Master Data Management vs. CDPs: A Guide

CDP|8 Minute Read

Master Data Management vs. CDPs: A Guide

Creating a ‘golden record’ (i.e., profile) for every individual in their respective martech ecosystems and across their databases is an imperative for marketing professionals today.

Master data management (MDM) tools — a popular business technology that specializes in data consolidation and information management — is one way for enterprise organizations to obtain said record for their prospects and customers.

In fact, several teams within a business — customer service, sales, product development, and finance, for instance — can benefit from a cloud-managed master data management tool (and related MDM program), as the database solution:

  • Democratizes data throughout a given organization and provides key stakeholders with an exhaustive view of information needed in their respective day-to-day
  • Corrects erroneous and outdated data associated with customers, personnel, vendors, and products, among other kinds, and deduplicates copies of data points
  • Gives brand leaders a single system from which it can glean insights into and analyze every corner of the business and make more informed decisions from said data

However, there are drawbacks to MDM software — particularly for marketing teams:

  • It relies on a high confidence rate that comes with inherent tradeoffs for the marketing team. Typically, MDM solutions only bring data into the golden record for an individual if they are 90% or more confident that data belongs to that person.
  • It only deals in structured, “hard” data (e.g., transactional data, reference data) and does not include softer data (e.g. cookie-based, IP addresses, etc.).
  • It typically runs on a relational, SQL database, which is burdensome for marketers, as it only works with structured data and, thereby, is inflexible, slow, and doesn’t scale well.
  • It doesn’t provide any data activation capabilities whatsoever, forcing everyday marketers who use the system to look elsewhere to liberate their customer data.

On top of all that, investing in (or maintaining) a master data management solution could exacerbate enterprise-wide silos, as data quality expert Henrik Gabs Liliendahl explained:

“As MDM is the remedy against data silos, you may end up with MDM as just another data silo within your enterprise.”

So, if a master data management tool isn’t the best answer (or at least the only answer) to marketing organizations’ first-party customer data unification needs, what technology is?

The answer: a customer data platform (CDP) that acts as a ‘single version of the truth’ (a.k.a. single source of truth) for marketing — and enables effective, efficient data liberation.

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Master data management tools missing core capabilities for marketing teams

As a 2018 McKinsey report noted, MDM solutions “rely on antiquated ‘list pulls,’ basic segmentation, and campaigns, all of which lack the automated decision-making, adaptive modeling, and nimble data utilization to scale personalized interactions.”

Not exactly the kind of martech modern marketers need to thrive today.

Of course, if IT is the data steward for a given enterprise, a master data management tool could be just what the doctor ordered, as the solution helps them significantly:

  • IT pros can sync all data — customer and otherwise — from data source systems across the business (e.g., supply chain software featuring customer product data), which can eliminate data silos, if synced correctly with other martech.
  • What’s more, MDM tools help IT teams manage the sizable volume of data and information stored across the business, which helps them reduce costs considerably and save substantial amounts of time to handle other technical initiatives.
  • Data governance, enrichment, and standardization becomes far easier for IT when they have a central MDM solution. This data ‘clean-up’ also helps other teams for their business entity streamline many daily business processes.

These are all big benefits for an IT-driven master data management program. But they don’t help marketers with their needs — particularly real-time, cross-channel activation.

Since IT owns an MDM tool, marketing must often wait for them to normalize the customer data stored in it, resolve customer identities, and create lists based on said data for them.

It’s only days (or sometimes weeks) later marketers like you can leverage custom, segmented lists in their campaigns and ongoing customer lifecycle orchestration activities.

And, by then, the data is days or weeks old. (In other words, mostly or entirely worthless.)

Simply put, waiting on IT (or data science, analysts, or costly external agencies, depending on the technical experts your company relies on) isn’t just inconvenient. It also obstructs marketing from doing its job: delivering consistently great customer experiences.

Brands with the best customer experience strategies are the ones who ‘meet’ customers with relevant, real-time messaging and on the most applicable channels — and ones who utilize a marketing technology, like the CDP, that can help liberate data from their MDM.

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Data liberation: The CDPs and MDM software tradeoffs and complements

CDP Institute Founder David Raab perfectly broke down what really distinguishes customer data platforms from legacy master data management solutions for Customer Think:

“The real differentiator is focus: CDPs are built exclusively for customer data, are packaged software built for business users (mostly marketers) and have standard connectors for customer-related systems. MDM is a general-purpose tool designed as a component in systems built and run by IT departments.”

