Does your customer data resemble a rural farm with stores of grain housed separately in tall silos randomly dotted across the land? It’s a fitting analogy for many organizations – but not the structure most aspire to achieve.
What is a data silo?
Data silos are a pervasive problem for digital-first companies. Generally, these silos emerge as a result of fast growth or rapid evolution of IT infrastructure. They can affect every department, including marketing, sales, customer experience, support, finance, and even HR. And by the time you realize this problem has taken hold in your business, it will require an incredible amount of effort and resources to undo the damage.
A silo forms when a pocket of data becomes locked inside one department or team and remains isolated from the rest of the business. If the sales team can’t see and act on critical information about a customer’s previous experience with the brand, you can imagine how a rep could make wrong assumptions about the customer’s needs and sentiment, and likely extend irrelevant offers. Likewise, when the marketing team wants to launch a new campaign, visibility into the current state of customer care would provide invaluable insight.
The root cause of data silos
Data silos typically result from a competitive internal culture, fragmented technology infrastructure, or a combination of both. The structure of data tends to mirror the organization and culture of the company. If teams work independently – or if they compete against each other for results – then data silos are more likely to pop up.
The situation gets worse when companies employ different IT solutions for every business unit, rather than centralizing the infrastructure around a unified data strategy. As a result, the dispersed IT stack prevents effective sharing of information across departments.
Business impact of data silos
The negative effects of data silos run deep. For starters, people in the organization will duplicate efforts to find and analyze different versions of the same information. This leads to wasted time and resources, but also to different versions of the truth. Without an accurate 360-degree view of the customer, everyone from CX to customer support teams is bound to make mistakes.
Beyond these scenarios, consider the effect of company leadership deciding to pursue a new strategy based on incomplete or conflicting data points – or the penalties associated with violating privacy regulations without even realizing it. And with 86% of consumers saying they want more transparency over how their personal data is used, businesses need to be more open than ever about how they manage data privacy. In fast-growing businesses, silos may seem inevitable because each team must work as quickly as possible, often without perfect information. However, in most cases, the cost of having valuable customer data isolated in separate silos is far higher than the effort required to break them down. If customers seem frustrated or you’re not seeing the ROI you expect from your existing data infrastructure, it may be time to focus on solving the data silo problem.
Established companies can implement both technology and change management strategies to improve communication and collaboration, which in turn will address the existing data silos. Newer and smaller organizations can apply these same principles to prevent silos from emerging in the first place.
How a customer data platform can help
One of the most effective ways to put a stop to disjointed profiles and negative customer experiences is to implement a customer data platform (CDP) as the foundation of your martech stack. A CDP captures, unifies, and activates data from all channels of the business, making it accessible to other systems. At a high level, here’s how it works:
- Effective governance: Customer data platforms pull together a complete set of real-time and historical data from online and offline sources, then scrub the information to eliminate duplicates and resolve conflicts. The result is a single version of the truth that everyone can reference and an accurate, up-to-date profile for each customer.
- 360-degree view: When customer data is unified and accessible in this way, all teams get better visibility into the evolving customer relationship, and each representative can see the activity and interactions moment to moment, before initiating any interaction or decision.
- Better CX: We know that customers respond when brands anticipate their needs. By providing holistic customer profiles, a customer data platforms helps you shape effective campaigns and product releases that will drive revenue, loyalty, and retention.
- Privacy by design: Your CDP also helps to increase data security and protect privacy, which in turn builds trust in key audiences.
Don’t let data silos hold your business back. By changing the underlying technology to a unified data foundation and evolving the company culture to prioritize communication and collaboration, it is possible to overcome the problem and unlock the full potential of your company’s data assets.
Ready to take the next step? Read this Knowledge Center article next, for help crafting the business case for a CDP.
David Schweer is Vice President of Product Marketing at Sitecore. Connect with him on LinkedIn