Many marketers wonder whether their company needs a CDP especially now when data is becoming more and more like an indispensable marketing currency. Some of you may need to know the answer to this question for your departmental goals. Some of you may just be doing an initial search to satisfy your curiosity. Whatever your ultimate goal is, you’ll find out your answers in this blog. We’ll tell you about what CDPs can do, how to decide if your company needs one, share the most common use cases for CDP and show how it can work together with the systems that may already exist in your tech stack.
As discussed in detail in our previous blog, CDPs can include most or all of these capabilities:
- Provide a unified customer view, by collecting and organizing data about each of your customers
- Segment your customers based on their past, real-time and predictive data
- Provide analytics & insights for every part of your business like business intelligence (BI), customer experience, and product teams
- Boost your advertising efforts by using predictive segmentation to target users with a likelihood to purchase, and increase your Return On Ad Spend (ROAS)
- Allow real-time personalization to deliver enriched and contextually relevant customer experiences
- Lets you save costs by automating the collection and organization of data
Such features of a customer data platform is a natural progression from the earlier CRMs and DMPs. An upgrade, one might say, for the data management operation by providing a 360-degree view of each customer and enabling personalization for seamless omnichannel customer experiences.
In fact, according to CDP Institute’s Industry Update, the number of CDP vendors has more than quadrupled in 2.5 years (between Dec 2016-June 2019) and buyer interest in customer data platforms is on a steady rise.
CDPs deliver many goals and serve several departments in a business, yet each organization needs to decide what their goals are before deciding whether a CDP is what they are looking for.
Goals of A Customer Data Platform (CDP)
CDPs can aggregate, clean, and organize vast amounts of data from multiple touchpoints, yes, and it is a great convenience. But before you decide if you need a CDP in your marketing tech stack, you need to answer one key question: What are you trying to accomplish with the collected customer data?
While a customer data platform can connect data on each customer and help you deliver consistent brand experiences on every marketing channel, marketers are not the only ones that benefit from CDPs. Customer data platforms not only support the efforts of departments like IT, finance, customer success, retail operations but also help your executives by giving them access to real-time data— much needed for analysis followed by decision making.
In most cases, CDPs are connected to various other tools like customer success tools, CRMs, email providers, and data warehouses and boost the goals of various departments. So the goals that CDPs serve can vary.
What Happens When You Buy a CDP
The kinds of data you can collect and categorize with a CDP is massive. It can truly enhance the experiences of your customers and provide unparalleled visibility in the behaviors of your customers.
- Understand Your Customers Better
A CDP allows you to gather data from all the touchpoints that your customers might interact with. These are not limited to emails, google ads, social media ads, behaviors on your website, and in-store actions. Your customer data platform can transform all this data into easily accessible and readable unique customer profiles.
When you click on a customer, you can have visibility into what emails they opened or not, what ads they clicked, what kind of device they’re using, what kind of products they purchased or have an interest in, whether they installed your app or not, among other things. All this information helps you understand your customers better and anticipate their needs.
- Hyper-Personalized Experiences
Having personalized experiences is becoming the new normal for customers. And delivering individualized experiences becomes easier the more data you have if you have built the right tech stack to leverage it. As CDPs can store detailed historical, behavioral, and transactional information, they allow you to create micro-segments and target very specific audiences at an individual level.
When you have data from all channels, from past sessions, device preferences etc. you can personalize emails, app notifications, and even promotions to enhance your customer experiences.
- Optimize Marketing Strategies (improve key metrics: CAC, Retention, & LTV)
Customer acquisition costs (CAC) have been rising steadily, almost by 50% in the past 5 years, and no marketer would want to spend their valuable marketing budget in vain. The smartest strategy is to try to decrease customer acquisition costs, increase customer retention, and the lifetime value (LTV) of a customer.
As roughly 80% of revenues come from 20% of users, you need to know which segments to target when making promotions or campaigns. A CDP gives you the right artillery to target the right audience, helps you know which customers are willing to pay for an upgrade, or follows your new collections, so you can easily increase their interaction and retention.
For a byte-sized guideline on how to retain customers and increase LTV, check out our playbook on LTV.
How It Can Work With Other Tools in Your Tech Stack & Use Cases
Customer data platforms can be used to complement some of the technologies that already exist in your business. You can connect them with your CDP to boost their results and deliver much better campaigns by powering them with data.
Email Marketing and CDP
If you are already working with an ESP solution, then adding a CDP in your tech stack makes this tool even stronger. With a customer data platform, you can now have information about the history of a customer’s transactions not only online, but in offline stores as well.
You can unify their journey from various touchpoints and customize your emails with this data rather than sending emails only based on their past email behaviors.
CDPs provide real-time data and several companies are already feeding this data into their email marketing tool to create more effective and targeted campaigns.
Customer Service and CDP
Customers and brands interact on many channels. And when they come for support on customer services, you need more than just the data from your website and app. When you’re speaking with them on live chat or on Messenger, or when your sales teams reach out to them to upsell or cross-sell an item, your team will benefit from a unified source of data that can give a complete picture of each individual customer.
Consolidating offline and online data, the way a CDP does, can also help you identify the unique needs of your customer and help you deliver better customer service experiences.
Advertising and CDP
There are several advertising channels and knowing which ones deliver the best result with the lowest Cost Per Click (CPC) rate requires a powerful data platform working in the background. Use the customer data from CDP in your advertising efforts with Facebook Pixel, Google Adwords (the most common channels) to get the most effective results.
SMS & Push Notification Technology and CDP
Brands have been driving interactions and engagement with SMS, web, and app push technology for the past several years. And connecting your aggregated and organized customer data with your SMS and push notification technology can make all the difference to your customers.
With a CDP-powered technology, you can reach out to pet owners who run out of their regularly bought dog food. Since you have a 360-degree view of their online and offline habits, past purchase histories, their various interests, you can target them specifically and offer them campaigns to replenish their food stock right when they’re about to run out.
Without a CDP technology, you end up sending either too general, untimely, or irrelevant promotional messages to your customers that they most likely delete within seconds. Imagine sending the same customer who regularly buys dog food a message right after he just bought his stock for 6 months. He would not engage with the campaign and would likely be frustrated with your brand for having such an off timing.
With customer experiences, it is all about being relevant and timely. Fail in those two, and you may not get many chances. Complementing your tools with a CDP can save you from failed moments, and make your customers choose you over competitors for knowing about their interests and life cycles.
Each business has different goals, and different reasons for collecting data. We listed some of the use cases of a CDP and the goals you can achieve by adding one to your tech stack. Before you decide to implement a CDP, consider what goals you want to primarily achieve and what other tools you have in your tech stack that you may want to strengthen with a CDP.
Stay tuned as we dive even deeper into CDPs in our new blog posts.