Understanding Customer Data Platforms (CDPs)
Customer data platforms (CDP) are marketing focused technologies that combine customer data from multiple sources to establish a unified view of each individual customer. In effect, creating a master database of every customer that can be granularly segmented to support a variety of marketing campaigns. These unique segments can then be leveraged into other adtech and martech to support omnichannel efforts that target customers wherever they are along the funnel.
CDPs are very useful and powerful audience segmentation tools. But not only can audience segmentation be used for targeting, it can be used for suppression, like preventing ads being sent to previous purchasers. Suppression in combination with personalized targeting allows for effective remarketing campaigns.
Imagine an online customer journey—during the customer’s search, a CDP, in combination with adtech, helps to orchestrate an omnichannel marketing experience in an attempt to coax the customer towards a purchase. The customer notices that as she dives deeper into product and brand research advertisements begin displaying products and categories that pertain to her search. Those ads may even begin to appear on her phone apps and her ad-supported streaming services. Because customer journeys are rarely linear, it is difficult to progressively market to a potential customer. In this case, CDPs work with ad networks to help companies serve relevant ads in spots along a winding customer journey playing touch and go with brands until eventually they purchase.
What is a CDP?
A Customer Data Platform (CDP) is an application designed for a comprehensive customer information database, capable of tracking, analyzing, and managing customer interactions. CDPs can be extended or integrated with other software packages through the use of APIs; typical integrations include marketing automation software and data warehousing.
Customer Data Platforms have several purposes.
Customer data management — The central function of all CDPs is real-time customer data management. CDPs aggregate all customer personally identifiable information within the company domain.
Analytics — CDPs offer analytics capabilities that allow marketing segmentation, and customer tracking across channels and determine customer interest and intent.
Orchestration — Advanced CDP functionalities for select CDPs allows campaign management of customer journey orchestration.
Data regulation compliance — Support for data compliance varies between different vendor packages, but all either have compliance features built-in or allow for the integration of third-party systems that address compliance.
Third-party systems integration — CDP integrations help streamline customer data into a variety of martech software, not limited to CRMs, DSPs, DMPs, marketing automation software, and campaign tools.
In all, CDPs take in customer data from multiple sources forming a historical profile of a person that can be used to personalize future interactions in more meaningful ways.
Types of Customer Data
Marketers find that customers generate useful information every time they are online or interact with their devices. It is even known that phone location tracking can help marketers reach customers while they are out and about in the real world.
Knowing that CDPs store and use customer information opens the question of what kind of customer data do CDPs collect. Generally, customer data can be categorized into four groups: identity data, descriptive data, quantitative or behavioral data, and qualitative data.
- Identity data forms the foundation of customer profiles by uniquely identifying them and establishing a profile. This information includes: names, demographics, location, contact information, social profiles, professional titles and workplaces, and account information.
- Descriptive data extends identity information with interest and relationship information. This can include career information, lifestyle information (like home, vehicle, and pet), family information, information about hobbies (subscriptions, memberships, or associations).
- Quantitative or behavioral data is of great interest to companies because it tracks where, how, and how much a customer has engaged with the brand. Behavioral data tracks purchase transaction information, communication information (chats, emails), online activity, and communications with brand representatives.
- Qualitative data is like descriptive data in that it adds a layer of depth to customers but is not measurable in the same way behavioral data is. Qualitative data may be captured through interviews and interactions and include customer motivations, customer opinions, or customer attitudes towards relevant topics for the brand.
Typical Features of CDPs
According to the CDP Institute, which developed the RealCDP program that measures CDP systems against six capabilities, in order to be classified as a true CDP it must be capable of the following functionality.
- Ingest Data From Any Source
- Capture Full Detail Of Ingested Data
- Store Ingested Data Indefinitely (Subject To Privacy Constraints)
- Create Unified Profiles Of Identified Individuals
- Share Data With Any System That Needs It
- Respond In Real Time To New Data And To Profile Requests
All CDPs provide these features as well as other core features.
- Data management of entity IDs across other systems
- Marketing features and controls that allow marketers to own functionality
- Vendor agnostic internal and external connections
- Accommodates structured and unstructured data
- Online and offline management functionality
To remain competitive vendors may offer advanced features.
