Selecting a Customer Data Platform in 2023: What is a CDP and What Can it Do for You?
customer data platform

Businesses across industries are dealing with increasing quantities of consumer data: site visits, social media interactions, in-store purchases, reviews, marketing campaigns, and more. Transactional, demographic, and behavioral data are all collected and stored with the aim of improving sales and customer satisfaction.

However, this data often ends up in disconnected locations, making it difficult to get a complete picture of an individual’s behaviour and preferences. Meanwhile, consumers are coming to expect targeted marketing efforts that know what they want and what they may have already purchased. They’re also looking for a seamless experience across multiple platforms such as desktop, mobile, email, and retail locations. Consumer data platforms (CDPs) have emerged to meet these needs by collecting and organizing all this data in a way that makes it useful and accessible to marketing and sales teams.

 

Customer Data Platforms: The Basics

What exactly is a CDP? According to the CDP Institute, a customer data platform is “packaged software that creates a persistent, unified customer database that is accessible to other systems.” It captures information from multiple systems to create a comprehensive picture of individual customers, allowing the company to track behavior over time, create targeted marketing campaigns, and evaluate the results of those campaigns on an individual level. The data it collects comes from both the company’s own systems as well as from external sources.

 

What Are the Benefits of Adopting A CDP?

 

One of the advantages of a CDP is that it consolidates and structures this data, allowing it to be analyzed by other systems and accessed by multiple users and departments within the organization. This eliminates the problems of blind spots and duplicated records that can occur when data is stored in silos, where different groups have access to different customer records and no one has a complete picture.

Types of data a CDP can utilize include:

  • Customer information such as name, contact details, and birth date
  • Transactions such as purchases and returns
  • User behavior on a website or in an app
  • Metrics from marketing campaigns, including impressions and engagement
  • Customer service records from sources such as live chats and CRM systems

Together, this data helps identify who the customer is, what their interests and needs are, how frequently they engage with the company, how they choose to engage, and feedback such as the customer’s opinion on the brand and why they feel the way they do. All of this information is invaluable when it comes to determining the best ways to attract and keep customers.

One of the most useful features of a CDP is the ability to accurately segment audiences, providing insights into how customers interact with the company’s offerings and identifying opportunities for cross-selling and personalization. Other benefits include suppression (preventing customers from seeing promotions and ads that aren’t relevant to them), personalization (targeted content such as recommendations and discounts), and insights that would otherwise be difficult to discover with siloed data. This allows for more efficient use of marketing and advertising budgets and increases customer engagement.

A CDP also provides the customer with a unified experience across channels and devices. While data from disparate sources such as an e-commerce site, app, email, and brick-and-mortar store would normally be siloed, a CDP brings all that information together, sparing the customer from having to repeatedly enter the same data in different places or from receiving promotions that are irrelevant or redundant.

This single view of the customer is valuable to several departments. Marketing plans, business strategy, and customer service all benefit from having detailed and consistent data about customer behavior, identity, and preferences. Well-informed, targeted marketing is more effective than something generic, providing greater returns for your marketing dollars. Good strategic planning also relies on strong data in order to be successful. And the more information your customer service department has on a customer’s purchase and interaction history, the smoother the experience will be for the customer. It’s typically much harder to win back a dissatisfied customer than it was to originally attract them, so good customer service is important to building and maintaining brand loyalty.

 

What Sets a Customer Data Platform Apart from Other Tools?

 

There are several other tools that store or analyze customer data, but none that serve the same function as a CDP. A customer relationship management (CRM) system, for example, stores customer data, but its focus is on transactions made by the customer and direct interactions with the sales team. Information in a CRM is populated manually by the sales team, meaning it lacks data from other platforms, and it’s possible for data to include errors or duplicated information. It doesn’t include information on consumer behavior or preferences unless the consumer directly provides that information by filling out a form or talking to a sales representative.

A CRM is focused primarily on sales and therefore has limited interactions with other parts of the business. In contrast, a CDP is built to automatically collect and organize a wide range of data from multiple sources, reducing the possibility of information being lost or duplicated. A CRM is in fact one of the sources from which a CDP acquires data. It combines that data with input from multiple other sources, including anonymous data from cookies, to create unified customer profiles.

The other side of the coin is a data management platform (DMP). This tool works primarily with anonymous third-party information such as cookies, IP addresses, and devices, and is therefore more limited than a CDP. A DMP is unable to create customer profiles as it does not collect personally identifiable information. Instead, it is primarily used to improve ad targeting and reach.

 

What Are the Use Cases of a CDP?

Segmentation: Learning about customer needs, wants, and behavior allows for accurate segmentation, allowing for improved personalization and greater advertising returns. It can also help determine what features to focus on when planning new products and services.

Retargeting: Understand your current customers and use that data to create campaigns that attract new customers with similar preferences.

Product recommendations: Accurate customer data enables you to identify products or services an individual is likely to want with high degrees of accuracy, improving your return on ad spending. Good recommendations facilitate up-selling and cross-selling and can increase brand loyalty.

Connecting offline with online: These two customer interaction points are often siloed from each other. Collecting both into one comprehensive profile gives the customer a smoother experience and provides a more complete picture of their behaviors.

 

What Kind of CDP is Right for You?

The best choice of customer data platform will depend on the size of your organization, the types of tools you may already have, and what your needs are. There are many options on the market which boast a variety of features and capabilities.

A standalone CDP can collect, organize, and analyze data from multiple sources, allowing for detailed audience segmentation and making that information accessible to other systems. However, it lacks other features such as the ability to create and execute advertising campaigns. If you already have other tools to handle this aspect, a standalone CDP may be the right choice, but if you’re looking for an all-in-one solution you’ll want a more feature-rich software package that includes marketing automation. Some CDPs even include AI capabilities.

Another important question is size. A small business is going to have different needs than a multinational enterprise. For a large corporation, scalability is essential. The CDP needs to be able to handle large volumes of data and to adapt to changing needs. A smaller organization benefits from something that is designed with attention to the needs of small businesses.

Related to this is flexibility: for smaller companies, software that’s ready to go out of the box with minimal setup will often be ideal. However, this will rarely suit larger businesses, who typically have unique needs and custom-built tools that need to be able to work with the chosen CDP. In these cases, customizability is essential.

Next is security. A CDP collects and stores large volumes of sensitive data. It’s therefore important that the product you use has strong security protocols and is able to protect your customers’ privacy. Security breaches are very costly in terms of both revenue and consumer trust.

 

Selecting a Supplier

Purchasing a platform that manages high volumes of valuable data and provides key insights for multiple use cases shouldn’t be a rushed decision. Once you’ve identified potential vendors, ask for additional information relating to your use cases or request a product demo. It’s important to determine which product will best meet your unique needs.

BizVibe allows you to search through millions of suppliers to find companies that meet your specifications. Discover, track, and connect with businesses globally. Arrange meetings, send out RFPs, and choose the best supplier that meets your needs for a CDP or anything else your business requires.

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