At the outset of World War II, the flagship of a naval force was the super-dreadnought battleship, the lumbering symbol of national might seen as vital for control of the seas. Yet within just a few short years it was nearly obsolete, supplanted by the aircraft carrier as a navy’s true show of strength.
The battleship fell victim to a perfect storm of lightning-quick advancements in technology that completely overhauled strategy and tactics. We are seeing a very similar thing happen today in digital customer experiences; old ways of doing things are becoming obsolete faster than anyone anticipated, roiling the waters if you will for companies intent on providing a differentiated, digital-first customer experience.
There is, however, a way for companies to chart a course for calmer waters, and that is with a focus on first-party data as the foundation for providing the always-on, connected customer with a real-time, omnichannel experience.
A Flight to Digital
The perfect storm that caused the latest CX upheaval started with a flight to digital, which the pandemic greatly accelerated. In response to consumers expressing a lasting preference for digital-first engagements, companies followed suit by continuing to rely heavily on third-party cookies as a proxy for a customer’s online behavior. But then the tide shifted; cookies are going away, ad blockers and privacy controls are now in vogue, and companies once again have to change tack. The paradox is that as it becomes more difficult to develop a deep understanding of a digital-first consumer, more customers are moving online and expect brands to know who they are across an omnichannel customer journey.
In a Harris Poll survey, 82 percent of consumers said they are loyal to brands that demonstrate a thorough understanding of them as a unique customer irrespective of channel. This is up 5 percent since the question was posed in 2019 ahead of the pandemic – which upended the traditional notion of what it meant to “understand” a customer.
According to research from McKinsey, the flight to digital at the start of the pandemic was all encompassing; digital adoption covered a “decade in days,” impacting not only shopping and online delivery but also telemedicine and online entertainment. In one study, 75 percent of consumers said they had tried a new shopping behavior, with 73 percent expecting the behavior to become permanent.
Expectations Solidify Around Privacy & Personalization
With the sudden digital adoption came increased consumer awareness and concern about data privacy. Joint research from Boston Consulting Group and Google found that while two-thirds of consumers want content personalized to their interests, just about half (45 percent) are not comfortable sharing their data for that purpose.
When interacting primarily across digital channels, the reluctance of customers to share personal data even though there is a desire for a personalized experience creates a conundrum for brands. How to serve customers with hyper-relevant experiences that reflect a deep understanding of the customer (and generate revenue) without breaking trust. Customers need to know that a brand is only using their personal data in accordance with their expressed intent – including tracking their various devices across the internet.
According to Boston Consulting and Google, five of six companies interviewed said they planned to invest in privacy-ready technology and building in-house capabilities as the way forward, revamping their data and tech infrastructure to not rely on third-party cookies, instead placing the protection of consumers at the forefront, and becoming centrally managed with a high degree of data ownership and control.
First-Party Data as a Guiding Star
That strategy is, in a nutshell, turning toward first-party data as the new guiding star, and it is the reason why data-driven organizations that differentiate on customer experience turn to Redpoint.
The Redpoint CDP perfects an organization’s first-party data in real time, applying advanced identity resolution, data cleansing, governance, matching and merging at the moment data is ingested. When first-party data has been resolved to an identity or household and matched to a unified customer profile using persistent keys, it creates a unified customer profile that combines every possible customer identifier with a complete transactional history and comprehensive data aggregates. Because it persists over time, a unified profile becomes the foundation for developing a deep and contextual understanding of an individual customer across all digital and physical channels.
What does this mean from the customer’s perspective? For starters, it leads to consistently relevant experiences because a brand has a cross-channel awareness of a customer’s behaviors and preferences. And when a brand demonstrates a deep understanding of an individual customer with real-time next-best actions across an omnichannel journey, customers intuit that the brand honors them beyond a transactional value.
We also know that customers will share more personal data when they do receive a more personalized experience. While in the BCG/Google survey 45 percent are uncomfortable sharing personal data, we see that percentage rise considerably when it is in fact used to improve customer experience. In the Harris Poll, for instance, 66 percent of customers said they will provide brands with more information about themselves in exchange for a more valuable customer experience. Interestingly, 67 percent said they are also fine when the brands they explicitly approve of use first-party tracking cookies to improve their experience.
The First-Party Data Value Exchange
The first-party data value exchange is about trust. Brand equity is strengthened when consumers trust that their data will be used to deliver a personalized experience, which in turn yields more personal data. Consumer expectations for digital-first engagements and for a brand to know them as a unique customer across an omnichannel journey look like they are here to stay. But the third-party cookie and trying to work around privacy settings or ad blockers was never the right approach, or even the proper motivation, for a digital CX initiative.
A good faith effort to provide customers with a digital-first experience that reflects a deep customer understanding starts with first-party data, the lifeline for staying ahead of a perfect storm that may otherwise sink a digital CX effort.
