Customer Data Platform Implementation: Easy task or an impossible attempt?

Abstract

This study explores the adoption of a customer data platform (CDP) in German companies. Lately, customer data has become a crucial asset for companies. However, the increasing amount of data makes it challenging to cluster and evaluate the high amount of customer data from different platforms. Combined in one platform, a CDP centralizes technology solutions that collect customer data from various sources, thus facilitating personalized and automated marketing processes. The study uses a critical realism and deductive approach to explore the subjective meanings of CDP implementation within the selected German organizations. A mixed-method approach has been applied to gathering data through 19 semi-structured interviews and a qualitative content analysis according to Mayring (2020) was conducted. The study investigated how companies perceive the benefits and challenges of implementing a CDP in their organizations. While interviewees recognize the value of CDPs in creating comprehensive customer profiles, challenges such as data quality issues hinder adoption. The findings highlight the need for prioritizing data quality and building expertise and resources to implement CDPs effectively. Recommendations include fostering communities for knowledge sharing and gradually preparing for CDP integration to ensure competitiveness.

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International Journal of Business and Applied Social Science
E-ISSN: 2469-6501
VOL: 10, ISSUE: 11
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DOI: http://dx.doi.org/10.33642/ijbass.v10n11p1
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Customer Data Platform Implementation: Easy task or an impossible attempt?
Prof. Dr. Manuel Kern
Professor
Heilbronn University of Applied Sciences
e-Mail: manuel.kern@hs-heilbronn.de
Germany
Prof. Dr. Marco Schmäh
Professor
Reutlingen University: Hochschule Reutlingen
Germany
Sarah Kern, Msc
Guest Lecturer at Heilbronn University of Applied Sciences
Head of Commercial Management Providata
Germany
Kathrin Striebl, Msc
Reutlingen University: Hochschule Reutlingen, MSc International Business Development
Germany
Lara Himmel, Msc
Reutlingen University: Hochschule Reutlingen, MSc International Business Development
Germany
Fabiola Beermann, MSc
Reutlingen University: Hochschule Reutlingen, MSc International Business Development
Germany
ABSTRACT
This study explores the adoption of a customer data platform (CDP) in German companies. Lately, customer data has become a
crucial asset for companies. However, the increasing amount of data makes it challenging to cluster and evaluate the high
amount of customer data from different platforms. Combined in one platform, a CDP centralizes technology solutions that
collect customer data from various sources, thus facilitating personalized and automated marketing processes. The study uses a
critical realism and deductive approach to explore the subjective meanings of CDP implementation within the selected German
organizations. A mixed-method approach has been applied to gathering data through 19 semi-structured interviews and a
qualitative content analysis according to Mayring (2020) was conducted. The study investigated how companies perceive the
benefits and challenges of implementing a CDP in their organizations. While interviewees recognize the value of CDPs in
creating comprehensive customer profiles, challenges such as data quality issues hinder adoption. The findings highlight the
need for prioritizing data quality and building expertise and resources to implement CDPs effectively. Recommendations include
fostering communities for knowledge sharing and gradually preparing for CDP integration to ensure competitiveness.
KEYWORDS: customerdataplatform, CDP,customerinsights.
1. The relevance of Customer Data Platforms (CDP)
Customer information has become a critical asset that
shapes the way companies understand, engage, and serve their
clients. Customer data encompasses a rich spectrum of information,
from demographics and purchasing behavior to online interactions
and preferences (Plangger et al., 2023, p. 2018). Customer data
are no longer just a simple collection of information, but “have
become currency” (Plangger et al., 2023, p. 2016). The ability to
gain precise insights into the behavior, preferences, and needs of
customers forms the basis for successful marketing strategies,
sales activities, and sustainable customer relationships (Rashedi
& Mauer, 2023, p. 148). To collect, analyze, and use this data
effectively, customer data platforms (CDPs) have emerged as a
major topic in the business application environment (Rashedi &
Mauer, 2023, p. 5). As CDP solutions are relatively new, the
research in scientific literature is limited, especially regarding
practical relevance in German organizations. This gap
emphasizes the urgency and importance of further investigation
to understand the challenges and benefits of CDP to make
effective use of gathered customer data within the given context
of medium and large German organizations.
2. Problem statement: Customer data as an indispensable
marketing component
To enable a seamless customer experience, companies
gather extensive customer information. Various methods for
collecting relevant data, such as demographic details and
transactional history, provide the groundwork for personalized
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International Journal of Business and Applied Social Science
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November/2024
DOI: http://dx.doi.org/10.33642/ijbass.v10n11p1
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sales strategies in B2B and B2C sectors (Rashedi & Mauer,
2023, p. 144).
