Customer Data Platforms: What They Do and How They Can Help Your Company
You may not be all that familiar with customer data platforms. But if you’ve encountered the term enough to get curious, it’s time to go down that rabbit hole. We’ll show you what the system does, the types of data it collects, and how it can help your business. The platform brings so many benefits you’ll wonder why your company hasn’t adopted one yet.
Let’s get down to it.
What is a customer data platform?
A customer data platform (CDP) is software that pulls customer data from many different sources, creating a standardized and centralized database that’s accessible to other systems. It generates a single-customer profile that shows you a complete view of the customer’s data and events.
This explanation is still too vague, right? To have a better understanding of CDPs, we need to take a closer look at the types of data they process.
Customer or buyer attributes
CDPs put together basic customer profiles, including name, age, gender, birthday, address, contact information, and company-specific account information (i.e., account numbers and IDs).
But CDPs are much nosier than that. They’re really invested in getting to know customers, expounding on the basic profiles by including the following descriptive data:
Customer service information
Of course, CDPs like to stay on top of issues. They do so by gathering data from the customers’ interactions with the support team. This allows the system to collect crucial information about the customers’ pain points and problems with the company. CDPs take information from recorded phone calls, support tickets, email history, and chatbot conversations.
Marketing campaign data
CDPs want to help you with your marketing campaigns. And they do just that by collecting customer events or behavioral data, such as website browsing activities and in-app actions. They also gather campaign evaluation data, such as the ROI of pay-per-click (PPC) advertisements, banner clicks, impressions, and reach.
Transactional data
CDPs also keep tabs on customer purchases, returns, order dates, and abandoned carts. They do so by pulling information from customer accounts and financial documents. You can use this transactional data to track customer journeys and determine preferences (such as preferred payment methods or favorite products).
We know what you’re thinking. CDPs sound a lot like customer relationship management (CRM) systems and data management platforms (DMPs). In the next sections, we’ll show you what makes them distinct from these two popular platforms.
How is a CDP different from a CRM?
CRM systems store client profiles and records of interactions with existing and potential customers in a centralized repository, enabling businesses to nurture relationships with their customer base and leads.
Customer-facing teams like customer service, sales, and marketing often take responsibility for maintaining the CRM, manually adding relevant information as soon as interactions happen. On the other hand, CDPs use APIs and code to automatically collect data from various devices and points of interaction (CRMs included!).
While CRMs record interactions between your business and specific customer accounts, CDPs track overall customer behavior to provide a big-picture view of how audience segments interact with your brand. So the former aids your teams as they interact with individual clients and the latter is much more helpful for crafting general marketing strategies.
How is a CDP different from a DMP?
A DMP stores and organizes audience data from various sources to build profiles and aggregate the data of anonymous individuals. Since it deals with large datasets of unidentified customers or prospects, DMPs are particularly useful for designing advertising campaigns that aim to reach a large audience.
A CDP, on the other hand, uses personally identifiable information (PII) that you can trace back to specific customers. It’s great for personalizing offers and ad messages.
CDPs collect mainly first-party data (collected from the company’s own customers), while DMPs collect mostly third-party data (purchased from third-party companies). Both have a bit of second-party data (shared by a partner company) added to the mix.
So, how exactly does a CDP bring benefits to businesses?
Benefits of a CDP
You probably already have a good picture of how a CDP can help your company. But we’re big on clarity, so stay tuned as we dive deep into the benefits of this low-key platform.
All your customer data in one place
The main advantage of using a CDP is that you get a single-customer view (also called a 360-customer view). The platform gathers customer data from all touchpoints and stores them in an actionable library of information that all relevant employees and decision-makers can easily access, organize, and update.
Every time a customer interacts with your brand — whether they’re simply reading a blog post, adding a product to the cart, or actually making a purchase — the CDP files the data into the single-customer view. As you can imagine, the 360-customer view enables your teams to gain better insights and deliver personalized services. And yes, you can now say goodbye to confusing and time-consuming data silos.
Updated profiles
Because CDPs automatically collect customer data, you can rest assured your teams are always working on updated profiles. Moreover, automation eliminates human error, which means you don’t have to worry about your staff keying in the wrong information.
Increased revenue
Intelligent audience targeting and personalization can do wonders for your company’s revenue growth. As a matter of fact, companies that outpace their competitors can trace 40% of their revenue growth to their personalization activities. If you’re in it to win it, you need a CDP in your armory.
Discovery of new audience segments
Because you have all your customer data in one place, you have more room to play around with audience segmentation. You can discover new segments and run A/B tests. Fancy reaching out to discount shoppers? How about making cart abandoners finally make that purchase? Marketers who thrive on creativity will relish the myriad options.
Campaign optimization
CDPs also help ensure your teams are not taking useless shots. The platform provides insights into the performance of your campaigns, providing your teams with opportunities to learn and improve their tactics. It also helps ensure your marketing campaigns are revenue drivers and not just a money drain.
Greater control over data
Third-party platforms often use cookies to collect data. This means the breadth of third-party data you can access can be limited by ever-changing laws and regulations. Because CDPs rely mainly on first-party data, they offer greater control over the library of information. You can use your bank of data to its fullest potential and delete only that which you deem useless.
Easier to maintain compliance
First-party data is not immune to regulations, of course. But because a CDP stores information in a single location, you can easily tweak the library to adjust to any new regulations. And because you are collecting the data first-hand, you can easily prove you’re doing so ethically. For instance, you can comply with GDPR by showing when and how you got consent from your customers to collect their data.
Types of CDPs
CDPs come in various forms. Here are some of the main types to consider.
Traditional standalone CDP
Traditional CDPs integrate with just about every system that collects and organizes customer data. You can hook it up with your existing enterprise resource planning (ERP) software, customer relationship management (CRM) system, and data management platform (DMP). Reflecting the value of data as an important investment, a standalone CDP maintains its own storage.
Custom Data Infrastructure (CDI)
Just like traditional CDPs, a CDI integrates with other systems, creates user profiles, and organizes data into proper categories. It organizes data at a much higher speed, all while ensuring data integrity and consumer privacy compliance. The caveat is that instead of storing the data, it funnels the information to another storage system.
Customer Data and Experience Platform (CDXP)
Meet the next generation of CDP development. A CDXP marries a standalone CDP with an experience cloud (a social platform that fosters connections between a company’s customers, employees, and partners). As a result, you get a customer-centric marketing platform that combines the benefits of automation, UX optimization, and efficient data collection.
Your choice of CDP will depend on your company’s unique needs.
Conclusion
CDPs allow you to maximize the benefits of your current systems. Already a huge fan of your CRM? Make it even more powerful with a platform that automatically captures data from every customer touchpoint. Sure, your DMP works great for segmenting large datasets, but you need a CDP to truly personalize messaging.
Data is powerful. And CDPs allow you to get the most value from it. Go ahead and make this happen for your company!
