Customer Data Platform: 101

We’ve all experienced it at one time or another – that moment when you took a chance on Spotify’s Discover Weekly playlist, or Amazon’s product recommendations, and they completely knocked it out of the park with their picks for you.

Over the past decade or so, digital marketers have been leaning more and more on the CDP to deliver standout customer experiences. And this demand looks set to continue. In fact, many organizations are prioritizing CDP investments as they prepare for a post-pandemic world.

With a multitude of versions now available, figuring out how to choose a CDP – and more importantly – the right CDP can be tricky. A customer data platform is a major investment, and several important factors are worth considering before you take the plunge and commit to a vendor. Understanding what a CDP is and what it does is a great place to start.

What is a CDP?

In simple terms, a customer data platform is a tool that allows marketers to transform their users’ data into impactful customer experiences.

The CDP does this by capturing digital signals in real-time as users interact with channels. It can then predict what customers want based on current and historical behaviors. With the support of a CDP; marketers can activate customer insights for optimization and personalization in any channel and share audiences across their entire ecosystem, resulting in improved alignment across campaigns.

But what exactly constitutes a CDP? A customer data platform is a packaged software that creates a persistent, unified customer database that is accessible to other systems.

CDP capabilities

Gartner’s Market Guide for Customer Data Platforms 2020 suggests a CDP product should feature a marketer-friendly, web-based interface that allows the following:

Data Collection

The ability to ingest first-party, individual-level customer data from multiple sources, online and offline, in real-time, and without limits on storage. Data persists within the system as long as it is needed for processing. This includes first-party identifiers, behaviors, and attributes.

Profile unification

The ability to consolidate profiles at the personal level and connect attributes to identities. This must include linking multiple devices to a single individual once that person has been identified and deduplicating customer records. Some solutions may support third-party data matching or aggregating customers into a household or account.

Segmentation

An interface that enables the marketer to create and manage segments. Basic offerings support rule-based segment creation. Advanced segmentation features may include automated segment discovery, predictive analytics, propensity models, and the ability to import and deploy custom models built-in external advanced analytics or data science environments.

Activation

The ability to send segments, with instructions for activating them, to engagement tools for email campaigns, mobile messaging, and advertising, for example. Marketers still need execution systems for the final mile. Some CDPs have added advanced support for content-based filtering, suppression, personalization, journey orchestration, A/B testing, and recommendations.

CDP offers a 360-degree view of customers by collecting and analyzing first-party customer data from websites, apps, and mobile browsers, as well as transactional data, customer service data, and campaign engagement data, along with details such as age, address, and contact info. This data is processed and distilled into specific segments within the CDP, triggering a personalized campaign unique to a particular customer or segment.

CDP use cases

Before you embark on your CDP shopping spree, it’s worth preparing a use case to pinpoint exactly what you want from the CDP and how you would like the CDP to support and improve your business.

Building a use case: Some reasons you may need a CDP

• You have a large amount of customer data, but it’s stored in slow-moving or inaccessible databases, preventing you from innovating quickly
• You need to join up behavioral (online), CRM, and transactional (offline) data so you can get a 360-degree view of the customer
• You want to offer memorable and meaningful customer experiences
• You would like to use your own data to inform targeted campaigns on paid media channels
• You need to improve your segmentation process

Once you’ve decided on your use case(s), you’re ready to research potential CDPs. It’s worth checking if the CDP you’re considering is already being utilized by customers within your industry. You should also make sure the CDP is compatible with tools that you’re already using such as Google Analytics or social media advertising. In addition, check that the CDP is GDPR and CCPA compliant. This means the CDP should have the capability to suppress data collection or delete customer data when requested.

The case for a CDP in a cookie-less world

With third-party cookies set to be phased out by the end of 2022, the case for investing in a CDP couldn’t be stronger. Not only do customer data platforms capture and store first-party cookies (cookies that are owned, stored, and dropped by the website domain that the user visits), but they also link every interaction with other channels belonging to the website including CRM, social media, e-commerce platforms, and apps.

The CDP acts as a central repository for the marketing stack and by gathering omnichannel data and merging email addresses, telephone numbers, and other personal information, it improves the accuracy of individual profiles.

Rules and algorithms then come into play to determine which information belongs in which profile. The CDP cleans and deduplicates this data, mapping it into single fields to make it consistent.

With the single customer view established, the CDP then ascertains customer requirements, and communications preferences, and can personalize the user’s brand experience based on details of their previous behavior. With segmentation, specific customers can be targeted with relevant ads or personalized recommendations, based on the behavior of similar users within the segment.

As the customer has willingly shared this data, concerns about “creepy” tracking are eliminated, making it much more likely for the customer to engage with your brand, build trust, and ultimately, build loyalty.

Types of CDPs

Depending on your use case and business requirements, your CDP will generally fall under one of the following categories:

CDP Engines and Toolkits

These vendors are often described as a CDP toolkit or are available as open-source and include feature sets ideal for IT-led teams seeking to build new applications on top of a CDP. Controls over data-handling operations dominate over marketing orchestration, and business users would need a substantial lift from SI partners or internal developers in order to take advantage of the platform.

Marketing Data Integration

A frequent use case for CDPs is data operations — features that enable granular governance of event data streams from within a marketer-friendly interface. There is some control over delivering segments to downstream marketing touchpoints for advertising activation, but analytics and decision-making must be handled in other applications. Marketing data integration solutions are often chosen for mobile and connected device use cases. Strong real-time use case support dominates in these products over access to historical data. This is often the choice of growth marketers or digital commerce teams.

Smart Hub

These vendors emphasize marketing orchestration and personalization that by nature require both granular customer data analytics and controls for event-triggered and planned campaigns or journeys. The solutions are most likely to fit in a hub-and-spoke configuration that allows marketing teams to focus on sending instructions to execution solutions from a single interface obviating the need to log into several. Predictive analytics, segmentation, and whiteboard or canvas-style interfaces for customer journey design are common, and support for real-time offer management may be more suitable for triggered messages than web-based personalization.

Marketing Cloud CDPs

Several enterprise software companies released or announced CDP solutions in 2019, promising to improve the tools that marketing and IT teams already possess. The inflexible data management and profile unification features of marketing clouds were a major driver of marketer interest in CDPs from the beginning. These new modules aim to shift the integrated suite value proposition to a more open and flexible embrace of enterprise data, leveraging trusted relationships with CMOs and CIOs.

CDP is transforming results for some of the world’s biggest brands. How do you think CDP can deliver more value for your business and your customers? Please share your thoughts in the comments section below as I learn just as much from you as you do from me.