Demographic data, such as age, gender, or address,
enables companies to better segment their target groups. The
collection of transactional data, such as past purchases, order
history, and product returns, provides valuable insights into the
individual purchasing behavior of customers (Plangger et al.,
2023, p. 2018). Behavioral data collected through the analysis of
website or app usage enables companies to better understand
customer preferences and optimize their digital platforms (Zavali
et al., 2023, p. 1953). By taking customer interests and preferences
into account, tailored offers can be created. The evaluation of
customer service interactions, such as complaints or inquiries,
enables companies to identify weak points and improve customer
satisfaction (Rashedi & Mauer, 2023, p. 142). Analyzing customer
interactions on social networks provides insights into opinions,
comments, and trends, which helps companies manage their
brand reputation and promote customer loyalty (Deges, 2018, p.
123 sq.). By integrating location data, companies can create
personalized offers based on the customer's current location and
develop targeted local marketing strategies. Capturing marketing
preferences, such as consent to newsletters or communication
channels, enables companies to target their customers and build
effective communication (Plangger et al., 2023, p. 2018). For the
effective collection, analysis, and usage of customer data, CDPs
have appeared as a major trend in the corporate landscape
(Rashedi & Mauer, 2023, p. 5).
According to the Customer Data Platform Institute
(CDPI), a CPD is “a packaged software that creates a persistent,
unified customer database that is accessible to other systems”
(Customer Data Platform Institute, 2021a, p. 48). Rashedi and
Mauer provide some more detail on the term: A CDP is a software
solution used by specialist users of different departments of a
company, not necessarily IT. Through many channels,
structured, semi-structured, and unstructured customer data is
merged into a central database, whereby the merging process is
mostly automated. Through the collection of online and offline
data, a CDP represents a central database application, however,
is not an end in itself. Instead, it combines and activates data of
various systems via interfaces, considering data governance
requirements, consent, and earmarked data processes. Therewith,
a holistic view of a company’s customers can be generated while
avoiding data silos. After the data collection, holistic customer
profiles are created that are used as bases for understanding and
decisions. (Rashedi & Mauer, 2023, 26 sqq.). Through automated
measures, the CDP itself or linked systems can then engage with
personalized messages as a “Customer-Driven Marketing
Machine” (Kihn & O'Hara, 2021, p. 107).
3. Research goal: Explore the benefits and challenges of a
CDP implementation
Overall, these diverse customer data types form the basis
for data-driven marketing and sales strategies. Efficient collection,
analysis, and utilization of this data optimize sales processes,
foster personalized customer relationships, and ultimately drive
long-term sales growth (Rashedi & Mauer, 2023, p. 148).
By conducting an examination of CDPs benefits and
challenges this study supports organizations to overcome ‘the
customer data issue’ described within this chapter. Thereby the
research question can be defined as follows:
What were the major benefits and challenges for medium
and large-sized German organizations when implementing a
customer data platform?
Hence, the results of this study contribute to the existing
theoretical knowledge and provide practical recommendations
for the mentioned organizations. To do so, two sub-research-
objectives are formulated as follows:
1. Exploration of the benefits that German medium and
large size companies see in introducing a CDP to their
organization.
2. Exploration of the challenges that German medium and
large size companies see in introducing a CDP to their
organization.
4. Research design and applied methods
The study uses a critical realism and deductive approach
to explore the subjective meanings of CDP implementation
within selected German organizations. Thereby a mixed-method
approach has been applied. First, and as the foundation for the
interviews, a literature review has been conducted following the
structured literature process according to Hart (2018) utilizing
the terms “customer data platform”; “CDP” and “customer
insights”. As a result, eight key articles have been identified to
be relevant to the context of this study. However, after a second
iteration five of these have been excluded due to the limited
insights into potential benefits and challenges of CDPs or due to
a lack of actuality. Based on the final three papers (Earley, 2018;
Plangger et al., 2023; Zavali et al., 2023) relevant insights have
been synthesized and concepts have been derived for the
qualitative data gathering using semi-structured interviews. As a
result, seven concepts for both - the benefits and the challenges
in the implementation of a CDP have been derived.
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Figure 1: Identified concepts of benefits & challenges
Building on these concepts, a semi-standardized
interview questionnaire has been created investigating the
benefits and challenges by gathering quantitative and qualitative
data. The search for participants was based on the networks of
the authors and recruitment activities on LinkedIn. To ensure a
cross-industrial perspective across different organizational sizes,
experts have been selected from various organizations. All
participants have been asked (before the interview) whether they
are familiar with CDP and if they can examine the topic for their
organizations.
