Do you remember the last time when you wanted to purchase a smartphone? Your buying journey might have started by searching prices of the latest smartphones on Google and visiting websites related to smartphone reviews.
You might eventually visit some online stores to make a purchase.
In a nutshell, you research smartphones to ensure you get the best one that perfectly fits your requirements.
But you might have noticed that in this journey. You have interacted with several companies via marketing emails, ads, live chat, etc.
Every experience leads to a personalized experience which convinces you to buy from them. And when an ad on Facebook appears, you just wonder:
“How do they even know that I was exactly looking for it?”
How’s all this possible?
It’s because the company is using the Customer Data Platform (CDP). Through this, they customize their marketing strategy according to their customers.
But what’s a CDP? And is it suitable for your business?
Keep reading to understand it in-depth.
What’s A CDP?
Customer Data Platform (CDP) is a centralized system that collects, integrates, and manages customer data from various sources. It creates a unified and comprehensive customer profile.
The primary goal of a CDP is to provide businesses with a 360-degree view of their customers. It allows more personalized marketing, improved customer experiences, and data-driven decision-making.
It is a packaged software where all customer data is available. Consider it as data that centralizes all the customer data. It won’t extract data from websites or social media only. This prebuilt system consolidates data from online and offline channels. Thus creating a unified customer database to 10x your marketing efforts.
Primary Types of CDPs
CDP is considered an evolution of CRM. It is finely tuned and crafted in a way to make campaigns in real time. With CDP, you can achieve goals that are connected with CRMs. That way, you can manage customer data efficiently, which is used to drive relevant experiences.
According to a survey, most marketers are looking for a CDP to analyze two types of CDPs.
- Insights CDP
- Engagement CDP
In Insights CDP, a single view of the customer is built. But how’s it done?
It’s by integrating data from various sources. Handling and Managing data and checking further analytics.
The second is Engagement CDP, which helps in real-time personalization. For example, you can customize offers and drive engagements from the audience.
How Does A Customer Data Platform (CDP) Work?
By now, you already know that the major job of CDP is to collect vast amounts of data about your customers. Here’s how this process goes.
Customer data collection → Unifying data → Creating unified customer profiles → Delivering personalized communication across many channels
That’s a glimpse of how CDP actually works. After the collection of data, the profile created by CDP is of an “ideal” customer. This profile is further used as a foundation to find similar customers.
But for that, you should ensure your data is accurate. By using this process, marketers can continue to create more customers, expanding their reach and achieving marketing campaign goals.
What’s The Purpose Of A CDP?
You might be wondering if implementing a customer data platform is really worth it for your business.
Why should you even use it?
There is not just one purpose for this platform; there are various. However, here are the top 3 purposes you must know.
1. Collection Of Customer Data
There are many systems you might be using for your business, such as:
- Analytics
- Social sites
Marketers use these systems, but these systems don’t pass data back and forth. It makes analysis harder, and you can’t fully understand what’s happening.
The major aim of CDP is to remove all these problems. Do you know how?
It connects all the tools that marketers use. So, it acts as a single source through which you can get first-party customer data.
2. Efficient Management Of Data
The best part is that CDPs manage first-party data and safeguard consumer privacy and data rights. It does this by controlling all the data in different marketing systems.
It also enhances the corporate image of your business. Now, it’s highly important to comply with GDPR and data privacy policies. Your business must actively manage and document the data flows and consent.
3. Customer data activation
After getting permission from users to collect their data, you can use first-party data, unify it, and structure it in various profiles. Taking them as a basis, you can take action on them.
CDPs are excellent for creating different audience segments. You can use it across different marketing channels to yield maximum results.
CDP vs. CRM vs. DMP
Many people assume that CDP is the same as CRM. However, that’s not true.
There are significant differences in these platforms that you must know. Here’s a table of differentiation between these three terms.
| Core Feature | Customer Data Platform (CDP) | Customer Relationship Management (CRM) | Data Management Platform (DMP) |
| Primary Function | Centralizes customer database that unifies data | Manages and analyzes customer interactions | Aggregates and activates audience data |
| Scope of Data | Comprehensive, both known and unknown | Focuses on known customer data and relationships | Emphasizes anonymous audience data |
| Data Sources | Integrates data from various customer touchpoints | Primarily sourced from customer interactions | Aggregates data from online (digital platforms) and offline sources |
| Customer Profile | Creates a unified 360-degree customer profile | Centers on individual customer profiles and interactions | Focuses on customer segmentation and segments |
| Privacy & Compliance | Prioritizes data privacy and compliance | Complies with data protection regulations, focuses on customer consent | Concerns with customer privacy due to anonymous data |
| Use Cases | Personalized data-driven marketing, enhancing customer journey and experience optimization | Sales, marketing, and customer service management | Targeted advertising, audience segmentation |
How Do You Choose A CDP?