Marketer-owned and -operated: That’s what the CDP is. And that’s what today’s leading enterprise brands invest in to aid their marketing teams’ most important tasks and tactics:

  • Multi-dimensional segmentation and segment analysis: Patiently awaiting list-pulls to (eventually) analyze and activate said segments is a thing of the past with the CDP, which unifies all customer data across systems and sources in real time and provides the complete, holistic customer view for marketing.
  • The development and deployment of predictive models: Marketer-friendly, out-of-the-box predictive machine learning models come standard in certain customer data platforms, like BlueConic. That means you don’t need to wait for modeling outputs from your analytics team or data scientist to inform customer scoring and segmentation.
  • Well-orchestrated one-to-one marketing to target audiences: Marketers such as yourself need confidence and utility when it comes to customer data utilization. The CDP ensures always-accurate marketing consent preferences for individuals, meaning you can deliver lifecycle messaging to customers assuredly.
  • Confident customer data activation at all times: Modern MDM tools ensure integrated data is at least 90% accurate. But getting to this accuracy level often prevents marketers from capitalizing on data in real time. Accuracy matters — but not at the expense of speed, scalability, and performance. With a CDP, data is both persistently and dynamically updated and ready for instantaneous activation.

Speaking with SearchCustomerExperience, Raab added “companies with a mature MDM customer domain may use it to populate customer IDs in a CDP.” In other words, the two technologies can work in conjunction — to a degree — to aid marketing’s efforts.

For instance, some BlueConic customers integrate with their MDM tools, which can handle tasks like identity resolution. Advanced matching capabilities in MDM software help marketers who use our CDP merge profiles and deduplicate email addresses.

The problem is not many brands have “mature” master data management programs.

In fact, just 65% of enterprises with master data management tools noted they have what they deem “quality” customer data and an engaged customer base, per Aberdeen.

Thankfully, the customer data platform solves all these pain points for big businesses and their marketing teams — and, often, renders MDM software redundant and dispensable.

customer data platform

Adjusting your master data management approach — and prioritizing the CDP

Unifying first-party data, resolving contacts’ identities across systems, and creating comprehensive customer profiles are three integral tasks marketers must master to build thriving marketing programs today. But they’re far from the only ones.

Many enterprise marketers fail to prioritize the activation element of their strategies.

In doing so (i.e., sticking with legacy tools like campaign management systems and “journey orchestration” solutions), they prevent themselves from delivering truly impactful, targeted messaging to high-value individuals and segments and, subsequently, improving their ROI from their marketing (and martech).

No matter how up-to-date and precise enterprise marketers’ customer data sets are within master data management software, failing to upgrade their other dated activation systems and modernize their data analysis, segmentation, and liberation processes can only lead to inefficiencies for them and the brand at large.

As McKinsey analysts recently argued, master data management tools simply aren’t capable of taking “full advantage of digital signals customers provide,” thanks to their utter lack of activation features and functionality.

This prevents marketing from implementing “end-to-end personalization” and “transforming simple customer transactions into enduring relationships,” the analysts declared.

The solution to these customer data activation woes? There are two marketers can explore:

  • 1) Integrating MDM software with a CDP to enhance certain activation activities (e.g., non-lifecycle orchestration activities like product launch campaigns).
  • 2) Reevaluating what their master data management tool is currently used for in their businesses and, after the audit, determining if they need an MDM or a CDP.

The case for the latter is clear: The pure-play CDP offers a true, persistent, real-time single customer view of all customer data a given marketing organization and their brand have available — not merely a latent, mostly comprehensive view of said data.

“Solving for the ways in which first-party data can make your marketing better and more efficient should be a top priority, but which solutions enable that vary widely,” BlueConic COO Cory Munchbach indicated in her CDP FAQ blog post.

Translation: Not every database technology will be right for your particular business.

But it’s clear the CDP has separated itself from the martech pack and has taken over master data management tools as the premier system to unify all customer data — and for marketing to leverage in its hyper-targeted lifecycle orchestration efforts.

Watch our CDP ROI webinar to discover sizable the return on investment enterprises realize with a customer data platform at the heart of their martech stacks.

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