What is a customer data platform (CDP)?
Last updated: April 5, 2023
Personalization has become table stakes for digital customer experiences: According to McKinsey’s Next In Personalization Report, 67% of consumers expect companies to give them relevant product and service recommendations and 53% expect companies to send them promotions and other triggers based on their previous behaviors.
But despite its importance, many companies struggle to implement personalization into their marketing strategy.
The problem isn’t a lack of desire, but a lack of execution: Marketing, sales, and support teams all take in customer data from a variety of sources, and store them in separate databases, each with different and inconsistent naming conventions.
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As a result, companies don’t have a complete view of their customers — or the information they need to give them the personalized, cross-channel campaigns they demand.
The solution? Customer data platforms (CDPs). CDPs take in customer data from every source (print, website, events, mobile, etc.) and compiles it into one central database for all teams to use. This way, every team in the business gets a single view of each customer — and they can create winning customer experiences for each one.
What is a CDP?
A customer data platform is packaged software that collects first-, second- and third-party customer data from on- and offline customer touchpoints, then normalizes it and uses it to build a unified profile for each customer.
Say that someone visits your website on their desktop, opens your emails and has an active subscription with your B2B publication. Without a CDP, this person’s data might be spread across multiple platforms.
But with a CDP, marketers can see which customers came from the website, the blog or third-party ads. They can see what website pages each person visited before requesting a demo, what webinars they attended, what emails they opened, etc.
With that, they can learn what products each person is interested in and what marketing messages resonate most with them, then apply that knowledge to create more effective campaigns.
What does a CDP do? How do companies use CDPs?
Sounds great, but what does that look like in practice? How can your company benefit from using a CDP? Below are some of the most common use cases for CDPs:
- Aggregate data from all sources to improve audience insights
- Track the behaviors and attributes of website users and connect these behaviors with the data already stored in your database
- Resolve customer IDs to create a single profile for each user
- Create more accurate and precise marketing segments
- Activate data for multi-channel automated marketing campaigns, covering email, website, social media display and programmatic ads
- Increase revenue by providing more targeted cross- and up-sell offers
- Provide content recommendations, personalized website messages and offers based on a customer’s interests, order/subscription history, job title, etc.
- Manage customer data for data compliance
What are the advantages of using a CDP?
A CDP can help any organization that wants to learn more about their customers and serve them more effectively. Some of the most important benefits include:
- Increase operational efficiency by making data more accessible: CDPs store all of a customer’s data, a record of all interactions across all touchpoints, in one place. That streamlines business processes and ultimately improves the customer experience.
Some examples: When someone contacts customer support with an issue, the support rep can immediately pull up a full profile of the customer, then tailor their advice to the person’s specific experience level / knowledge of the product.
And with access to each prospect’s website activity, marketing can see what products and content pieces prospects have responded to. With that, they can split audiences into more precise behavioral segments and even provide targeted content recommendations based on each person’s previous interactions with the site.
- Demystify the customer experience: Businesses devote untold time and energy into understanding their customers’ experiences. But with a CDP, you can see what steps prospects most commonly take to learn about your product. You can tailor your top-funnel marketing campaigns in response — and do less work to get more conversions.
- Automate manual tasks and enhance creativity: CDPs automate many manual tasks, like updating profiles or resolving customer data. That gives marketers the time and space to create more innovative campaigns. (And since CDPs aid with targeting, those campaigns are more likely to reach the right people too. Talk about a win-win.)
- Increase marketing velocity: Without a CDP, marketers often need help from developers in order to collect, analyze and act on their customer data. But CDPs are usually owned by marketing, so teams can create segments, execute campaigns and evaluate their results more quickly than ever.
- Ensure regulatory compliance: It’s hard to stay on top of data privacy regulations (consult our US privacy law tracker for a refresher). CDPs store data in one place, making it easier for companies to stay on top of data privacy regulations, especially if they serve customers across many states or countries.
How to Choose the Best Customer Data Platform in 2023
OK, so you’ve decided that you want to try a CDP. What capabilities are must-haves and what’s optional? Keep these questions in mind as you start shopping CDP options:
- Is the CDP part of an end-to-end audience management platform?
- Does the CDP have the capability to capture customer profiles, as well as interactional and transactional data? The biggest advantage of a CDP is the ability to create a 360-degree, single view of each customer. So ensure that your solution can record your customers’ profile information, as well as every time they interact with your digital properties or make a transaction.
- How would you use the real-time audience insights gained from a CDP? Think about how your team will use the data generated by your CDP — and decide on your top priorities. Will you use your data to execute paid campaigns, improve segmentation, create dynamic content, etc.? Use this to identify vendors that best align with your priorities.
- What kind of onboarding support does the CDP offer? Do you need the vendor to provide a team to help manage integrations and other technical matters related to your implementation? What self-service resources can they offer?
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