- Pre-built and tested APIs to martech systems
- Native identity resolution
- Advanced and user-friendly user interfaces (UI)
- AI and ML analytics
- Orchestration of dynamic interactions
- Regulatory compliance
Types of CDPs
Generally, all CDPs provide the ability to unify customer data, but vendor competition has pushed some CDPs to specialize their offerings and remain competitive.
- Marketing cloud CDPs: Provides a complete data view across marketing, ecommerce, sales, and services.
- Data integration CDPs: Facilitates the collection and transmission of application event data in real time with other apps.
- Identity management CDPs: Reconciles online and offline customer profile information to deduplicate customer records.
- Data science CDPs: Supports the creation of analytical models that predict behavior.
- Website personalization CDPs: Supports content personalization and optimization for mobile apps and websites.
- Experience orchestration CDPs: Designed to scale personalized experience and orchestrate omnichannel marketing efforts.
Benefits of CDPs
The martech industry has marketers in charge of dozens of applications creating problems of redundancy, accuracy and integration. This provides an opportunity for CDPs to fill the gap for marketers. Marketers can benefit from CDPs in the following ways.
- Expand enterprise collaboration — CDPs break down silos and support cooperation between those groups because data is gathered from the entire company. A unified view allows enterprises to see all their customers, strategies and execution in real-time.
- Improved data accessibility — CDPs aggregate customer information gathered from many systems to create detailed customer profiles. This centralized database of customers makes it easier to share data across departments and the organization.
- Streamlined systems integration — CDPs unify a company's data systems creating a system of record for first-party customer data. Data flows are under control and streamlined minimizing errors and speeding data flows.
- Increased marketing efficiency — CDPs created more robust customer profiles with data aggregated from many systems. CDP automations eliminate manual tasks, freeing time up for marketers to focus on higher level functions.
- Faster marketing velocity — CDPs allow marketers to ‘own’ the marketing data, and remove the need for IT intervention. Marketers can feel free to segment audiences, build campaigns, and analyze results on their own.
- Stronger regulatory compliance — Streamlined data operations and internal controls over customer data support stronger regulatory compliance.
Master Data Management tools vs. Customer Data Platform
The premises of both master data management (MDM) tools and customer data platforms (CDP) are very nearly the same. They both propose to unify data.
MDM tools are used to pool a variety of data from all over the company and from every department. This repository becomes a “single source of truth” of all the company data. CDPs differ markedly in that they just unified customer data into a single customer view. The domain is set to benefit marketers. MDM tools, on the other hand, encompass all the data and must be tailored to suit the end needs of the system. Feasibly, an MDM tool could be modeled exactly after a CDP and cater only to a unified customer view, but more often it is used to consolidate business-critical data.
What is a customer data platform?
Customer Data Platforms, or CDPs, create individual profiles of customers using multiple data sources to compile the most accurate and complete picture available. Sources include personal information, buying history, communications, and potentially location. The profile data from CDPs can then be shared with other technologies like martech to support marketing campaigns.
Why is customer data important?
Once it was feared that customer data was an encroachment into personal space, and while there still is concern today, many customers expect companies to be able to personalize their experience to themselves. This requires specific and unique data on customers in order to tailor communications across multiple channels. Given this information, companies can better serve their customers, and with established data regulations customers can feel safe that their data is secure.
What kind of customer data is collected?
CDPs collect various personally identifiable information (PII), including identify data, descriptive data, qualitative or behavioral data, and quantitative data.
What is the difference between a CDP and a CRM?
CRMs once were the gold standard for customer databases. CRMs happen to be limited though, incapable of ingesting new forms of data, particularly unstructured data. This leaves CRMs blind to website behavior, social media, app sessions, email behavior, digital ads and more. CRMs cannot store data for anonymous users like CDPs do, and do not work with Big Data.
What is the difference between a CDP and a DMP?
Data Management Platforms (DMP) are similar to CDPs, but limited. DMPs collect data from second- and third-party sources and so are limited to understanding audiences only by their cookies, device IDs, and IP address. CDPs can collect from first-party sources and so develop full customer profiles that can be used to target advertising and personalize experiences across channels.