Figure 2: Size of companies interviewed
The chosen sample enabled the topic to be viewed from
different perspectives and a deeper understanding of the subject
matter to be gained, allowing new dimensions and explanatory
approaches to be recognized. All interview partners and their
companies have been anonymized.
All participants have been asked to assess the benefits
and challenges according to the developed concepts using a 5-
point Likert Scale, first. Afterward, the qualitative part of the
questionnaire explored the characteristics of the organization and
its operations. As a result, the study reveals a prioritization of
benefits and challenges when implementing a CDP and offers
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DOI: http://dx.doi.org/10.33642/ijbass.v10n11p1
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qualitative explanations for those. Thereby, the standardized
sequence of questions and wording of the questions guaranteed
an important level of comparability when evaluating the data.
Providing an insight into the applied methodology one
exemplary statement per benefit (B) and challenge (C) are
presented:
 B1: The company considers the design of a 360-degree
customer profile to be a benefit in introducing a CDP to
their organization.
 C3: The company considers insufficient data quality to
be a challenge in introducing a CDP to their
organization.
5. Results: Major benefits and challenges for CDP
implementation
This chapter presents interview results regarding the
benefits and challenges of implementing a Customer Data Platform
within an organization. Respondents highlighted benefits such as a
360-degree customer profile, data consolidation, improved customer
experience, personalized marketing, automated processes, and
enhanced acquisition and upselling. Disadvantages included
limited expertise, resources, data quality, finances, security
concerns, and potential loss of customer trust and resistance to
change. For an impactful discussion of benefits and challenges,
the following sections will focus on the three most important
benefits and challenges, as indicated in Figures 3 & 4.
Figure 3: Benefits of a customer data platform
Figure 4: Challenges of a customer data platform
5.1 Benefit #1: 360-degree Customer profile
Creating a 360-degree customer profile is deemed the
most significant benefit of a CDP. 74% of respondents rated the
benefit as very high, and a further 21% as high. This is also
confirmed by the evaluation of the qualitative analysis according
to Mayring. In the category expression is very strong, 14 anchor
examples were named, and a further 4 in the category expression
is strong. One respondent explained his choice as follows: "The
360-degree customer profile is a great benefit because you can
get comprehensive information about the customer [...]. The
more information we have about the customer, the better the
marketing activities can be carried out in a targeted manner”
(EI 1, l. 33-43). Another interviewee rates the 360-degree
11%
26%
47%
47%
47%
63%
74%
47%
47%
26%
32%
37%
5%
21%
26%
11%
21%
5%
21%
16%
5%
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5%
5%
5%
11%
5%
21%
5%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
new customer acquisition
improved customer experience
consolidation of online & offline data
automated marketing processes
personalized marketing campaigns
cross-/upselling
360-degree customer profile
very high high neutral low very low no statement
11%
16%
21%
21%
53%
42%
26%
16%
26%
42%
21%
26%
21%
26%
21%
32%
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16%
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32%
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47%
21%
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16%
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11%
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11%
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
loss of costumer confidence
limited financial resources
willingness to change
data security
limited human resources
limited know-how
insufficient data quality
very high high neutral low very low no statement
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DOI: http://dx.doi.org/10.33642/ijbass.v10n11p1
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customer profile as "the basis for customer centricity” (EI 9, l.
68-71). Although a higher proportion of B2B companies (34%)
plan to implement a CDP compared to B2C companies (19%)
according to the CDPI (Customer Data Platform Institute,
2021b), the perceived benefit varies depending on business
models. Some B2B interviewees view the benefits of a 360°
customer profile as weaker compared to B2C, with one noting
that the 360-degree customer profile is less impactful due to their
customers comprising buying centers with diverse demographic
data, behaviors, and interests (EI 12, l.31-35): “At our company,
we deal with a very, very large number of people at one
customer, which makes this 360-degree view difficult for us. We
could then see a 360-degree view of only a single person of the
customer, so to speak.” However, this statement suffers from a
narrow perspective of a 360-degree view which incorporates
only a B2C perspective of customer data.
5.2 Benefit #2: Improved cross-selling and upselling
The respondents see the second biggest advantage of a
CDP in improved cross-selling and upselling. 63% rated the
advantage as very high, and a further 5% as high. 21% rated the
benefit as neutral and therefore saw no impact for their company.
