What Is a CDP?

Data is a company’s most valuable resource. As such, it’s driving business like never before. Companies that gather and control accurate customer data can explore targeted and effective marketing efforts. Thus, helping them position the right products in front of the right consumers. Customer Data Platforms (CDPs) are at the cutting edge of delivering the right messaging to the right customer, but what is a CDP?

What is a Customer Data Platform (CDP)?

A customer data platform (CDP) at its very core is martech software that creates a unified view of your customer data across various systems into a single place.  This unification makes data accessible throughout the entire organization. The beauty in a CDP is that it operates behind the scenes, providing three key functions: customer data management, unification, and activation. Resulting in marketing teams to end up with customer profiles that are both accurate and comprehensive. Which in turn, attracts customers and inspires them to buy.


How Does a Customer Data Platform Work?

Selling opportunities can be fleeting. Customers come and go. Therefore, marketing teams need access to their customer data, wherever it is stored, at the precise moment when it will be most helpful.

Having data available at your fingertips helps develop higher degrees of personalization. Additionally, this type of personalization drives engagement and helps drive customer loyalty. Lastly, this engagement inspires your customers to seek out the products presented by this level of data-driven marketing. 

The real secret sauce is a CDP that integrates with your existing tech stack. A CDP can provide the right data to the right customer at the right time. The best CDP solutions can also provide broad integration. Your existing CRM or ERP platforms can stay in place, and customer support systems can perform better. Now that we better understand “what is a CDP,” let’s look at how it works.

What’s the Purpose of a CDP?

CDPs should fulfill three key functions: customer data management, unification, and activation.

Customer Data Collection and Management

Data management is collecting and storing data in a secure location. This collection helps companies optimize data usage while still keeping the data protected. The two ways a CDP helps with data management are ingestion and access. These pieces work together to get all your data in one place for anyone with permission to view. 

Data ingestion is the ability to gather, standardize, and validate data from online and offline sources. Next, this data is stored in a centralized location to be accessed, used, and analyzed. Moreover, this information is also available for every team to view. Making data accessible to all departments is crucial to the success of cross-functional teams. Not only does it free up time from having to do manual data pulls, but it ensures everyone is using the same information when running a campaign. All teams being able to view the same data is also essential to cohesive analytics.

First-Party Data Unification

Once the data has been collected and stored in one place it begins being cleaned and unified into a unified customer profile. In other words, no matter where your data is coming from, a CDP can receive and translate it into a single customer view. This profile is like the holy grail of understanding your customer- everything you need to know about them in one place.

Customer Data Activation

As any marketer knows, having access to your data is the first step in understanding your customer. Now imagine having access to data insights while gaining the ability to control and play with this data on demand. Spending time playing with data leads to understanding. Understanding leads to insights that create things like better segmentation.

With a centralized hub, every department gains access to the same segments; Additionally, the database updates in real-time. Meaning, the segments created by an email manager are instantly available for the social media manager to use. In the end, each department is now targeting the same customer but with their campaigns.

The ability to organize teams around customer data gives a fantastic amount of flexibility. When the friction of collaborating lessens, things happen much quicker and more efficiently.

With customer data segmentation, marketers can examine customer data within specific groups or frameworks. This view helps marketing teams determine which customers are most likely to act on a marketing campaign. Also, it helps determine how they will respond and how likely they are to continue to value the products and services offered to them. From there, the team can choose the most effective size and distribution of the customer data sample set. This sampling helps generate the most valuable results from any data segmentation initiative.

Why is Customer Data Important?

A CDP delivers these segmented marketing tests within a single framework and workflow. The resulting insights suggest the potential efficacy of particular marketing campaigns and inform any follow-up efforts. This information is valuable because marketing teams are constantly facing new and emerging challenges. A strategy that may have been effective several months ago may now fall short of expectations. All this helps build value, generate business revenue and ensure customer loyalty.

To further maximize marketing campaigns, teams can use their aggregated customer data for campaign orchestration. 

Marketing orchestration is a linear process within the larger marketing efforts. Marketing teams examine the entire process: developing the campaign, executing it, and measuring its success through all channels. It is crucial that a unified customer experience is delivered regardless of the customer’s channel of interaction. While customers may not directly perceive this, they appreciate a seamless and smooth experience when doing business with a company. A seamless customer experience helps brands generate value, reduce wasted spending and effort, and secure customer loyalty.

What Data is Used in a CDP?

There are different types of data that make up the single customer view. Those types of data are identity, psychographic, quantitative, and qualitative. 

Identity Data

Identity data is the collection of data about an individual person, such as their name, address, bank account number, health records, and other highly sensitive information. This type of data is unique to the individual and is normally gathered as part of the sign-up or payment process. Yet, while this data is crucial to building a profile, it does less to tell you who the individual is. 

Psychographic Data

Psychographic data is information on a person’s  attitudes, interests, personality, values, opinions, and lifestyle. This type of data is crucial in understanding who your customer is, but is often more difficult to gain. The best way is to ask users questions, for example, as part of the welcome experience. This zero-party data becomes a critical part of understanding their wants and needs.

Quantitative Data

Quantitative data refers to information that can be represented as numbers. This data comes from things like purchase history or website visits. It gives a clever picture of customer preferences, but often won’t account for changes in lifestyle or taste. 

Qualitative Data

Quantitative data is another type of data that is less easily gathered. This type of data gives you a sense on how a user feels about something. For example, product surveys or reviews are an important piece of information to capture. Each piece of data is different and valuable in its own way. Together they give you a complete view of who your customer is. 

What are the Benefits of CDP?

The potentially complex steps in collecting and unifying all your marketing data is why deploying a CDP is critical to maximizing your marketing muscle. A CDP can aggregate customer data from virtually any source. Meaning, marketing teams won’t have to search through multiple sources. All customer data is delivered in one framework, making that data easily accessible. Therefore, helping marketing teams develop and execute the optimal marketing plans to drive success, value, and customer loyalty.

CDP vs. CRM vs. DMP

The martech space is crowded. It’s difficult enough to sift through CDPs, but what about all the other promising technologies? To that point, we will cover the differing and overlapping capabilities of CRMs and DMPs vs. CDPs.

Customer Relationship Management Tools (CRM)

How they differ

CRM tools were designed for sales and services to track direct customer interactions (e.g., purchases and customer service communications). While CRM tools have their strengths, they lack the necessary capabilities for being beneficial to marketing such as limited data integration and automation. The results lead to manual outreach and disconnected marketing efforts. 

How they work together

CDPs can push audiences to CRM tools for downstream management. CDPs can also ingest data from CRM tools to support audience segmentation and personalization.

Data Management Platforms (DMP)

How they differ

A DMPs can play a role in centralizing and organizing customer data to make it usable. However, they have a narrower focus on anonymized third-party data specifically for managing paid digital advertising and marketing platforms. CDPs focus on first-party data that can use personally identifiable information (PII) for marketing functions. 

How they work together

CDPs deliver on all the promises DMPs made. CDPs can push audiences with customer PII (name, email, phone, etc.) to DMPs to pass to demand-side partners (advertisers). If customers click on downstream advertisements, a CDP will ingest that data for further segmentation and analysis. 

That was just a quick overview of what a CDP is, what one does, and why you would want one for your business. Be sure to check out this video for more insights into the value a customer data platform can bring to your marketing efforts.

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