As mentioned earlier, you’ll find various types of CDPs in the market. So, choosing the most suitable one for your business can be difficult.
So here are some of the important things you should consider when choosing a suitable CDP for your business.
Firstly, analyze your focus, i.e., insights or engagement CDP, if you don’t want to invest in a platform focused on only one of these. Then, you should choose a platform that is best in both aspects.
To narrow down more, here are some other things you should consider.
Check the technicality of CDP. Is the CDP too hard to implement?
There are some CDPs with extremely complex and technical features. It’s important to consider a platform that is easy to operate for your marketing teams.
The CDP should be easy to integrate with your data sources. CDPs bring a lot of data from various technology systems. It needs a lot of integrations and APIs. So, ensure the model of your CDP aligns with data systems with prebuilt or custom integrations.
Analyze the ability of CDP to handle identity. A CDP should easily resolve customer identities on different platforms and devices.
Measure the compliance of a CDP with customer data privacy. It all comes down to checking if CDP follows the rules, regulations, and privacy laws:
- GDPR
- CCPA
Not only this, but it should also be quick to keep up with changing data privacy rules and regulations. Moreover, ensure it connects with relevant customer engagement platforms.
Key Benefits of Customer Data Platforms
According to stats, the CDP market is expected to surpass $5.7 billion by 2026.
A customer data platform has plenty of benefits. Here are the top five benefits you must know.
1. Crafting 360-Degree Customer View
CDPs are built intricately so they can collect data from a variety of sources. It unifies all the data to give a big picture to the marketers.
What does that mean?
They get a comprehensive view of the potential customer base through different channels. After that, it’ll make data available on the systems. With the passage of time and the changing data of customers, the system keeps updating.
2. Building Resilient Technology Infrastructures
With CDPs, businesses have access to a tool to connect technology with their business. It keeps adapting to the changing behavior over time according to the trends.
They focus on data foundation, thus giving businesses tools to gather relevant data from anywhere. They can use it as they like to push their business towards success.
3. Catalysts for Data Accessibility
The customer data has significant value for businesses. Its benefits go beyond just marketing, customer services, and much more. But it all comes down to data utilization for driving the business forward.
A CDP democratizes data access and the ability to utilize customers and their touchpoints.
4. Ensuring Consistency in Customer Interactions
Customers are not relying on one platform only. According to statistics, people use around 6.6 social networking sites monthly. That’s why they have high expectations when it comes to buying experience.
There should be a consistent customer experience. Imagine a customer who wants to purchase a MacBook. However, your advertisement shows up a week after the customer purchases the smartphone from another store.
Will the customer like it?
No. They won’t like this experience at all. That’s why you should implement a CDP. If CDP is in place, businesses can access customer behavior. What’s the result of that?
It’s to give a better customer experience. Through this, you can get customer insights, which leads to better customer communications. It tells you about customer preferences, which can be used as a source of truth to achieve business goals.
5. Reducing the Burden of Integration Complexity
The simple task of integrating point solutions and new systems used to be extremely resource-intensive and time-consuming. Even after all the hassle, there was no surety that the solution would be efficient for business.
But that’s where CDPs help a lot.
They centralized customer data while maintaining turnkey integrations. It saves a lot of time.
Moreover, you don’t need to send the data to every person in your business manually. Instead, it’s easily accessible through marketing automation platforms. All the rules are set up in one place to save extra effort.
Ending Thoughts
Adopting a Customer Data Platform is not considered a technological advancement only. Instead, it’s an advanced personalization approach and strategic move through which businesses can stand out in crowded markets.
It’s because this gives businesses a competitive edge.
However, choosing a CDP according to your business visions and goals is important. That’s how you can unlock the full potential of customer data. It must be chosen after assessing your business requirements and the benefits of a particular CDP.
With it, businesses create long-term relationships with customers. It’s a way to create customer-centric businesses that provide personalized customer experiences and is the key to success.