The customer data platform (CDP) has become quite popular in the past couple of years. This is because it is so effective at allowing users to personalize their marketing campaigns.
The customer data platform succeeds where other systems lack, giving a holistic view of who your customers are. With the CDP, you can see what that customer data you’ve worked so hard to collect and refine can do for you and your business.
An effective data management strategy is customer-centric, meaning it uses data provided by the customer to help you make decisions necessary to enhance the customer’s experience. Using what you know and understand about who your customers are to personalize their experience builds trust and loyalty.
CDP marketing works so well because it allows you to organize all the customer data you gather during the customer’s journey (more on this later) in one place. If you don’t have your customer data organized it becomes fragmented and much more difficult to analyze.
Ask yourself: am I fragmenting customer data and slowing my processes? If your system doesn’t check the following five areas, you might be:
- Unified customer data
- Persistent data storage
- Packaged system
- Real-time capability
What is the Customer Data Platform?
The customer data platform is a marketing software that organizes customer data to build a unified profile of a customer. The CDP platform considers first-party datasets from multiple touchpoints to let you know and understand who your customers are—individually.
Then, the customer data platform takes that information and shares it with other systems and software to aid in communication, marketing, advertising, etc. However, a CDP platform is only as good as the data you feed it. So before you can be ready to utilize CDP data, you need to make sure you collect good data from multiple categories (we’ll cover the different types of data soon).
There are two important steps to take when collecting customer contact data: data integration and data processing.
Data integration involves the use of an API to connect your point of sales system to a data processing service. Data integration is an automated process that updates and verifies customer information that’s already in your databases. This process protects your customer databases by preventing incorrect data from entering. It happens in real time and minimizes the need for manual data entry.
The Data validation process validates and completes customer data entries, filling in gaps, so that it’s complete when you upload it to your database. If you collect or plan to collect a bunch of customer contact information, you need to make sure you use good customer data collection tools such as APIs and batch solutions.
The best customer data platform organizes more than just customer contact data, though. And that’s what makes it so useful. When you have multiple departments within your business, and each has access to different segments of customer data, you fragment the data and create what’s known as “data silos”.
Using CDP Data to Avoid Data Siloing
When each department has access to and handles customer data that is specific to its function, the data is fragmented. It becomes impossible to personalize a customer’s experience because contact data is in one silo while descriptive data is in another, for example.
A consumer data platform unifies the different types of customer data you collect on one, single, centralized platform. This allows you to make marketing decisions (among others) based on who your customers are individually.
Types of CDP Data
1. Identity – Data such as names, phone numbers, email addresses, mailing addresses, geographic location, and even social media handles. Company-specific user IDs also fall into this category. Sometimes, errors occur here: information is mistyped or is invalid. Data cleansing allows you to find and fix these errors before uploading the data to the customer data platform.
2. Descriptive – data which includes factors such as your customer’s lifestyle, career, hobbies, family, etc.
3. Quantitative – data that considers your customer’s interaction with your company. For instance:
- How many and what kind of transactions has he made?
- How has he responded to and interacted with your emails?
- How often does he visit your website and what does he do when he’s there?
- What products and services is he viewing?
- If he has interacted with customer service, what were his concerns? And what was the result?
4. Qualitative – data informs a business of a customer’s attitudes, motivations, and opinions. This can be helpful in determining what angle to take when approaching your customers in ads, on social media, and through email.
Each of these areas represents a different point of the customer’s journey. Every time a potential customer visits your website, you have a chance to acquire more data. Initially, they may provide just an email address or a name and an email address in exchange for your lead magnet, something of perceived value (a freebie or a low-commitment product or informational piece).
As trust in your business builds, customer interaction increases. Each interaction provides you with more and more data that you can use to retain these customers and reach more just like them.
All of these data types can be organized on one CDP platform, but the types of data you collect depend on your specific business and industry. If you’re looking to acquire new customers and improve customer retention, using a customer data platform is a great way to support your marketing efforts. Here’s why:
5 Reasons to Use a Customer Data Platform
1. Unified Customer Data
Unifying customer data enhances the customer’s experience. All customers care about is whether or not you care about them. And you do, of course. But are you able to convince them that you do? Because if you can’t, they will do business with someone who can.
A unified customer experience should be your number one priority because so many other marketers have made it theirs. In order to step up to the competition, you need to know and understand your customers.
2. Persistent Data Storage
The CDP captures data from multiple systems and multiple touchpoints, stores that data, and retains the history—all on a single record.
3. Packaged System
If you struggle with technology, good news! The CDP is prebuilt, meaning the hard work has already been done for you. Of course, it will require some technical maintenance, but compared to other systems, the CDP does not require a ton of technical skill to implement. You still have control over it, but you save time, cost, and risk.
4. Real-Time Capability
With the ability to connect a variety of types and sources of customer data, you are able to act on it in real-time. Data is collected each time customers interact with your business giving you the most up-to-date data to use to your (and their) advantage.
The CDP captures data from multiple systems. It does not necessarily replace other platforms such as CRM or DMP (keep reading to see them compared). Rather, it shares data with these platforms with the goal of linking information related to each specific individual customer.
- Customer Relationship Management (CRM)
The CRM system collects customer data for the purpose of assisting sales and marketing activities, like the CDP. However, it only focuses on intentional customer data and interactions whereas the CDP collects data from multiple systems and touchpoints, intentional and otherwise.
CRM was created to solve the problem of managing customer data, but it does not provide the insights that the CDP does. CRM is a persistent, packaged system, like the CDP, but it, unfortunately, does not have the real-time capability.
- Data Management Platform (DMP)
The DMP was also created to collect customer data for the purpose of assisting sales and marketing activities. Although the DMP is a packaged system with real-time capability and open-access, the data is neither persistent nor unified (enter data silos…).
The DMP looks only at general behaviors (rather than customer-specific ones) and anonymous data such as devices, cookies, and IP addresses. The DMP functions better for advertising goals than marketing ones. Since ad targeting changes so frequently, the data the DMP collects quickly becomes outdated and therefore is only stored for a short period.
- Data Warehouse
A data warehouse provides persistent, unified, open-access data, but it requires a lot of IT involvement to maintain. This is a huge downfall if you’re looking for a quick, smooth process and access to real-time data.
At the end of the day, the platform you use to organize your customer data will depend on your business, industry, and goals. The CDP was designed with marketing goals and activities in mind and solves problems specific to those purposes.
You might currently be using a CRM system or DMP, and that’s great! The Customer Data Platform can take what you’ve started and improve it. Because it is open access, the CDP platform communicates with other systems to collect all different types of data into one, unified system.
Before you implement any kind of customer data system, though, make sure you properly clean and verify the data you plan to upload to your database using good customer data collection tools. You could have all of the data in the world, but if it’s bad data, your systems will not function profitably.
Collect as much data as you can, properly process it, and implement it. A Customer Data Platform can help!