Episode 256 / Constantin Hourmouzis / PwC Germany / Senior Manager | Data Driven Marketing
The Data Driven Marketing Potential of CDPs
CDPs - customer data platforms - are able to collect data from various touchpoints to enable companies to understand their consumer base, build an audience and work on it. They’re not a new concept, but they’re Constantine Hourmouzis’ shiny new object for their unique role which is growing in importance as first party data becomes ever more crucial for data driven marketing.
In this podcast episode, we discuss top marketing advice from Ray Dalio’s book, Principles. We look at the importance of creating a data value proposition to extract consumer data while giving something in return. And we examine Constantin’s advice on how to make CDPs work for your brand.
Transcript
The following gives you a good idea of what was said, but it’s not 100% accurate.
Constantin Hourmouzis 0:00
Do we want to collect data in a progressive way? Or do we want to ask at certain points and take a certain risk? And maybe not, not everyone will will lock in. But yeah, first party data gets obviously more valuable.
Hello, and welcome to the shiny new object podcast. My name is Tom Ollerton. I'm the founder of the creative effectiveness, ad tech platform, automated creative. And this is a podcast about the future of data driven marketing. Every week or so I have the pleasure and the privilege of speaking to one of our industry's leaders, and this week is no different. I'm on a call with Constantin Hourmouzis who is senior manager, data driven marketing at PWC. So Constantin, for anyone who doesn't know who you are and what you do, could you give us a bit of background?
Hey, Tom, first of all, thanks for having me on your show. And I'm excited about this conversation. My name is Constantin Hourmouzis, and I've been part of the PwC customer transformation practice focusing on data driven marketing. I've been, I think, 11 years now in in marketing. I spent five years in industry in the b2b business, and then six years now in consulting, and mainly I help organizations to effectively engage with their customers. And either by leveraging innovation or shaping, shaping the business organization, optimizing processes, helping them to implement technologies, and always from a human lead tech power perspective. And I think if I break it down to what really drives me day to day, I think it's it's curiosity and meaningful connections and yeah, to build something, and I'd be happy to be on the show.
Speaker 1 1:45
So are you a experience person or you are bookworm? Do you have a marketing book? Or do you have a pile of marketing books that you're plowing through? Or is there a favorite that stands out for you?
Constantin Hourmouzis 1:58
Great question. I mean, there are a few potentially good marketing books to recommend if I had to choose one, which really had an impact with me. And it, it's not directly a marketing book, but I can highly recommend it. It's from Ray Dalio, the hedge fund manager and founder of Bridgewater Associates, and he wrote a book which is called Principles for life and work. And he speaks about how to be a successful entrepreneur and gives certain Yeah, as the name says principles to, to manage that.
Speaker 1 2:31
So help me understand what are the three things that you took away from that book.
Constantin Hourmouzis 2:35
I think to nail it down, the first point is giving is to learn from mistake and try and fail. And I think this really resonates with with marketing, it's about piloting things, it's about building hypothesis, either or taking hypothesis from from data and be open about failure and create a culture of where respectful disagreement we're gonna fix. This brings out the best, I think, in any team, but I think this specifically sticks to to marketing. And I think it's important to somehow carrying your failures like metals, and be very open, what worked and didn't work and learn to improve. And I think you can relate this to you to a lot of think different aspects of life, but I think it has quite a meaning to the agile marketing world. The second point, which I really took away is he speaks about how to build up a systematic decision making process. And again, I think in marketing, this is very much related to today's data and and the hypothesis. And I think it's important to have a process to to scale and test and learn and build up new use cases. And he's also talking about how to make this decision how to come up. Yes, I think it's a great book.
And what was your third point? I think we've done two there.
How to make a decision. I think the first one is building the processes really building, building the engine, how to come up to the decision making process. And the third part is then how to make and come to this decision. And he's talking about being being very transparent, creating a culture of merit. I think he's calling it culture of meritocracy, to really bring out the best of the team and be open with what's working and what's not. That's great points.
Speaker 1 4:28
I think what really stuck with me from that book is talking about like the radical candor or the radical transparency, I think he calls it. The book's about five, six years old is I think, maybe, and maybe even older, might have got that wrong, but he talks about recording every single meeting and making the content of every single meeting available for everyone in the business within reason. I think there was some caveat about that within financials or something, but it's like invite as few people as possible to a meeting and say, look, here's the recording if you want to hear it, it's all there. It's all recorded and We try to do that automated creative, we use things like Otter AI, and I certainly record all of my calls anyway. And you know, they're all available. But I'm curious to know if you've tried any of that stuff. Yeah.
Constantin Hourmouzis 5:10
And I think that's a big point he's making but also it is, he speaks about being very transparent on the way you make decisions and being done being very open. I think the way as you mentioned, is being radical and being open about this decision and share it with the audience. And I think in most cases, it's fair that you have only a certain of giving information, and you'd be very open to to the to the audience and say, Oh, those are my factors, where my decision is based, and I do not have all the necessary necessary information. But I think this this transparent openness, can really create a great culture and yeah, somehow get the people on board.