Qualitative analysis further supported this, with 12 identified
anchor examples in the category expression is very strong. One
interviewee explains his decision as follows: "That's one of the
main goals at the end of the day. To recommend, based on
preferences, products that my customers might not even know
yet, but that they might like" (EI 11, l. 156-158).
These findings vary also depending on the business
model. Here it could be found that the benefits are perceived as
bigger in the B2C sector: “[…] one of the main goals […] is to
recommend products based on your preferences that you might
not even know yet, but that you might like. But with 25 shower
gels, you might not scroll through them all. But because you
know that the person is now into citrus fragrances, you can
primarily show them ads […] like that.” (EI 11, l.156-160).
However, some interviewees from the B2B sector perceived the
benefits as weaker, as there is oftentimes customization required
based on the customer demands, which influences the potential
of cross- and upselling: "Rather difficult. It is not classic cross-
selling as we know it in B2C. As I said, we sell 400-500 products,
so the topics are slightly different" (EI 18, l.106-108). With that
said, customizations can also be improved based on the
combination of a 360-degree view of the customer. For instance, a
B2B organization might be able to promote customized products or
solutions based on clear personas that have been derived from
multiple customer profiles. Moreover, the interviews neglect that
cross- and upselling can be much more data-driven than the
interviewees might be able to foresee from today’s perspective.
The reason for that might be, that interviewees consider cross-
and upselling a lot from the product perspective. However, cross-
and upselling can also be maximized when combining the cross-
and upselling offer with the third major benefit of personalized
marketing campaigns (or at least messages).
5.3 Benefit #3: Personalized marketing campaigns
Last, the findings indicated personalized marketing
campaigns as the third biggest advantage of a CDP, closely
followed by the automated marketing processes category. This
shows the enormous potential that respondents see in a
personalized customer approach. 47% rated the advantage of a
personalized marketing campaign as very high, and a further
37% as high. According to Mayring, most of the anchor
examples could therefore be assigned to the category expression
is very strong, which confirms the quantitative analysis. One
interviewee explains: "I see this as a huge advantage for us
because it allows us to address our customers much better" (EI
19, l. 88-89).
Our data suggests that the interviews see the personalization
primarily from a marketing campaign perspective. This viewpoint
is valid but can be extended further when combined with other
benefits. Thus, a CDP can create persona-based customer
journeys, but it can also react precisely to customer service. For
instance, it may detect an increase in incoming service inquiries
based on a persona profile of that organization and thereby
suggest informing all other customers (within that segment) to
check and predict additional service inquiries. This requires high
data quality and well-defined segments based on personas,
wherefore an organization needs to overcome the
implementation challenges, which will be discussed in the next
sections, first.
5.4 Challenge #1: Insufficient data quality
As shown in Figure 4, insufficient data quality is cited
by respondents as the greatest challenge to the implementation of
a CDP. 54% of the respondents rated the challenge as very high,
and a further 21% as high. This is also confirmed by the
evaluation of the qualitative analysis. In the category expression
is very strong, 11 anchor examples were named, and a further 4
in the category expression is strong. One expert explains his
assessment as follows: The data quality is "A much bigger
challenge. […] and if you work according to the old motto
'garbage in, garbage out', everything will blow up in your face
afterward. Of course, you need clean data beforehand and you
have to bring it together cleanly" (EI 9, l. 211-214). Another
expert explains the consequences that insufficient data quality
can have: “If the data quality is not right, the person may still be
approached in an area that doesn't interest them. We need to
improve our data quality in this respect." (EI 14, l.276-278).
The primary challenge is perceived differently depending on
company size. Our data suggests that the challenge is perceived
higher by smaller companies, as stated in EI 16 with 656
employees: “Exactly, so we simply do not have the data yet. [...]
It is extremely rudimentary.” In contrast, the challenge is
perceived as neutral or low by bigger companies as stated by
company 12 with 9,500 employees: “[…] I don't think we have a
massive data quality problem.” One might argue that data
quality is not an issue that hinders a CDP implementation only
but seems to occur as a major challenge within digitalization
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projects. With that said, the major challenge is still relevant and
must be tackled from a data (governance) perspective.
5.6 Challenge #2: Limited knowledge
In addition, the respondents see limited knowledge as the
second biggest challenge of a CDP. 21% of respondents rated the
challenge as very high, another 42% as high. Only 11% rated the
challenge as low and 5% as very low. About the qualitative
analysis, four anchor examples in the category expression are
very strong and another 8 in the category expression is strong
were determined. An expert explains his assessment as follows:
"Yes if you're not familiar with it, it's problematic. Accordingly, I
would say that it is a challenge. […] In general, I see the lack of
know-how as major, as the data in the platform has to be
properly maintained, which involves a certain complexity." (EI 7,
l. 102-123).
