Across sectors, Customer Data Platform (CDP) has emerged as the ultimate solution for personalized customer experience. According to a report by Forrester, 35% of surveyed companies are planning to invest in CDP in the next 12 months—for many good reasons. The most obvious one is to build a unified profile of customers across all channels (to which 83% of respondents in the report agreed). Two-third of them also appreciated CDP’s ability to personalize experience for both known and unknown customers.
Whether you want to centralize customer data from all channels into one source, to make every bit of data accessible company-wide, or track customer interactions across channels in real-time, CDP can help.
Still, due to the variety of data solutions out there, the term is sometimes mistaken for Customer Relationship Management (CRM) or Data Management Platform (DMP). Before purchasing one, you should understand what CDP is (and what it’s not), as well as how CDP can support your business.
1. What is a Customer Data Platform (CDP)?
2. How does a Customer Data Platform (CDP) work?
3. What kinds of data does a Customer Data Platform (CDP) store?
4. Who use Customer Data Platform (CDP)?
5. Key features of Customer Data Platform (CDP)
6. The differences between Customer Relationship Management (CRM) and Customer Data Platform (CDP)
7. The differences between Data Management Platform (DMP) and Customer Data Platform (CDP)
As a packaged data analytics solution, a Customer Data Platform (CDP) offers a centralized customer database that is easily accessed by other systems, with the goal to facilitate the analysis, tracking, and management of customer interactions.
The keys here are “packaged”, “centralized”, and “integrated”.
Thus, CDP helps you build a personalized and unified profile of each customer—the starting point to a true personalized customer experience.
Due to the growing variety of channels, different customers interact with your business in very different ways. In other words, each of them has a unique journey. To personalize customers’ experience with your business, you need to watch and track everything they do throughout that journey. Luckily, a CDP can help you do that seemingly impossible task.
As customers travel through their unique journey, they leave behind footsteps, which are valuable bits of first-party data that you wish to capture. A CDP’s job is to collect this first-party data. To standardize this data, the CDP matches specific customer identifiers from all channels and centralizes them into a unified customer profile.
The CDP also allows you to transform this profile data into the format you want to support your jobs and other processes in analytics, marketing, sales, A/B testing, personalization, etc.
And CDP is not just a tool for one-off personalization. It constantly maintains and updates data about individual customers for as long as you want (unless you delete this data) so that you can maintain and update the evolving profile of those customers.
As customers interact with your business through channels such as websites, e-commerce sites, call centers, or social media, accordingly they leave behind different categories of data. A CDP should be able to collect four main types as below.
Identity Data (Who the customers are):
Identity Data (or Attributes) are very unique to each customer. It is the foundation of customer profiles in CDP and helps to avoid data duplication.
Descriptive Data
Descriptive data is a more detailed extension to identity data. It gives a deeper understanding of customers. Different industries use different descriptive data as it varies based on the product/service you sell. A bank may look at an individual customer’s credit risk as descriptive data, while an IT company may be interested more in the client’s current and future IT investments. Having said that, most companies have in common some types of descriptive data.
Quantitative or Behavioral Data
Behavioral data documents how each customer interacts with your company in the forms of specific actions, reactions, or transactions.
It’s clear that salespeople and digital marketers are the primary users of CDP, where customer data is centralized and analyzed to support decision-making and communications. Moreover, other roles and departments can reap the benefits of CDP to improve their performance and outcomes.
Data ingestion: the CDP collects data from both online and offline channels: CRM, ERP, data warehouse, marketing automation, and social media, thanks to APIs. A CDP usually goes with an integration listing the channels from which data is ingested. As CDP is self-service and designed for non-technicals, these integrations do not require technical knowledge to configure.
Data Processing: A CDP provides your business with an operational data layer. Users can perform data processing tasks such as transforming, cleansing, and enriching data, either through the CDP’s user interface or with codes.
Identity resolution: a CDP constructs a customer profile in the form of digital identity—information about customers that exists online. The CDP can represent digital customer identity in a variety of ways and lifecycle stages (anonymous web visits caught from cookies or email addresses submitted on web forms). Different CDP may have different ways of reconciling customer data. But they all have one same goal: to build a personalized profile for each customer.
