Data, Is That You?
“Without big data, you are blind and deaf in the middle of a freeway.”
Geoffrey Moore, management consultant
Think of a regular online shopper in today’s world. She sees a bag as she scrolls through her social media, let’s say Instagram. Then she visits websites of bag brands on her mobile phone. The next morning, she decides to take a closer look at one bag model that stuck in her mind, on her laptop. She also discovers other nice bags during her search. A day later, she goes ahead and buys that leather bag she “liked” on Instagram. The story is not over just yet — a week later she returns the bag, by logging in with her email on her iPad and fills out the reason why she’s returning it.
Imagine collecting all the data of that single customer: her interaction at all touchpoints, her steps during the entire customer journey, and more. Think of how much better you can understand and address her preferences, now that you have information on her habits, purchase history, and unique choices.
Well, if you have a growing customer base and are not already collecting such data, you will most likely need to, one day soon. Because without such data, your business may indeed be “blind and deaf” to your customers’ needs as they leave you for your competitors. And Customer Data Platforms (CDPs) are here to solve exactly this problem brands have.
CDP in a Nutshell
Customer Data Platform (CDP), a term coined in 2013 by David Raab, the founder of CDP Institute, is simply put:
“A marketing system that unifies a company’s customer data from marketing and other channels to analyze customers, enable modeling, and optimize the timing and targeting of communications. It includes a user-friendly interface that helps activate customer data and enable personalization across multiple channels.”
It’s a smart data platform (a packaged software) geared primarily towards the needs of marketers and does not require the technical skills of an IT unit. It has a full and unified view on a customer’s history and habits and is organized in a way that can be easily integrated with other systems in the tech stack of an enterprise.
CDPs were created to address the increasing demand of customers to have an improved and tailored experience. Also, to address marketers’ need to optimize and excel in omnichannel marketing strategies, as referred to in the example above.
While earlier data platforms like CRM, DMP and CMS (we will discuss soon!) worked well with solving some of these issues, they usually failed in unifying fragmented data sources, caused data silos and did not organize data in an actionable way easily accessible to different departments. Essentially it meant that before CDPs, brands ended up delivering disconnected experiences to their customers that did not take their context and preferences into account.
Why Do You Need a CDP?
It costs way more to acquire a new customer than to retain an existing one. It is highly advised to put significant effort into retaining your existing customers. And today’s customers feel entitled to have a personalized, relevant, and cohesive customer experience as their fundamental universal right. To become a lovable brand that customers stay with, delivering a delightful experience at every interaction is the new minimum.
In order to better serve and exceed the expectations of your customers, you first and foremost need the power of data to effectively support your customers and address their needs. Accurate and accessible data is the foundation for all your seamless CX efforts
A CDP helps you unify vast amounts of data in a single place, organize and make them easily accessible to other systems for analysis and strategy purposes. You can rely on this clean and thorough data for your marketing efforts, among other needs.
What Does a CDP Do?
According to Gartner’s 2019 Marketing Technology survey, “27% of responders stated that integration between marketing technologies was the biggest impediment to delivering against marketing and business objectives.”
Many marketers face challenges when arranging vast amounts of data crucial for their campaigns. A CDP offers a great solution to this problem by collecting and unifying data from several sources and systems. As a database software, it provides a seamless integration by unifying and classifying previously fragmented data, so each department can access it for their own unique needs.
What Kind of Customer Data Do CDPs Work With?
The kinds of data that are unified across all digital touchpoints are behavioral, demographic, transactional. They can be collected from first, and third party sources like web forms, transactions, email, social media, your website, mobile apps, call centers, in-store activity, and more.
CDPs work best when they are fed detailed and thorough customer data from all channels. If you cannot provide data from a vast array of resources, you may miss opportunities for personalization and revenue boost.
Behavioral Data: a customer’s actions during a session on a website, an app, or a browser on a mobile device.
- With such data, you can calculate important metrics like customer engagement, the reach, and the impressions of a specific campaign.
Demographic: a customer’s name, address, contact information, birthday, occupational info, and more.
- In certain CDPs, you can predict a users’ behavior, such as their likelihood to purchase or likelihood to churn, based on such data.
Transactional: a customer’s purchases, return actions, all information gathered from payment systems like POS and transactional activities on eCommerce sites.
- This kind of data is important to calculate principal metrics like customer lifetime value (CLV) and return on investment (ROI).
On the more technical side, in order to feed the vast amounts of data that CDPs are built for, they use their own SDK and ingest data in different formats like real time data streams, JSON, CSV, and accept SQL queries and even allow API access.
