Customer Data Platform (CDP) Guide: What is it and how to select the right platform
Customer Data Platforms – you’ve probably heard them creep up in conversations from time to time. To become more customer-centric in your marketing, CDPs need to be at the center of it all. Yet just 14% of organizations have a 360-degree view of their customers. Of those with that view, 44% say they can access it via a Customer Data Platform. But many businesses struggle to understand what type of CDP slots best in their MarTech stack and how to unlock its full potential. The unsolved riddle: what’s the right platform for your business?
Creating optimal customer experiences needs data flexibility. You need the right tools to store & segment customer data, activate & execute campaigns, and enrich & analyze insights. But think about the long-term impact multiple platforms can have on your MarTech stack: the more siloed tools you have, the more fragmented your data and marketing becomes.
Consolidating your customer data and technologies simplifies your stack and helps your tools work better together to help you run high-performing marketing campaigns smoothly.
To help, we’ve answered several fundamental questions about Customer Data Platforms – and we’re kicking off with the first one.
TABLE OF CONTENTS
What is a Customer Data Platform (CDP)? How does a Customer Data Platform work? Differences between CDP, DMP & CRM Types of Customer Data Platforms What businesses need to consider when picking a CDP eGuide: How to Optimize Your Marketing Technology Stack
WHAT IS A CUSTOMER DATA PLATFORM (CDP)?
A Customer Data Platform (CDP) is a marketing software that unifies, collects, and stores your customer data from various data sources to create a complete 360-degree single customer view. Its purpose is to help you create customer profiles with this data to understand their characteristics, interactions, and behavior along the customer journey. These insights are used to optimize the customer experience to:
Improve customer engagement
Increase conversions and reduce cart abandonments
Grow and activate your customer database
Develop customer relationships
Strengthen customer loyalty
HOW DOES A CUSTOMER DATA PLATFORM WORK?
Many businesses utilize a data lake, data warehouse, or general marketing clouds when it comes to trying to make use of their data. While these have some great use cases for certain businesses, these models tend to need IT and Data Specialist support due to either their raw format, lack of flexibility, or accessibility of the data.
CDPs unify and store data from the above models or straight from the data source itself to centralize and normalize your data for better digestion and flexibility. It builds on top of this by collecting zero-party and first-party customer data from your multiple touchpoints. For e-commerce and retail businesses, CDPs can help bridge the online and offline data gap to help you get the full omnichannel customer view.
The types of data that are plugged into and collected by a CDP are:
Website and application interaction data
Past interactions and orders
Online forms & newsletter subscriptions
And as your customer data pours into the CDP from these many different sources, it’s all about structuring and managing this information efficiently for your daily use. Segmenting your data into customer profiles gives you a single view for accurate insights into who your customers are to tailor your content on the right channel at the right time.
Diagram: Unified Data in a Customer Data Platform (CDP)
The biggest advantage of a CDP is that it helps structure your customer data in a way to make it actionable. It can act as the central database for your other tools.
Depending on your platform, data can be passed into the CDP using batch uploads or data streaming. For real-time insights, data-streaming is the best option to allow a continuous flow of data into your system to be reactive in your marketing campaigns.
In fact, our client Flaconi used Mapp’s Data Streams to activate their real-time marketing to create outstanding CX by reacting to customer interactions in a highly personalized way.
WHO IS A CUSTOMER DATA PLATFORM FOR?
Marketers: for their daily activities, it helps pair data with multi-channel marketing to enable more data-driven decisions rather than gut-feel marketing
Data Analysts: enables sophisticated use for those who know how to work with data, what to track via custom dashboards, test, and report results to other stakeholders
Other stakeholders: depending on your CDP and user requirements, your technical stakeholders, senior management, customer-facing teams, and agencies can be granted access to your data. Mapp Cloud takes data handling very seriously and ensures limitations can be set for different stakeholders.
WHAT’S THE DIFFERENCE BETWEEN A CDP, DMP, AND CRM?
Customer Relationship Management and Data Management Platforms are other forms of collecting, utilizing, and storing different data types. Many vendors claim these are the best solutions for your business. But the capabilities and use cases are very different, so it’s important to know the differences to see where these fit into your business goals. To summarize their definitions:
CDP: are centralized customer databases that build unified profiles from data it collects and unifies from your data silos. CDPs mainly use first-party data and combines it to be used by other solutions in your stack to enhance your CX. These are aimed to help with marketing.
DMP: are used to improve advertising, retargeting, and media buying. The data is anonymous and comes from cookies, devices, and IP addresses. These are only stored temporarily. DMPs can feed this data into CDPs to develop the customer profiles even further. These are aimed to help with advertising and are also seen as a marketer-managed platform.
CRM track and manage interactions with customers and prospects. They’re used to support sales teams, and marketing data can be integrated into CRM systems using connectors or in manual data entry stages. These are aimed to help with sales.
