What is a Customer Data Platform?

Disney Yapa

May 18, 2020

Disney Yapa

May 18, 2020

This blog is updated June 15, 2021
 

A customer data platform (CDP) gives marketing teams a single view of their customers across different channels. CDPs help marketers build a persistent, unified customer database by stitching together data sources and marketing systems.

In this blog, we’ll take you through what a customer data platform is, how it can benefit your business, and how you can use CDPs to create a 360-degree view of your customers across every touchpoint along their customer journey. 

We’ll show you some common use cases for customer data platforms and how to bring personalization and cross-channel marketing to your customer relationship strategy for maximum engagement, retention, and revenue.

Table of Contents
  1. What is CDP?

  2. What is CDP in marketing?

  3. What are CDP marketing use cases?

  4. What does a customer data platform solve?

  5. What is customer data?

  6. Why should you invest in a CDP?

  7. Comparing CDP with other marketing systems

  8. CDP vs. CRM

  9. CDP vs. DMP

  10. CDP vs. PE

  11. Customer data platform and marketing automation

  12. Conclusion

What is CDP?

Customer Data Platform (CDP), a term coined in 2013 by David Raab, the founder of CDP Institute, describes CDPs as:

“A marketing system that unifies a company’s customer data from marketing and other channels to analyze customers to enable modeling and optimizing 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 marketers’ needs and does not require the technical skills of an IT unit. It has a full and unified view of a customer’s history and habits and is organized to 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.

While earlier data platforms like CRM, DMP, and CMS solved some customer demands around personalization and consistent cross-channel experiences, they usually failed in unifying fragmented data sources, caused data silos, and couldn’t organize data in an actionable way easily accessible to different departments.

Before CDPs, brands delivered disconnected experiences to their customers that did not take their context and preferences into account.

What is CDP in marketing?

CDP in marketing enables your marketing teams to collect data about each customer across all their touchpoints and their entire customer journey. Customer data can include first-party data, third-party data, behavioral data, and more. A data management platform gives you a 360-degree view of customer interactions across your marketing campaigns.

As visitors and customers interact more with your brand, their unified customer profile gets stronger. The more content and purchases they make, the better you can predict customer behavior and personalize their journeys.

What are CDP marketing use cases?

Let’s take a hypothetical real-life example that shows the value the right CDP can bring to your marketing campaigns.

Imagine you’re an online shopper on the hunt for a new messenger bag. You’re probably scrolling through social feeds like Instagram or maybe even looking for inspiration on Pinterest. 

But, of course, you’re already on your phone, so you’ll check out multiple sources (maybe read a couple of customer reviews, visit your favorite brands, check out online stores with special offers) before making a decision.

You see one bag that really catches your attention, but you’ve got things to do, so you pause your search and go about the rest of your day. The next morning, you’re on your laptop, but you’re still thinking about that bag. So maybe you check out a couple of other sites before heading over to Instagram (where you started your customer journey) to buy the bag you liked.

But that’s not the end of the story. You get the bag, and the straps aren’t as comfortable as you expected, so you get on your tablet and sign in to your email to start the return process.

Talk about a customer journey!

If you don’t have a data management platform that’s keeping track of customer interactions across multiple touchpoints, channels, and devices in real-time, then you’re limiting your view of your customer experience and are subject to reactive customer service instead of proactive customer relationships.

What does a customer data platform solve?

CDPs are ideal for marketing teams with a growing customer base who aren’t tracking customer interactions and using data to create a persistent, unified customer database. 

If you aren’t creating 360-degree customer profiles, then you may be in the dark and losing sight of who your customers are, what they care about, and why they may be leaving you for another brand.

Customer data platforms give you a window into your brand health, customers, and customer service. These platforms collect invaluable insights from multiple sources to create a single customer view.

Customer data platforms solve visibility issues, siloed data, and marketing automation challenges by giving marketers a powerful yet easy-to-use solution to acquire, nurture, and retain their customers. 

From identity resolution issues from incomplete data sources to an actionable unified customer profile, CDPs enable marketers, sales, and customer service agents to solve customer problems and improve their customer experience proactively.

What is customer data?

What qualifies as customer data?

Customer data is information your customers provide interacting with your website, mobile apps, social media, marketing campaigns, and offline channels.

CDPs can collect data 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 receive detailed and thorough customer data from all channels. If you cannot provide data from a vast array of resources, you may miss personalization and revenue boost opportunities.

Behavioral Data: tracks 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 essential metrics like customer engagement, reach, and 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, information gathered from payment systems like POS, and transactional activities on eCommerce sites.

