The Customer Data Platform (CDP) in Travel: An Introduction
Travel brands have always dreamt about having a centralised view of their customers where they can understand customer interactions all touchpoints and be able to deliver rich, value-creating experiences.
However, delivering a unified experience with personalised recommendations, content or propositions across many devices and channels requires a true understanding of who the customer is and how and when to reach them.
Why is this? Tracking customer interactions, understanding customer history and preferences and predicting customer behaviour is difficult in travel because a unified customer experience is impossible without unified customer data. To date, this has proven very difficult as the data required to deliver these outcomes is trapped in separate travel systems that weren’t designed to share it with anything else.
So, it is not strange that the Customer Data Platform (CDP) is gaining momentum fast – even though many travel brands are not yet familiar with the technology.
So, what exactly is a CDP?
In essence, a good CDP enables travel brands to do two things:
- Intimately understand who their customers are
- Engage with their customers in a more relevant, personalised way
Gartner refer to a CDP as “a marketing system that unifies a company’s customer data from marketing and other channels”. They are very bullish on CDP’s, as they believe that data is, at last, moving away from an IT responsibility to other areas of the business that are more customer-centric rather than operations-centric.
In more technical terms, a CDP can unify multiple customer data sets into a single customer view and integrate with other systems to either ingest customer data or to push content and messaging out across channels and devices.
A CDP unlocks true data-driven marketing as it brings together all customer data, and ‘stitches’ that data together into unified customer profiles. This unified customer profile delivers a single view of the customer, which when combined with multi-channel customer journey orchestration enables travel brands to achieve personalised and targeted customer experiences.
What are the benefits of CDPs for travel brands?
According to Econsultancy, a CDP can offer a wide range of benefits including:
- Unified customer data
- Ease of use and access to data
- Savings in time and money
- Privacy compliance
- Improved customer understanding, driving life-time value and deeper customer relationships
One of the most popular applications of a CDP is personalisation. Customers want their interaction with travel brands to be personalised at the individual level, while travel brands need to be able to personalise at scale to effectively monetise this demand from passengers. The single customer view held within the CDP is the basis for this, so the clearest benefit of a CDP is that it will open up the revenue floodgates that personalisation at scale can deliver.
McKinsey have attempted to quantify this, saying personalisation at scale has the potential to create $1.7 trillion to $3 trillion in new value across e-commerce, with airlines alone in line for between $300 billion and $500 billion of this. [ Source – /www.mckinsey.com/business-functions/marketing-and-sales/our-insights/a-technology-blueprint-for-personalization-at-scale]
This helicopter view aggregates the business processes which a CDP can improve such as personalisation at scale. But a CDP can also improve customer relationships. Detailed, constantly updated and accurate records support one-to-one marketing strategies, real-time web/mobile/app interaction and bespoke email engagements.
Remember, when all of the marketing actions are based on a single customer view, travel brands can realistically start to deliver on the promise of multi-channel, multi-device consistency. In turn, this consistency is recognised by the customer and improves customer satisfaction. And with increased customer satisfaction comes increased frequency, recency and spend to enhance Customer Lifetime Value (CLV) scores.
The CLV metric is relatively new in the travel sector. A CDP gives travel brands the chance to calculate in advance the long-term value a customer might have, and to target their engagement with these customers accordingly. A CDP can define top customers using a variety of criteria – highest spending, most legs flown, most points, social media engagement – and identify other customers with a similar profile who have the potential to grow their value to the airline.
Upsell and cross-sell messaging can also be personalised, with the analytics engine ensuring that the right offer is provided to the passenger at the right time in their journey.
Why are CDPs gaining traction today?
The perfect storm of device and channel fragmentation, the explosion of new technologies and tools, the shift to privacy and GDPR and the rise of the API economy are a few of the factors that have led to the popularity of CDP’s today.
Could you build your own in-house CDP?
In theory, a travel IT organisation could build their own CDP. But there are large investments, time and risks involved in a custom project like this.
Remember, CDP’s are not just a database – they incorporate features like standardising, stitching and cleaning of customer data, as well as content orchestration, analytics and reporting. This additional functionality enables the application of a data science layer that uses machine learning to define the optimal business rules to enable travel brands to optimize marketing campaigns and commercial strategies.
Foundational capabilities like ‘identity resolution’ are also required. Recent personal data regulations like GDPR give rise to all sorts of challenges that can easily get out of control. Travel brands know that the same customer might have different profiles within its CRM systems, while other data platforms might use anonymised data from different channels and devices – desktop in the office, mobile on the commute home, tablet on the sofa in the evening. But identity resolution should take place before the data gets into the CDP so that there are not multiple views of the same customer. When you combine the technical challenge of identity resolution with the challenge of data protection, privacy and security issues, you can begin to understand the challenge of the ‘DIY’ CDP.
What sort of questions can be answered by a Customer Data Platform by travel brands?
- What was the last holiday booked by a particular
- Which customer segments or group does this customer belong to?
- Is this customer likely to leave and not buy from us again?
- What destinations has the customer shown interest in lately?
- What is the customer’s purchasing intent and timing for a particular ancillary revenue product?
- What is the value and predicted future value of this customer?
- Where does the customer prefer to interact? What device does the customer typically use?
- What is the customer’s hotel preferences?
- Where is the customer in the total customer journey?
Clearly, this is just a sample and it might seem that it is all about analytics. But it is actually about easily deciding on the right segments, user journeys, messages, channels, and timings (while validating hypotheses, doing A/B tests etc.) to improve customer lifetime value and prevent churn.
Once you combine the underlying data and insights, they can lead to even more remarkable, valuable moments.