Realizing the full potential of customer data

Realizing the full potential of customer data

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To be successful in retail and e-commerce in the long term, you need to know what your customers want and respond to them in a targeted way. Although numerous data sources promise insights, their full potential is not so easy to tap. IBM iX explains why Customer Data Platforms (CDPs) are the key to an outstanding customer experience.

The retail landscape has been changing significantly, and not just since the Covid-19 and Ukraine conflict upheavals. More diverse business models, new technologies, and modern services mean that consumer expectations are rising. They no longer just want to be offered great products and attractive prices, but also to be convinced by the overall experience. To excel in this area, retailers should study their customers’ behavior in detail and adapt their own businesses accordingly. However, many companies fail because they hardly have an overview of their customer base, which is often related to a poor data structure.

Two sources of error stand out in particular: First, customer data is collected in individual systems and evaluated individually. The resulting fragmentation prevents an overarching and realistic picture from emerging. Second, companies do not use data consistently across all channels, making it difficult or impossible to address them personally and, in the worst case, confusing consumers with conflicting information. Even with much better thought-out data strategies, you also have to pay attention to data quality and security throughout.

This is why the use of a Customer Data Platform is almost always recommended. This is a technology solution that collects customer data from numerous different sources in a unified format and processes it in real-time. A large amount of information now linked together – for example, on payment and product preferences, age, frequency of visits, or use of certain touchpoints – makes it possible to put oneself in the shoes of one’s own customers and offer them content that is precisely relevant to them.

Omar El Agrebi, Director of Sales & Alliances at IBM iX DACH, provides a more detailed insight in the following interview.


Who are Customer Data Platforms suitable for?

Customer Data Platforms are suitable for all companies that have already started to learn about their customers’ interests and now want to use the collected first-party data for real-time activation along existing (and new) interaction points online and offline. Some groundwork around analytics, personalization, and marketing automation is beneficial, but not mandatory. We help companies evaluate where they are in their marketing journey toward becoming a “Data-Driven Organization”. With our support, potential technical as well as process gaps can be identified and filled to become CDP-ready, and then a suitable tool can be found on the market and implemented.

What are the key benefits of such solutions?

Companies learn much more precisely than before what sets their customers apart and can thus better understand what expectations they come to them with. In addition, it becomes much clearer how interactions with individual customers affect their own organization and whether offerings and services are in line with what customers want. Marketing benefits from personalized messages that can be played out across all interaction points. To achieve all of this, an effective CDP must not only collect and enrich data, but also, for example, be able to support decisions based on data, make predictions, and activate users. In summary, a CDP helps increase return on marketing investment (ROMI) by playing out activities more cost-effectively through targeted data-driven campaigns and increasing customer engagement, and therefore revenue, through personalized targeting.

Can you illustrate this with an example?

Let’s put ourselves in the shoes of a fashion retailer who offers his products on various channels and a customer who is looking for new clothing. The customer has already found an interesting combination online but is still undecided about the fit. Based on location data and stored preferences, they can now be informed directly that they can try on precisely this combination in the nearest or preferred store. When the customer then actually visits the store, he does not have to explain his request again to the sales staff there, as they identify him via a mobile app, for example, and bring the desired combination and, as an extra, other accessories of interest to him without any additional prompting.

Since the customer really likes the clothes, he decides to buy them. A few days later, the customer is emailed another fashion item that matches the purchased outfit and is offered at a lower price, especially for him. Because of the customer experience offered beforehand and the offer personalized especially for him, there is a high chance that he will make a purchase there as well. In the long term, the customer’s loyalty is also secured because the shopping experience is significantly better than the usual standard.

How do improvements in the customer experience affect business?

Forrester Research found that, above all, the volume of purchases made increases, while marketing costs fall dramatically thanks to better targeting. According to our experience, consumers who have been spoiled by an outstanding experience and picked up at the right time spend 150 percent more than the average buyer. Highly personalized marketing messages increase click-through rates by three times, and recommendations based on cross-channel interactions increase cart size by 30 percent. So you can see at a glance that investments in customer experience pay off quickly.

How can IBM iX help with this?

There is no universal standard approach to creating a successful customer experience with the help of Customer Data Platforms, as the optimal strategy differs significantly in some cases. Therefore, help should be sought from experts such as IBM iX, who work with companies in an agile and collaborative manner to create a personalized and positive customer experience. By evaluating data strategies, technologies, and existing system architectures, IBM iX can help companies implement an effective Customer Data Platform based on the needs of their exact customers, significantly optimizing the Customer Journey.

IBM iX is particularly committed to putting the human experience at the center, and as a consultancy, digital agency, design studio, and tech company, it offers a comprehensive range of services that can be used to successfully shape digital transformation.


Want to learn even more about Customer Data Platforms and the foundations for an outstanding customer experience? Get more insights in the free whitepaper.


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