Types of Customer Data Platforms (CDPs) and How to Choose the Right One

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In the past, all this valuable customer data lived in different places and different formats, making it difficult for marketers to access and understand comprehensively. The customer data platform (CDP) changed that.

CDPs are a type of data platform designed to import and integrate customer data from different sources. They organize your customer data into holistic customer profiles that update automatically, combining real-time and historical data into a single customer view as your customers engage with your brand.

This highly effective functionality has made them quite popular. According to research firm MarketsandMarkets, the CDP market was worth $3.5 billion in 2021. Over the next five years, the firm projects it will increase at a compound annual growth rate of more than 30% per year.

With this growth has come a variety of platforms to choose from. The question is no longer, “Should I use a CDP?” but, “What kind of CDP should I use?” Different platforms will have different benefits depending on the size and goals of your business. In this blog we will look at the different types of CDPs and when each one is best.

Types of customer data platforms

There are a variety of customer data platforms out there, yet most fit into the following categories:

• Data streaming
• Automation
• Orchestration
• Marketing cloud (not a true CDP)

Data streaming

Data streaming CDPs sit on top of your existing databases, ingesting and centralizing customer data and (where possible) resolving customer identities to link all of the records of a customer’s interaction with the company across its various channels and platforms. Data streaming CDPs are great for things like tag management and streaming data collection, but they don’t always have some of the more marketing-oriented campaign automation features available with other types of CDPs. They can also be technically complex to implement and maintain.

Automation

Automation CDPs focus on making the execution of marketing campaigns easier and, as the name implies, more hands-off. Most of them were built with messaging in mind, so they’re particularly good at automating data assembly, segmentation, and the delivery of marketing messages via various channels such as email. Since they tend to have been built with that kind of workflow in mind, however, they’re often not great at integrating real-time data and adjusting messaging on the fly.

Orchestration

Orchestration (or smart hub) CDPs tend to have more features aimed at facilitating modern marketing workflows. They may even be integrated in tandem with Data Streaming CDPs, which feed them real-time data that are immediately integrated into campaigns. The right orchestration CDP, however, offers the best of both worlds: the data ingestion and centralization features of a Data Streaming CDP together with many of the marketing convenience features found in Automation CDPs.

Marketing cloud

Though not technically CDPs, marketing clouds are worth mentioning. These are multi-channel marketing solutions that integrate customer data from various channels. While they serve a purpose, many began as something else (often email marketing service providers)—as a result, they aren’t always capable of handling the complexities of modern customer data.

Benefits of customer data platforms

Broadly, CDPs can offer four major benefits:

1. Understanding your customers better. CDPs make it easier to get a full understanding of who a customer is because they integrate all customer data—including demographic and personal data, engagement data, behavioral data, and even qualitative data.

For example, an ecommerce company will have data about social media engagement, ad views, email clicks, on-site content consumption, cart abandonment, purchases, returns, customer surveys, and much more. But each type of data often comes from a separate tool or service and thus lives in a separate place. CDPs automate the process of importing and unifying all of that data, making it much easier to see the big picture of a customer’s journey.

CDPs also make it easier to create effective segments by targeting customers using data points from a variety of sources that would be challenging to integrate without a CDP.

2. Orchestrating communications across all channels. Because CDPs identify and group data from individual customers across all your channels, they are ideal for facilitating consistent cross-channel experiences.

When you identify a single user across multiple channels, you can offer a consistent, individualized experience no matter where they are. This personalized customer experience leads to better brand engagement and, ultimately, more conversions.

3. Optimizing team effectiveness and removing silos. Collecting lots of customer data in one place makes CDPs worth the price of entry for many companies. Without a CDP, teams must rely on each other to get the information they need. Marketing teams have to wait for data or engineering teams to build segments, which not only slows down the process but can also lead to errors in data interpretation. Putting the data straight into the hands of marketers allows for more accurate segmentation and lets the engineering and data teams focus on their own priorities.
4. Marketing effectively in real time. CDPs are built to simultaneously ingest real-time and historical data, giving you the most accurate view of who your customer is at any given moment. This enables you to build even more personalized experiences.

For example, a CDP could enable a recommendation engine to suggest a product to a customer based on their earlier behavior in the same session. Without a CDP, that behavioral data would need to be manually transformed and likely moved to another database before it could be used by the recommendation engine.

What are some of the main features of CDPs?

While there are many types of CDPs, most of them offer some or all of the following key functionalities:

• Data ingestion. CDPs import customer data from a variety of sources, centralizing it in a single location.
• Data unification. CDPs clean, transform, and gather data from all your different channels into one place so that it conforms to the schema you’ve defined for your customer data.
• Out-of-the-box integration. In addition to ingesting data from a variety of sources, most CDPs can also format and send data to other tools and databases, enabling easy automation of many data workflows.
• Identity resolution. Many CDPs offer identity resolution as an added feature (often through a partner company). Individual customers are identified so they can be tracked across the different channels where they might interact with your brand.
• Segmentation. Better CDPs offer customer segmentation. This real-time process allows businesses to easily define and target specific user segments, and can be entirely automated.

Example of a CDP

To better understand how all these features deliver on the benefits promised by CDPs, let’s take a look at a specific orchestration CDP—Simon CDP.

Simon CDP uses batch and streaming processing to ingest different data from all kinds of sources. Both real-time and historical data are unified to create a single customer profile. As soon as specified events occur, the customer is identified and their profile is updated with valuable data.

From there, the Simon platform offers a variety of powerful features for enabling marketing workflows. For example, Simon CDP comes with intuitive tools like a no-code editor that allows anyone to build customer segments quickly. These segments are then used for everything from targeting digital marketing campaigns and email flows to analytics and reporting.

While its holistic customer view enables greater personalization, Simon CDP also offers an option for integrated machine learning (ML) models that draw on its unified customer data store to make product recommendations or predict customers at risk of churning. It also comes with intuitive features for A/B testing so you can see which messaging works best for a specific customer segment.

How to choose a customer data platform

Choosing the right CDP for your business will depend on your business use cases, your existing tech stack, and your goals. However, any request for proposal (RFP) for a CDP should include the following carefully evaluated potential solutions:

• Data management. Can the proposed solution ingest data from all your databases and channels? Can it process streaming data?
• Analytics and intelligence. Does the proposed solution provide intuitive analytics and reporting features that will enable your team to better understand your customers?
• Cross-channel orchestration. Will the proposed solution enable you to provide a more unified customer experience across all your channels via data syndication?
• Privacy, security, and compliance. Does the proposed solution allow you to easily manage and remove customer data in accordance with government regulations and best practices for security and privacy?
• Platform and services. What features does the proposed solution offer in comparison with others? What level of service can you expect from the vendor?

Get our complete guide to choosing a Customer Data Platform here. Want to see what Simon CDP can do for you? Request a demo today!

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