What is a CDP?
A customer data platform (CDP) is marketing technology that pulls together customer data from multiple sources, then shares it with other applications.
It helps you unify business data, create 360-degree views of each customer, and personalise engagements—all key to delivering the right engagement for the right person at the right time. You can use a CDP to personalise every customer touchpoint, across all online and in-person engagement channels.
How does a CDP work?
A CDP unifies an organisation’s customer data—including transactional, behavioural, and demographic data—from all channels and sources. CDPs are business-managed systems that create persistent, unified customer profiles accessible by other systems such as analytics, marketing, advertising, and customer engagement platforms. Business applications can directly access and use standardised data from the CDP to facilitate a wide range of actions, including segmentation, web personalisation, journey optimisation, marketing campaigns, next best actions, recommended products/services, churn detection, sentiment analysis, and case resolution.
Why do I need a CDP?
Organisations have a lot of data. The challenge is that data exists in silos, collected by systems that were never designed to integrate. Adding additional complexity, these systems often store—not interpret—the data they house. To understand the benefits a CDP can bring to your business, it’s important to understand how disparate systems with disconnected, inaccessible customer data are holding you back.
The proliferation of channels and data types has resulted in a customer data boom. Customer data spans everything from anonymous ad impressions to known purchases, product usage, and customer service interactions. There are three main types of customer data:
- Behavioural: Generated by a customer’s interactions with a company using devices connected to the Internet. This kind of data tracks which sites are visited, apps are downloaded, or games are played. Behavioural data can also provide insights about instances, frequency, and duration of your customer interactions.
- Demographic: Socio-economic information such as age, gender, population, race, income, education, interest, and employment. Demographic data can also include personally identifiable information (PII) such as customers’ names, birth dates, and addresses.
- Transactional: Typically has either commercial or legal significance and can include transactions such as purchases, returns, payments, signups, reservations, and subscriptions. Transactional data documents an exchange, agreement, or transfer that occurs between organisations and/or individuals.
The problem with siloed customer data is that it makes it difficult to understand who your customers are, what they’re doing, and what they want. Without data-driven insights into the core of your business, decision making is limited and less effective.
Each type of customer data can be used to improve engagement with new and existing customers. For customer data to be useful, however, it needs to be unlocked from silos, unified, enriched, and made accessible. CDPs are designed to analyse multi-source data and provide insights, recommendations, and a holistic view of each customer that’s based on data from every stage of the buyer’s journey.
How a CDP can help your customer engagement teams
Customers demand personalised experiences, and the only way to deliver them is to improve your understanding of what your customers want and need. A CDP provides a central, accessible, and useful source of customer data that can be used by multiple departments. It provides the single, accurate source of truth you need to drive growth across critical customer touchpoints:
Marketing: Deliver targeted, personalised approaches across all online and in-person channels with relevant content and campaigns that raise the likelihood of conversion, increase marketing ROI, and provide a competitive advantage. Identify loyal customers and reward them with meaningful offers that increase their brand affinity. Design retention strategies informed by insights about sentiment and likelihood of churn.
Sales: Create detailed segments and personalise sales engagements with contextual information such as loyalty status, customer lifetime value, buying frequency, spend, and recent purchases to optimise each sales opportunity.
Service: Equip customer service representatives with 360-degree customer profiles so they can provide proactive, consistent omnichannel support that leaves customers feeling understood and valued. Use detailed profiles to direct high value customers or those with unique support needs to specialised agents.
A CDP can deliver numerous benefits to your organisation, in addition to the ones listed above:
- Greater efficiency: Bring together data from disparate sources, that’s more reliable than custom systems and easier to update. Centralise audiences and business rules so they can be applied across all the tools you use, so you save time and require less ongoing effort from IT to maintain and update.
- Flexibility and agility: A CDP gives you greater flexibility to respond to consumer behaviour and evolving technology trends. Good CDPs deliver a solid data foundation that works seamlessly with the other systems you already use. CDPs should easily integrate with your existing data and power decision-making and business processes with easy retrieval and sharing of the data they store.
- AI and machine learning: Make more accurate predictions based on insights that would otherwise be impossible to spot. Unless you have a dedicated team of AI experts in-house, advanced AI and machine learning capabilities built into some CDPs such as natural language processing, predictive recommendations, and intelligent insights are cost-prohibitive to develop, implement, and continuously maintain yourself.
- Privacy, Consent, and Compliance: Help your teams honour both customer consent and privacy without creating extra workflows. Gain full control over your customer data and minimise the burdens resulting from data siloed across systems. Build customer trust through compliance with existing and emerging data privacy regulations and industry standards such as the General Data Protection Regulation (GDPR), HIPAA, and FedRAMP
- Advanced analytics: Get real-time insights to help you drive meaningful actions. Increase your marketing agility by spotting opportunities based on preferences, geography, and other factors. Combine customer data with operational and IoT data to further enrich customer profiles and proactively reveal customer needs. Use stock status and past purchasing behaviour to deliver predictive customer recommendations that maximise campaign ROI.
What makes a CDP different?
While a customer data platform shares some similarities with other customer data solutions, it’s important to understand how a CDP differs from the other systems you might already be using.
A CDP adds to the functionality of customer relationship management (CRM) solutions and data management platforms (DMPs) by integrating the data from first-, second-, and third-party sources. This means it incorporates CRM and DMP information to provide a comprehensive view of each customer, so you can find all the information you need from a single application.
The difference between a CDP and CRM
CDPs and CRM solutions both collect customer data. CDPs help you manage customer data, improve your marketing effectiveness, and inform high-level business decisions about customer touchpoints. They generate unified customer profiles and segments that can be shared with other marketing tools or business systems in your stack and be used to personalise customer engagements.
A CRM only stores what’s known as first-party data—information about your customer’s direct interactions with your company. Data entry in CRMs is mostly manual; sales teams enter notes from calls, support tickets, etc. While CRMs can help you organise and manage information about customer-facing interactions, they are generally most useful for employees who manage individual customer relationships.
The difference between a CDP and DMP
CDPs help you create personalised customer experiences by aggregating first-, second-, and third-party customer data, which can include personally identifiable information like names, mailing addresses, email, and phone numbers of both anonymous and known people.
DMPs typically work only with anonymous or non-personally identifiable customer data. DMP’s primary data sources are second-party and third-party data. A DMP’s primary use is to segment and categorise your customers anonymously for advertising purposes, whereas CDPs help you create persistent customer profiles that can be shared with marketing, sales and service teams to inform and improve customer engagements. A DMP can’t run on first-party data alone, so second-party data can be used to supplement and scale your first-party data. Third-party data is used to supplement first- and second-party data, adding depth and precision to customer profiles.
The difference between a CDP and marketing automation solution
A CDP pulls data from all sources—including online, offline, operational, and IoT—to create and drive insights about your customers. With marketing automation, you can likely drive single-channel engagements such as targeted emails, but achieving true one-to-one personalisation requires the depth of insights delivered by a CDP.
Marketing automation systems help marketers orchestrate customer journeys to nurture leads, win more customers, and increase customer loyalty. They rely on data and insights to power campaigns and often run alongside other MarTech and AdTech systems. However, marketing automation systems aren’t often designed to use data from multiple sources to build and deploy omnichannel campaigns.
A CDP is an intelligent data source, which, when shared as robust 360-degree customer profiles, can power consistent experiences across an omnichannel customer journey. When marketers have access to unified customer profiles, they can optimise their automated campaigns by successfully targeting the right customers, at the right moment, with the right message.
Learn more about what a CDP can do for your business
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