History of Customer Data Platform (CDP) is closely linked to the development of several important marketing technology solutions over the past 20 years. There may be numerous potential starting points to track the development of customer data management, but perhaps the most appropriate one in this discussion is the evolution of Customer Relationship Management (CRM) systems and Data Management Platforms (DMP).
The First CRM:
The first CRM software, TeleMagic, was released on DOS in 1985 by its creator, Michael McCafferty. McCafferty referred to this software as an “electronic Rolodex” with significantly enhanced functionality. TeleMagic not only stored contact information for customers and potential customers, but it could also be integrated with word processing and accounting systems to help the sales department prioritize potential customers.
Next was the Launch of Act!:
In 1987, Conductor Software introduced Act!, an initial CRM application designed for the manufacturing industry. Act! is still in use today, having changed ownership multiple times over the past 35 years, initially described as a “digital Rolodex for storing customer contact information.”
Key Milestone in CRM Development:
The next significant milestone in CRM development was in 1989 when McCafferty and his friend Elan Susser used a $5,000 investment to develop GoldMine CRM. GoldMine, introduced in 1990, was the first software to combine contact information, scheduling, sales data, and marketing automation into a single platform.
Birth of Customer Data Management:
The Customer Data Management (CDM) market officially took shape in the 1990s after the successful launch of the aforementioned CRM packages. CDM software, like CRM, was at this time on-premises software tailored to a specific company or department. By the late 1990s, Microsoft introduced Outlook and other key software companies in the industry began entering the market with their own products.
In 1999, Salesforce introduced the first subscription-based software model, improving upon traditional on-premises solutions. This gave rise to a new segment of Application Service Providers (ASPs), where software was hosted in the cloud for organizations, eliminating the need for in-house software deployment and IT support. Over time, these ASPs, with their own architectures, were supplanted by Software as a Service (SaaS) solutions. SaaS solutions became more popular around 2007, allowing businesses on-demand access to customer data.
However, customers soon became disappointed with the overly optimistic promises of early CRM systems and were dissatisfied with the results provided by data management systems. According to Gartner, in 2006, over 50% of CRM installations were deemed failures.
Connecting it All:
At this point, most customer databases were specifically designed to support the standalone software applications of the providers. Consequently, customer databases could not easily connect or interact with other layers of the technology system. Data could not be easily moved from one place to another to leverage it for improved business efficiency.
Due to these limitations, many providers decided to start adding more advanced Application Programming Interfaces (APIs) into their customer databases, transforming them into what we now call Customer Data Platforms (CDPs).
With integrated APIs from the start, CDPs can easily connect to other databases, like CRM, as well as other marketing technology platforms such as Content Management Systems (CMS) and Digital Asset Management (DAM) solutions to impact customer experiences. Many web analytics and tag management providers rebranded and repositioned their software applications as CDPs.
Introduction of DMP:
Data Management Platforms (DMPs) were first developed in the early 2000s, allowing organizations to collect, organize, and activate customer data for building anonymous customer profiles for advertising campaigns. DMPs primarily focused on data collection and storage.
The issue with DMPs is that they primarily focused on distributing anonymous profiles for advertising channels, and they couldn’t effectively handle known data or store data for extended periods. DMPs were designed from the ground up to easily integrate with other martech platforms and were managed and controlled by IT teams. Advertisers needed a data management platform they could use daily to make smarter decisions, put the customer at the center, and rely on data.
MarTech Fragmentation:
In the early 2010s, the marketing software technology landscape became increasingly fragmented with specialized solutions such as CRM and DMP provided via SaaS. Enterprises were using up to 100 different tools within their marketing technology stack.
All of these emerging solutions were partly a response to changes in consumer behavior, including the proliferation of mobile devices, rapid growth of social media, and a new generation of tech-savvy digital natives. The opportunity to capture all this new user data, clean and unify it into a single customer view with all their attributes and characteristics while maintaining the data behind a unique customer ID was substantial.
2013: The Year of CDP:
The term Customer Data Platform was coined by David Raab in a blog post in 2013, where he stated:
“It took me a while to connect the dots, but I’m fairly sure I’ve seen a new type of software emerging. These systems collect customer data from many sources, combine information about the same individual, perform predictive analytics on the resulting database, and use the results to guide marketing treatments across multiple channels.”
“These systems can also provide sales, customer service, online advertising, point of sale, and any other customer interaction systems. From now on, I’ll…call this concept ‘Customer Data Platform.'”
Raab published the industry’s first CDP report in September 2013, profiling 11 systems. Interest in the CDP category began to grow significantly in 2016 when CDP first appeared on the Gartner Hype Cycle, and the Customer Data Platform Institute was established. The institute’s goal was to explain the CDP category to potential users, technology companies, media, and others.
CDP systems offer marketers unique features that previous data management tools could not provide. CDPs can ingest data from both CRM and DMP systems, and they can send data back to both systems. They serve as a broader, more focused customer data management solution designed to work seamlessly with other platforms to attract, connect, bind, and manage future relationships.
CDP Today and Tomorrow:
Since its inception in 2013, CDP has come a long way and has now become a mature market. Today, the global customer data platform market is expected to reach $20.5 billion by 2027, with a market growth rate of 34%.
Originally designed as a data collection and integration platform from various sources, CDPs have evolved to become an all-in-one data management solution, playing a crucial role in your martech stack. DataS’s SaaS CDP product is equipped with advanced features such as artificial intelligence and machine learning, allowing you to segment, analyze predictions, score predictions, and build predictive models. This, combined with other modern capabilities like customer journey orchestration, journey optimization, retargeting, and marketing automation, helps you optimize your customer data management strategy.
Furthermore, DataS’s SaaS CDP also complies with new data privacy regulations such as GDPR and CCPA, ensuring your adherence to customer data management laws.
In the past decade, CDPs have evolved into a central data management solution, and DataS’s SaaS CDP can work alongside other data management platforms such as CRM or DMP, providing you with a reliable centralized source of customer data and improving the efficiency of your technology stack
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