The biggest differences between a CDP, DMP, and CRM are the data they use, the capabilities, and the use cases to help different business goals. Here’s a quick summary below:
Chart: Differences between a CDP, DMP & CRM platform
TYPES OF CUSTOMER DATA PLATFORMS
The Customer Data Platform has evolved, and marketers are prioritizing becoming more familiar with customer segmentation to provide more insight-led customer experiences. But as understanding fastens, so does the need to act. In other words, it’s what you do with the data that matters.
To deliver exceptional customer experiences, your MarTech needs to give you the three core capabilities you need to deliver insight-led customer experiences:
Data management: Storing, segmentation & management of customer data
Activation: Using your data to execute your campaigns
Insights & AI: Analyzing your consolidated data for optimal decision-making
Some platforms only focus on the data management side, and others incorporate data activation and insights & AI. Depending on whether some of your tools have these capabilities, you need to understand the different Customer Data Platforms that exist and what exactly is packaged within them.
Diagram: Types of CDPs
1. STANDALONE CDP
A standalone Customer Data Platform solely focuses on the data management side of your marketing: the consolidation, collection, and storing of your fragmented data in one place. You can analyze your unified customer data on a granular level to segment your data into customer profiles for a complete 360-degree view.
How it’s used in your MarTech stack: Your data and insights can be integrated into other systems, but that’s where its capability ends. A standalone CDP requires integration into third-party marketing automation and execution tools to activate this data to execute cross-channel campaigns. While integrating into your existing marketing automation tools appears like an effective solution, not all integrations are as seamless as they seem. It takes time, resources, IT, and technical support to make this a success – and even post-implementation, there may still be some bumps to iron out.
2. CDP + AUTOMATION
Think of these as the next step up for customer centricity. These types of Customer Data Platforms come with data management with built-in marketing automation and execution as a “all-in-one” solution. Built as an “easy-to-use” solution to make it more “marketer-friendly”, it aims to empower you to activate your data to create personalized cross-channel customer experiences.
A CDP that’s integrated into an execution platform makes your customer insights actionable in real-time. It enables you to run highly personalized marketing campaigns that are relevant to your customers through channels, such as email, mobile, SMS, and web.
How it’s used in your MarTech stack: By pulling your CDP insights within a native marketing automation platform, it makes your data highly actionable to execute personalized cross-channel marketing and campaign execution. It removes data siloes and requires less assistance from IT and technical teams.
3. CDP + ANALYTICS
These platforms are the next level of innovation – that includes Mapp Cloud. It incorporates the standalone CDP and the data analytics solution to help you do more than just provide personalized experiences. It empowers you to become insight-led, using AI-powered predictions to be even more reactive to customer behavior. Most importantly, it enables you to stay ahead of your customers’ needs to ensure you’re prepared for any changes in their journey.
How it’s used in your MarTech stack: These are considered “best-of-breed” platforms, as it consolidates your marketing technology into an all-in-one solution. It allows seamlessness as the technologies talk to each other, enabling your data to be used in the most powerful way. It breaks data siloes, GDPR compliant, and makes it powerful for you to stay on top of the changing market, with an AI-driven approach.
MAPP CLOUD: AN ALL-IN-ONE SOLUTION
Mapp developed an all-in-one solution help marketers focus on their daily activities instead of figuring out the tech behind it. By consolidating customer data into one place, marketers can easily and effectively gain data-driven customer insights across all channels.
Our platform has its own cross-channel marketing activation capabilities to enable you to trigger highly personalized and automated marketing activities. With our data analysis capabilities, customers benefit from AI-supported forecasting models that enable targeted and self-optimizing cross-channel campaigns. Our advanced level of one-to-one personalization helps ensure the highest levels of engagement and long-term customer loyalty are achieved.
WHAT SHOULD BUSINESSES THINK ABOUT WHEN PICKING A CDP?
Picking the right platform should be like the Goldilocks principle if we simplify it: too big (complex), too small (limited), and just right (fits with the growth of your business). But the reality is that you need to assess the layers in your MarTech stack to see what piece of tech you need.
For instance, having a Data Management Platform that works mainly with third-party data when you’re trying to shift to a first-party data strategy won’t set the foundation for providing customer-centric experiences. Having an “industry-leading” CDP without native automation and analytics tools may give you meaningless analytics if you can’t action these to execute your campaigns. This is where you start comparing the capabilities and compatibility of tools in your MarTech stack.
We’ve taken four important factors when it comes to selecting the right CDP.
Security & Data Privacy: Cyber security and regulation compliance are becoming heavily required today, especially as GDPR regulators tighten their restrictions.
Tech Support: Without a (local) tech-support team, companies won’t be able to use 100% of software value, wasting resources and getting longer time to value. Having tech support helps you grasp the fundamentals quicker and enhance your marketing more strategically.
Personalization & activation: Having segmentation, personalization, and campaign activation as part of your CDP features can help you seamlessly execute your marketing. Without these as native tools, you’ll need to integrate different tools and lose flexibility, sync time, and instant activation.
Analysis & insights: CDP can track any web & app behavioral data, but it often happens that analytics are hard to activate, and insights are difficult to be highlighted. Data visualization is important to get a single view of the customer and allow value from data.
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This article was first published by Mapp. Permission to use has been granted by the publisher.