Following the data collection step, the second pillar of a CDP is the integrations that help you make use of the data within the platform. By integrating clear systems into execution mechanisms, you can turn this data into gold. With the insights you get from this data, you can set highly-personalized and contextualized campaigns, trigger certain actions in your customer’s journey, and stitch the customer experience across channels and devices in a seamless way.
Features of a CDP
Depending on the specifications of a CDP, it may have several additional functions. However, for any software to be accepted as a Customer Data Platform, it needs to have these features and deliver the following solutions.
- Unified Customer View: A CDP provides a 360-degree view of customers to help you understand and target your customers in a pin-pointed way. It persistently unifies data from several channels, both online and offline, in a single platform and organizes it in an efficient manner to serve a variety of systems. Its main goal is to help marketers boost their marketing efforts.
According to Gartner, it links several fragmented data into the same customer, and stores information track behavior over time and makes it possible to have individual-level marketing results.
- Segmentation: CDPs aggregate data from thousands, even millions of customers. They allow marketers to create basic and advanced segments from these data and let you target different customers based on their behavior, historical data, past purchases, likelihood to purchase, predictive segments and more.
- Analytics & Insights: Every part of a business can benefit from such powerful data. Your marketing surely needs it to fuel its growth, but also your business intelligence (BI), customer experience teams, and product teams, among many, can rely on persistently collected and organized data. A CDP makes it easy to access and leverage this data by all in real time.
- Advertising: The vast size of data that’s contained in a CDP also gives you the ability to use advanced functions like predictive segmentation to target users with a likelihood to purchase, audiences with a higher propensity to buy in ad channels, and improve your Return On Ad Spend (ROAS) significantly.
- Real-Time Personalization: No marketer can truly excel without personalizing their campaigns. Large enterprises have strict requirements for class-leading personalization capabilities built into CDPs as they allow you to create highly-enriched customer profiles and serve personalized content, and recommendations based on customer behavior, customer lifecycle stage, lifetime value, previous purchases, wish lists, and more.
- Cost Savings: By automating the data processing step, and adding advanced features for making use of this data, CDPs saves a ton of time for marketers. While formerly your marketing team would be bridled with processing, analyzing and creating actionable insights from this data, CDPs turn this into an efficient system as long as they are fed data and integrated into wide ecosystems.
Comparing CDP with Other Systems
CDP is often compared to other systems like CRM, DMP, and personalization engines (PE). Although some functions of CDP are similar to these, overall the results that CDPs deliver differ from these systems. Many marketers may already be working with some of these data systems to support their goals. While some of these may be complementary to a CDP, some fall short in comparison to a CDP.
CDP vs. CRM
CRM (Customer Relationship Management)
- CRMs are limited in the range of ways they make data actionable and are generally used to keep track of a sales cycle, renewal of accounts, upsell, and cross-sell.
- The data collected in a CRM has to be entered manually, meaning users need to intentionally fill out a form or answer certain questions.
- CRMs cannot track info from anonymous users, unlike CDPs that can track these users with an individual ID.
- CRMs can not connect data with other channels like email, push or mobile app, among others like CDPs.
- Cannot integrate offline & online data. CDPs on the other hand, support a full range of customer data, such as customer acquisitions via organic and inorganic digital channels.
CDP vs. DMP
DMP (Data Management Platform)
- Mostly collects 3rd party data, and cannot create consistent customer profiles.
- Used primarily for advertising purposes, not for the entire customer journey.
- Unlike CDPs that can keep and build data over a period of time, DMPs hold onto data for shorter periods of time to target ads and build similar audiences.
- CDPs and DMPs can complement each other in a marketing tech stack rather than overriding each other.
CDP vs. PE
PE (Personalization Engine)
- Like CDPs, PEs are also geared towards marketers and are built to help with personalization efforts
- They personalize marketing efforts across channels (websites, apps, email and social channels) with audience insights and defined targets.
- PEs are specialized in deploying personalization campaigns like pushing dynamic content, triggering automated email flows among others.
- While a CDP brings together and organizes data, and gives valuable insight for personalization, it does not directly activate personalization campaigns.
- CDPs and PEs can be used together as complementary tools.
The Gist of It All
Customer Data Platform is a powerful tool that gives you a full view of a customer over a period of time. It can ingest vast amounts of data and help you better govern it for a wide array of goals. As a packaged software, it has an easy-to-use interface to help marketers be independent of IT teams. CDPs can be your indispensable tool for setting off seamless customer journeys.
Stay tuned for our next blog where we’ll discuss CDPs in more detail and check out our Complete Guide to Customer Data Platforms in the meantime.