Real-time segmentation: Thanks to a CDP, you can build and save dynamic segments of customers that are updated in real-time. Since the CDP is connected with all of your tools and channels, you can segment customers on a wide range of attributes, interactions, and events. The result is an extremely specific profile of the customer.
Data syndication and synchronization: The ability of CDP does not stop at ingesting data from other systems, it can also send out data to other systems. Moreover using CDP, you can have a full control of data flows as it allows you to put guardrails on what is synced and what is not. The ability to fully control your data can help avoid “overcrowding” destination tools and save data costs and API calls.
A CDP and CRM software have only one function in common, that is collecting and storing customer data, although the two are oftentimes used incorrectly as one. On the one hand, CRM’s job is to store and track intentional interactions of known prospects and customers through manual entries (performed by salespeople). On the other hand, a CDP automatically builds unified profiles of both known and anonymous customers with data collected from online and offline channels that have been integrated.
Other differences between CDP and a CRM are easy to recognize.
CDP and DMP can both work with data that comes from first-party (data directly submitted from customers, data from CRM or marketing automation, or transactions), second-party (data provided from entities other than the company, such as its partners or resellers), and third-party (data from sources that have indirect relationship with the company).
But their centers of focus are different. CDP primarily handles first-party personally identifiable information (PII) that is either structured, semi-structured, or unstructured, whereas DMP focuses on third-party data (cookies or segmented customer IDs).
CDP and DMP have many other subtle differences.
Distinguish CDP and DMP easily with this article: Customer Data Platform (CDP) vs Data Management Platform (DMP): Let’s Stop the Confusion!
CDP is what you need to keep up with the customer personalization trend. Other than that, it can enhance many other business aspects of yours.
Support data democratization and break down data silos
Data democratization is the ability to grant everybody in the business access to the data and information they need to effectively get their jobs done. Quite contrary to data democratization, a data silo is data that is accessible to only one or some apartments and prohibited from others. While data democratization fosters a collaborative and transparent environment and enhances the accuracy of customer profile data, data silos do the opposite.
Fortunately, CDP can help you enable data democratization and put an end to data silos. As CDP unifies customers’ profile and data and makes them accessible to those who need them, your data remains accurate and transparent.
Enhance customer experience and personalization
CDP consolidates and maintains data from multiple sources, thus it can build a continuously updated 360-degree view of each individual customer as they travel through their journey with your business. Thanks to this granular understanding of specific customers, you can build more personalized experiences and communications.
Moreover, CDP can segment your customers in a very specific and personalized manner. For example, more than Personally Identifiable Information (PII) such as name, job title, life cycle, email, or phone number, a customer can also be portrayed as “read the product page for 16 minutes 2 days ago”, or “have visited the product demo page 2 hours ago”.
These granular data can be the basis for your personalized marketing and more. Some use cases are:
Streamline reporting & attribution
Without a standardized tool, reporting & attribution not only wastes time of teams such as data, sales, and marketing team, it can also create conflicts between them as the lack of information of who should get the credit for which leads. With a CDP, customer interactions are tracked and unified in a chronicle order. Aside from automating reporting, a CDP can also make clear which employees and teams should have credits for which outcomes.
Improve data compliance
Most CDPs are designed to stay compliant with popular data privacy regulations such as EU’s GDPR (General Data Protection Regulation) and CCPA (California’s Consumer Privacy Act). These data security standards stipulate your business to give customers the right to know that their data is tracked and stored, to access those data, and to have it deleted - e.g. the right to be forgotten.
Leveraging CDP, companies are now able to build a personalized experience that customers demand. They can use it to achieve the so-called “360-degree view of customers”, in turn supporting customer-related departments, such as sales and marketing, to create more targeted campaigns and win more customers.
If you want to learn more about Customer Data Platform and how it can help you create a truly personalized customer experience, subscribe to our newsletter or contact us at contact@kms-solutions.asia