  • This data is vital to calculate principal metrics like customer lifetime value (CLV) and return on investment (ROI).

On the more technical side, to feed the vast amounts of data that CDPs are built for, they use their 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 use the data within the platform. By integrating transparent 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 specific actions in your customer’s journey, and stitch the customer experience across channels and devices in a seamless way.

Why should you invest in a CDP?

According to the Gartner CMO Strategic Priorities Survey 2021, 39% of CMOs plan to increase sales of existing products to existing customers, and 34% will introduce new products to existing customers in 2021. As the global economy recovers, CMOs are focused on low-risk activities.

That’s not surprising considering how much more expensive it is to acquire a new customer vs. retaining an existing one. CDPs can help you with identity resolution through data collection across desktop, mobile apps, tablets, channels, and social media.

Customer data platforms can also reveal targeting issues. If you don’t have a single customer view, then you may be trying to convince and convert audiences who aren’t qualified to become your customers. 

Your CDP can help you create and refine your buyer personas because this packaged software collects first-party customer data including:

  • Behavioral data
  • Demographic data
  • Affinities
  • Pain points and insight into where people are getting stuck
  • Historical purchasing patterns
  • Likelihood to purchase (LTP algorithm)

Combined with third-party data (aka cookies), marketers get a clear single view of their visitors and customers can perfectly stage experiences and right time messaging that’s relevant and aligned with each customers’ goals.

CDP vendors expand your ability to retain your existing customers and serve them personalized, cohesive cross-channel experiences that help them form a positive impression about your brand. 

The right CDP gives you the insight and tools to deliver delightful experiences at every interaction and helps you become a lovable brand that customers can’t get enough of and can’t wait to tell their friends and family about.

Comparing CDP with other marketing systems

CDP is often compared to other systems like CRM, DMP, and personalization engines (PE). Although some functions of a CDP are similar to these systems, overall, the results that CDPs deliver differ. Many marketers may already be working with some of these data systems to support their goals. While some of these may complement a CDP, some fall short compared to the capabilities a customer data platform can offer.

CDP Comparison with other marketing systems

CDP vs. CRM

What are the differences between customer data platform and 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 must be entered manually, meaning users need to fill out a form or answer certain questions intentionally. 
  • 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 apps, among others like CDPs.
  • Cannot integrate offline & online data. On the other hand, CDPs support a full range of customer data, such as customer acquisitions via organic and inorganic digital channels.

CDP vs. DMP

What are the differences between customer data platform and DMP?

DMP (Data Management Platform) 

  • Mostly collects third-party data and cannot create consistent customer profiles.
  • They are used primarily for advertising purposes, not for the entire customer journey.
  • Unlike CDPs that can keep and build data over time, DMPs hold onto data for shorter periods 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. 

Customer data platform and marketing automation

What are the differences between customer data platform and marketing automation?

If you’re a marketer, you’ve no doubt heard about the promises of marketing automation. You may even be doing advanced forms of marketing automation at your company, so you may be wondering is a CDP relevant to my needs?

The answer is yes. 

CDPs unify your data sources, including first-party customer data into a single customer profile. Marketing automation platforms can use unified customer profiles to automate emails, web push notifications, and other actions across multiple channels thanks to a persistent unified customer database.

Marketing automation simplifies your team’s operations, increases your efficiency, and enables you to send right time messages based on customer behavior data and predictive insights.

According to Gartner’s Marketing Data and Analytics Survey 2020, marketing analytics teams spent 64% of their time on data management, data integration, and data formatting up from 52% in 2018. These statistics aren’t surprising because most marketing teams don’t have a single customer profile or reliable real time data about where customers are in their journeys.

Businesses treasure data, but too often data is untapped, lives in multiple locations, and can’t be acted on in a meaningful way. CDP vendors offer solutions to these problems through data collection across multiple sources and systems. 

As a customer database platform, CDPs offer seamless integration by unifying and classifying fragmented data so that each team can access a persistent unified customer database in real time.

Conclusion

Businesses treasure data, but according to leading research and firms, few are realizing the full power of their data or using it to improve their customer experience.

We hope you’ve walked away with some insight into the benefits of a customer data platform, how they compare to other marketing systems, and how you can use CDP data to create consistent, personalized, and relevant customer journeys.

For even more information on customer data platforms, check out The ultimate guide to customer data platforms


I am passionate about helping retailers and brands to acquire, understand, retain, reward and grow their customer base in e-commerce, hospitality, retail and service sectors. Working with CX and digital marketing strategies. Currently working with the worlds first integrated GMP - Growth Management Platform to manage all customer touch points with an AI powered unified data layer, creating a true single customer view.