Speaker 1 6:04
So what's your best bit of data driven marketing advice, the bit of advice that you find yourself giving to most people?
Constantin Hourmouzis 6:14
I think one point, which really, which really stuck with me is, and which really separates, I think market leaders from from laggards in that sense is that the companies are carefully thinking about what's their data value proposition. And what I mean by that is that some company has really managed to, to build an ecosystem where people want to stay and who gives certain data and information. And some companies that really manage to to build on the fly, we love that. And there are some laggards which have no clear understanding where they have possibilities to collect data. And let me give you a few examples on that. But what companies can do, to somehow create a systematic approach and think about how to get more data and more concepts, because there are multiple ways companies can do this. And I think one simpler way would be when you give economic rewards to your clients, or you create certain exclusive as soon as exclusivity or community, you share, you share information in exchange for data, or you do personalization, either on product service or communication level, and or social responsibility. I think it's an issue in Stryver, or even amusement can be an issue, there are so many possibilities where companies at the have the option to create this value proposition and to really systematically review the touchpoints and greatest value proposition to make it effortless for for people to step to step in and love to stay and think about where to, to collect data progressively. And I think that's a huge, huge advice I would give them to do this process carefully. Because at the end, and that was my last point, and apart from that, because at the end, it's the data and as well, the contents, which which makes you able to really build a flywheel and build a data driven marketing engine.
Speaker 1 8:20
So I'm embarrassed to say this, but a data value proposition isn't a phrase that I've come across, and it actually makes a lot of sense, obviously, value propositions are very common. And they are very common, this kind of makes sense squished together. So hopefully doesn't explain too much. But in short, it kind of feels like what is the consumer gonna get in return for giving you the business their data? Is it as simple as that? Or is there a is there a wider nuance to what the value proposition is?
Constantin Hourmouzis 8:47
Exactly, exactly. And can be I mean, economic reward, I think it's an easy example, we have retailers, which created a lot of great apps and they collecting your email address your phone number, they know when you buy stuff where you buy it. And I think it's just super valuable data to build your marketing engine or companies create certain communities around products and services where people really love to enter and stay. And it's easy for some companies to to write affinities of that and then use this to to upsell and cross sell. And there are so many other examples which you can build to create this value proposition in a systematic way.
Speaker 1 8:48
I'm guessing here a little bit, but is there more of a trend that you're seeing towards brands being very specific and front footed about the data value proposition? Or is it still like Oh, give us your email address and the consumer learns what their take your value proposition is overtime? Or is this actually being used as a conversion tool now where you're very upfront, you will specifically get this in return for this?
Constantin Hourmouzis 9:56
I mean, there's different angles to look at the topic. But I think some some companies have seen us who have done their homework and went really touchpoint by touchpoint. Just to understand what are we actually collecting? Why would we have missed opportunity? Either from a business perspective? Or where do we let like the architecture, to in some cases, companies collect data but not be utilizing it to some extent. So you can either go from a touch point to touch one way, or as you mentioned, you take this to a more strategic and more strategic view and say, What can we really offer? And do we actually how aggressive or defensive? Do you want to use data? Do we want to collect data in a progressive way? Or do we want to ask at certain points and take a certain risk? And maybe not, not everyone will will lock in the amount of data we're getting, it's so valuable to want to take this risk. And I think that's, that's not an easy decision at at some of the touch points. But yeah, I agree that it's conversation, companies having more and more mean as Yeah, first party data gets obviously more valuable.
Speaker 1 11:21
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Speaker 1 11:58
So we're going to talk now about your shiny new object, which is customer data platforms CDPs as they're known, so not the newest thing in the world. But I'm curious to know why you've chosen customer data platforms as your shiny new object.
Constantin Hourmouzis 12:15
Yeah. And I agree, Tom, it's definitely not a new topic in that sense. But I think it's very shiny if you if you if you implement and do it, right. Maybe I have to give you just a quick elaboration what would a CDP is doing? I think it's a widely known tool, which is able to collect data from from multiple touchpoints, create an ID and get an understanding of of your customer across different systems, build an audience and then being able to activate and work on that. And the promise of the CDP, obviously, is to to increase marketing efficiency or positive impact on on sales and service. And I think if you look at Gartner, they actually put his hat at the bottom of the hype cycle right now. And I think there are a couple of reasons for it. But I think if you if you do it in the right way, if you set the implementation, right, the automatic operating model, right, that the governance, right, it can be very, very shiny and impactful. And I think there there are a lot of computational steps, which have to be done, either before or during the selection process. Let me just name a few of them. I think the first one is obviously related to, to the advice I just gave, I think some companies they implement the CDP and have not done their their homework on the data value proposition. And I think it's of course necessary to to have a certain amount of data and a certain amount of concepts to work with that. That will be potentially my point number one. And second point is to drive an early understanding on the governance of the tool, should it be more related to it or CRM or ecommerce? And who are the people who really driving and owning the tool and having this? Yeah, adding a certain team and stakeholder group from from the beginning. And I think it's also important to include data protection to be sure on those aspects. And then the third point is how to select the technology. And I think there are two very different approaches to to take the CDP topic, either you taken a package or out of the box CDP, which is I think nowadays over 170. The vendor out there's or an analyzation big trend is building a composable CDP which means you're taking your existing data warehouse and take a lot of different tools and build up your own solution, I think that's a capital evaluation you should do in this topic, of course, dependent on your probabilities on your time to market requirements and the decision if you agree, you can build a competitive edge out of them. I think that's something which companies should really carefully look about. And then there's a Target Operating Model, right? I think a tool which is able to potentially tear down data silos from a technical perspective, also needs to tear down some of the organizational silos organizations having and I think that's mainly where big implementation, either being successful or failing is getting the business processes, right, or wrong. And I think, if you consider those factors can be very, very shiny object.