With newer topics such as CDP, organizations struggle
to build up the necessary knowledge. Having limited (IT)
knowledge is a well-researched phenomenon, especially in
German organizations, and stands out as a major obstacle. One
might argue that organizations need to upskill their existing staff
on newer technologies while at the same time, others are
proposing to get external expertise. No matter how organizations
are trying to close this knowledge gap they must be aware that
profiles are more dynamic than ever and that roles such as a
‘Customer Data Analyst’ will not be permanent over time.
Luckily, knowledge is easy to access, and technology providers
are offering dedicated education programs. Hence, companies
need to make resources available and allow their staff to innovate
with solutions such as a CDP.
5.7 Challenge #3: Limited human resources
Closely related to the previous challenge, the challenge
of limited human resources is assessed as the third biggest
challenge of a CDP. 21% of respondents rated the challenge as
very high, another 26% as high. A further 32% rated the
challenge as neutral and 16% as very low. This is also supported
by qualitative analysis, where most of the anchor examples could
be assigned to the category expression is very strong and strong.
One interviewee explains: "We often receive feedback that this is
difficult in the subsidiaries, particularly due to a lack of staff or
a shortage of resources." (EI 15, l. 119-124).
Especially in an international context, the limited
availability of human resources becomes a major challenge. As
discussed in the previous section, this is not isolated to CDP
implementations but relevant to many digitalization projects.
One might even argue that the limitation factors are primarily
within IT departments. With that in mind and thanks to a strong
development towards low-code IT solutions, organizations can
overcome this challenge by reallocating projects such as the
implementation of a CDP more towards a business or process
excellence team. In contrast, the integration of such a low-code
solution within the existing landscape requires a profound
knowledge of IT. This needs to be balanced and well-organized.
6. Recommendation
Overall, data suggests that the perceived benefits of a
CDP outperform the perceived challenges, as indicated in Figure
5.
Figure 5: Overall distribution of challenges & benefits of a customer data platform
The interviewees recognize the significance of
implementing a CDP, acknowledging its potential to enhance
customer engagement, product development, and revenue
generation. However, challenges persist, particularly regarding
data quality, which is crucial for CDP implementation. The
decision to adopt a CDP should be carefully considered,
considering factors like company size, industry, and customer
segment. To maximize benefits during and after a CDP
implementation three recommendations can be made.
First, companies need to gradually prepare themselves
for the implementation of a CDP by making themselves aware of
the actual challenges they might face. Therefore, organizations
should promote awareness and knowledge sharing. To do so,
participating in relevant communities of German companies
utilizing CDPs is recommended. This community can offer
guidance and inspiration for both newcomers and those already
employing CDPs, fostering competitiveness in an increasingly
data-driven landscape. Second, before implementing a CDP,
45%
31%
12%
4%
3%
4%
very high
high
neutral
low
very low
no statement
PE RC EIV ED BE NE FIT S
17%
25%
24%
12%
16%
5%
very high
high
neutral
low
very low
no statement
PE RC EIV ED CH ALLE NG ES
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DOI: http://dx.doi.org/10.33642/ijbass.v10n11p1
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organizations should be clear about their objectives, such as
improving their customer data quality and increasing their know-
how. Therefore, preparing for CDP implementation also involves
prioritizing customer data cleansing to enhance data quality. Third,
during and after a successful implementation, organizations need
to ensure adequate personnel resources in the field to stay
competitive in the future.
7. Conclusion and limitations
The findings of this study have explored key benefits
and challenges for German organizations that are considering a CDP
implementation and thereby contributed to practical knowledge.
Hence, the results bridge a gap between limited research for the
context of medium and large German organizations by gathering
primary data.
However, the study has its limitations. First, the
literature review resulted in seven concepts for benefits and
challenges which are based on eight, and finally just three key
articles. Second, the sample size of 19 interviews provides a first
insight into a diverse landscape of medium and large German
organizations. Future studies can explore this more in-depth, for
instance per industry. Lastly, using the mixed-method approach
allowed the researcher of this study to explore the phenomena
thoroughly and based on qualitative and quantitative data,
however, it does not provide statistically significant data to
deduce a set of universal hypotheses. Hence, external validity is
at least limited. Consequently, we suggest that future research
should involve larger (and maybe industry-specific) samples and
contribute to statistically significant findings.
Finally, it can be concluded that this explorative study
enables practitioners of medium and large German organizations
to better assess and finally evaluate their attempts for a CDP
implementation.
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