For any marketer, your customer data is one of the most prized possessions you can have. However, it is surprising how many marketers do nothing with that data. Either, they don’t know how to use that data or they don’t have the tools in over to fully leverage it. If this sounds like you, you might be missing out on a wide range of benefits such as personalised marketing strategies, enhanced customer experiences, and ultimately driving your revenue further. To help solve this challenge, Customer Data Platforms (“CDP”) have been rising rapidly in popularity with marketers. A CDP is a powerful tool designed to unify customer data from various sources, providing a comprehensive view of customer interactions and enabling more informed marketing decisions.
What is a Customer Data Platform (CDP)?
A Customer Data Platform (CDP) is a data management system that centralises customer data from multiple sources into a single, unified customer database. Unlike traditional data management systems, CDPs are designed to collect, clean, and consolidate data – often in real-time – ensuring that every interaction is recorded accurately against the deduplicated record for that customer. This unified view empowers marketers with advanced capabilities for segmentation, personalisation, and analytics.
The concept of CDPs emerged to address the challenges of managing complex and diverse customer data across different platforms. As the world became increasingly digital-first, traditional systems like Customer Relationship Management (CRM) and Data Management Platforms (DMP) struggled with data silos and lacked agility. Modern CDPs offer a marketer-friendly solution by integrating data seamlessly and providing a unified view of customers across these digital platforms as well as those elsewhere inside the business, including your website, service platforms, ERPs and more.
How can a customer data platform help me?
CDPs serve several key purposes essential for modern marketing strategies:
- Data unification: Consolidating data from diverse sources such as websites, mobile apps, CRMs, and offline events and purchases to create a holistic view of each customer.
- Real-time data processing: Processing data as it is collected to enable immediate updates to customer profiles and real-time personalisation of marketing efforts.
- Enhanced segmentation and targeting: Creating precise customer segments based on unified data, improving the relevance and effectiveness of marketing campaign executions.
- Personalisation at scale: Delivering tailored marketing messages and experiences across multiple channels to enhance customer engagement and loyalty.
- Improved customer insights: Providing a deeper understanding of customer behaviour and preferences through comprehensive data analysis.
Traditional data management tools often result in fragmented data across different departments and platforms, hindering a unified view of customers. CDPs resolve this issue by integrating data from all sources into a single platform, eliminating data silos. This means a single customer view can be achieved and the rich data within can be used for insights, analysis, segmentation and marketing activation.
Not all equivalent systems come with robust analytics capabilities needed to derive actionable insights from customer data, but typically CDPs offer abilities to dashboard and report on both behavioural analytics of customer actions, as well as cohort analysis of their attributes. These insights are then often actionable in 1:1 personalised experiences, across connected websites, apps and marketing automation platforms.
Without a unified view of customers, delivering consistent and personalised experiences across various channels becomes challenging; for example recommendation engines across a website and then separately running in email. CDPs ensure that all customer interactions are informed by the same data, enhancing overall customer experience coherence.
With data privacy regulations such as GDPR and CCPA becoming stricter, ensuring compliance with these laws is critical. CDPs offer robust data governance features and compliance tools to safeguard customer data and meet regulatory requirements in an auditable way.
How to populate your CDP with customer and event data
CDPs integrate seamlessly with various data sources including websites, mobile apps, CRM systems, email platforms, and offline channels like in-store point-of-sale systems. This integration ensures continuous flow of data into the CDP in real-time, which can then effectively build a robust customer record.
Utilising APIs, SDKs, scheduled data file imports and other tools, Customer Data Platforms collect customer data as purchases, events and service conversations occur, ensuring that customer profiles are always up-to-date with the latest information.
Additionally, typically based on hard identifiers (i.e. an email address) and soft identifiers (i.e. a browser cookie) these records can then be deduplicated to maintain accuracy in the data despite the numerous inputs.
Activating Data in Marketing Campaigns
- Personalised messaging: Using unified customer profiles, marketers create personalised messages tailored to individual preferences and behaviours, enhancing engagement and conversion rates across channels. This can be based on actual customer attributes (1-1) or their cohort or segment membership (1-many).
- Dynamic segmentation: CDPs enable dynamic creation and modification of customer segments based on real-time data, ensuring targeted and relevant marketing campaigns. These can sync with third-party platforms and remain up-to-date and refreshed 24/7, saving time and reducing the time before data can be reactivated in marketing campaigns.
- Cross-channel orchestration: Orchestrating marketing efforts across multiple channels such as email, social media, and websites, ensures consistent and cohesive customer experiences throughout their journey. CDPs can fulfil a central role in cleaning, managing and synchronising customer data, compliantly with all appropriate third parties.
- Predictive analytics: Leveraging predictive analytics capabilities, CDPs forecast future customer behaviours and preferences, enabling proactive marketing strategies and personalised recommendations. This can extend to predictive lifetime value modelling depending on the data captured.
- A/B testing and optimisation: Facilitating A/B testing of different campaign elements on segmented customer groups, CDPs analyse results to optimise marketing strategies for improved performance and ROI. A/B testing with known audiences ensures you can derive further insights from your customers based on their value to you.
Comparison between CDP, DMP, CRM & Marketing Automation platforms
Finally – you may be thinking you are already invested with a number of platforms and this may create duplication of features. If that’s the case then perhaps a martech review is an appropriate next step. Many Martech platforms indeed offer overlapping features, particularly with marketing automation vendors.
CDP vs. Marketing Automation
A marketing automation platform and a customer data platform serve distinct roles within a martech stack. Marketing Automation platforms handle triggered activities, such as email campaigns, social media posting, and lead nurturing, streamlining workflows to enhance efficiency and consistency. CDPs are focussed more on the customer data and the analysis and activation thereafter. Some CDPs offer similar features and functionality, so it is a good idea to check the benefits of the vendors to ensure you are considering a platform which can do both.
CDP vs. DMP
While both CDPs and Data Management Platforms (DMPs) handle customer data, they serve different purposes. CDPs focus on unifying first-party customer data for personalised marketing, whereas DMPs manage third-party data for targeted advertising across channels.
CDP vs. CRM
Customer Relationship Management (CRM) systems primarily manage customer interactions and relationships, focusing on sales and service. CDPs, in contrast, consolidate data from multiple sources to provide a holistic view of the customer, enabling more sophisticated marketing strategies and real-time personalisation. Some CRMs offer functionalities in which they can also consume additional customer data to power a single customer view, so again it is worth giving vendor selection due consideration. There are many examples where the two types of platforms co-exist, and there are other situations where only one is really necessary.