Speaker 1 15:51
So can you describe a transformative experience for one of your clients that they had as a result of implementing a CDP in the way that you suggest?
Constantin Hourmouzis 16:02
Yeah, I think where we have seen, I mean, to take value drivers, we have we've been building on leverage, it's either on the efficiency side and creating more returns on on the activation to the consumer, or leveraging more organization and efficiency, right? There are companies where it takes four to five days to request audiences. And you need to do a lot of SQL and manual work to get an understanding of the audiences and KPIs. And I think that's where CDP's really can bring value, or to just make to give you some, some use case example. CDP can help you to really build and get a better understanding of your, of the affinities of your customers, which where they spend their time and Commerce on the web on App Data. And if you combine this, let's say unknown data with the known transactional data, we have seen great use cases where you were able to personalize messaging and seen a huge impact on open and click rates and and then in the end on leads and conversions.
So I'm in the process of writing a book at the minute about the interaction between data, creativity, and ads, and interviewing people actually outside of the podcast about their experience with combining those things, and very much off the record, people are very cynical about the actual data that is being collected by some of the most famous marketing organizations in the world. The line is they're capturing names and email addresses really, like that is the most easiest thing to capture, and what is the most prominent, so do you have an opinion on that? Do you think they sensationalizing that? Or are you seeing there actually being rich data being captured in CDP's? That is actually making a tangible difference?
I've seen, I've seen both extremes. And I think it very much also depends on the industry, obviously. And on on your business model. But I agree with you, I've seen both extremes. But I think the importance of rich structured and clean data is just accelerating, of course, with the rise of AI, because my somehow hypothesis is at the end. And of course, we don't know No, no, does not know this yet. But my hypothesis is the model such and there are, of course, a few models out there will not make the big difference. It's more the data, the companies having to feed this model will make a huge difference. And then of course, the CDP along attitudes, plays plays a crucial role. And I think that's yeah, the the importance is just accelerating again.
Speaker 1 19:01
And how would you think the roles of the CDP will change based on the changes to the use of cookies online?
Constantin Hourmouzis 19:08
I mean, great question. I think what what, where were a couple of companies now struggling and I think that's sort of the bit where, where the composable questions is coming from, How much data do I actually have in my data warehouse? Is the CDP not just creating another silo? How should they work together? Where are where should I do heavy lifting? Where are I'm building the new scoring models and the machine learnings? And getting those two things together with having lesser and lesser data? is of course a challenging question for a lot of companies.
Tom Ollerton 19:51
So if someone's listening to this conversation, thinking we need a new CDP or we need a CDP in the first place. What would you say are the common challenges that companies are facing when integrating a CDP into their existing text? And what advice would you have for overcoming these obstacles?
Constantin Hourmouzis 20:08
I would relate them all to the four points that I mentioned, have a clear understanding of the data value proposition, think early about governance, and include your data protection early in digital discussion, be very conscious on the technology, technologies selection, and think about the Target Operating Model. And one point we hadn't talked about is then really scaling that solution. And I think it's a huge, depending, of course, on the size of the company, but I think you have somehow a team and a mechanism which is continuously doing proof of concept testing new features. As Ray Dalio mentioned, try and learn fail, and then hand this over, and somehow cross the chasm in between innovation scalability, and, and make us available for a certain amount of friends for certain amount of markets. And that's really where where you see up implementation that makes a difference being being able to do a lot of proof of concepts and being able to to scale because obviously, innovation and scalability might be a little bit unbalanced balance to keep now I would give you those answers and operations. Of course, at the end of the day, this might be a hygiene factor. But yeah, have a clear have a clear operations.
Speaker 1 21:31
Well, unfortunately, we've come to the end of the podcast, I can't believe it. I feel like we've been talking for five minutes, but and I could definitely talk for another hour. It's been fascinating. Thank you so much. If someone wanted to get in touch with you to talk about Ray Dalio, or indeed CDP's, how would you like them to get in touch with you? Where is the best place to do that?
Constantin Hourmouzis 21:49
I think LinkedIn would be a fantastic opportunity for that. Fantastic.
Tom Ollerton 21:53
Okay. Well, look, thank you so much for your time. And yeah, please reach out to Constantin on LinkedIn.
Constantin Hourmouzis 21:59
Thanks, Tom, for having me on the show. I appreciate it.
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