Your guide to customer data platforms (CDPs) and how they’ll impact the future of marketing.
Deep in rural Wisconsin in 1962, there was a marketing organization that was decades ahead of its time. They operated a data processing center with an IBM 650 computer and a person-based direct mail program. They even had an early version of a propensity model, showing how often their audience responded to messages.
Their marketing response rate? Eighty percent.
This organization was the communications department for a small Catholic sect known as the Society of the Divine Savior (SDS). Almost six decades later, their style of person-based data record is still exactly what marketers need — and that 80% response rate shows what’s possible when data is used the right way.
In the decades since the time of the SDS data processing center, we’ve seen new innovations transform the marketing landscape. Database marketing was the big new thing in the 1980s. Marketing automation and customer relationship management (CRM) arrived on the scene in the 1990s. Web data and B2C scale changed everything yet again in the 2000s. Most recently, the 2010s have been all about data management platforms (DMPs) and customer data platforms (CDPs).
Despite the fact that CDPs are now ubiquitous in marketing, many people continue to be a bit mystified by them. In this blog, I’ll unpack what you need to know about how CDPs manage customer data and how they’ll impact the future of marketing.
What is a CDP?
A CDP usually includes a customer database, marketing automation, multichannel campaign management, and real-time interaction management. Essentially, CDPs are for when you need a marketing database with user-level data.
CDPs encompass systems of insight and engagement. A system of insight allows marketers to discover new segments and build predictive models, and a system of engagement allows marketers to deliver real-time (or near real-time) personalization.
There are more than 100 CDP vendors out there right now, and they’re usually either a system of engagement or a system of insight — not both. Salesforce recently extended the capabilities of Customer 360 to include an enterprise-grade customer data management and activation platform to build a unified profile of each customer and deliver hyper-personalized engagement across marketing, commerce, service, and beyond. It fits within the CDP category — but it’s more than that, and it fits within the Salesforce ecosystem.
CDP vs. DMP
CDPs and DMPs are different but complementary. Here’s how they compare:
|Customer loyalty and wallet share||Customer acquisition and conversion|
|CRM and Personally Identifiable Information (PII)||Anonymous hashed IDs|
Top Use Case
|Informing next-best actions||Extension and lookalike audiences|
|Email and mobile||Programmatic advertising|
Both CDPs and DMPs can do segmentation, predictive scoring, reporting, attribution support, and identity resolution.
If you plan to use both, you should get your DMP up and running first to prepare for your CDP. First, you’ll need to collect data, manage consent, map devices to identities, and build pseudonymous profiles linked to first-party data.
For total customer engagement, you need a unified user profile and smart segmentation, and you need to be able to engage with customers across channels. This includes ads, social media, email, mobile, websites, APIs, and more.
To bring it all full circle, you need to be able to analyze these engagements and use them to build and refine user profiles. You can do all of this by integrating your CDP and DMP, and it’s pretty exciting what this can lead to.
Here are just a few of the things CDP and DMP integrations can give us:
- Interactive store displays
- Dynamic applications
- Increased personalization on the web and through apps
- Personalized offers across channels
- Chatbots that reflect customer actions
All of these applications will give marketing much better lifetime value, and impact will be easier to measure. In the future, there will be a lot more coding and automation — but everything will require a unified view of customers. Ultimately, CDPs and DMPs are parallel, complementary, and highly integrated. They’ll probably always be this way, even as they evolve far into the future.
How to use a CDP
There are four key ways that modern marketers can use CDPs to their full potential: data unification, people-based marketing, identity resolution, and real-time engagement across channels.
1. Data unification
The number of data sources used by enterprise marketing departments is growing each year, and it’s growing fast. Research shows a 25% annual growth rate for significant data sources, but there are also others that are much smaller. If you look at this 25% growth rate and think ahead 10 years, you’re going to go from 15 to 40 data sources. For marketers to have a unified view of their customers, all of these disparate data sources need to be unified, and CDPs can help.
2. People-based marketing
‘People-based marketing’ essentially means that you’re respecting your audience as individuals. Previously, marketing has been channel-centric or campaign-centric. For many organizations, it’s been tough to reorient all of their marketing efforts around individuals — but it will be worth it in the long run. CDPs will be an integral part of the people-based marketing future.
3. Identity resolution
To understand their audiences as individuals, marketers need sophisticated identity resolution technology. Drawing all the different channels of customer identity together in a way that is privacy compliant (where your audience knows what you’re doing and is okay with it) is as complex as it is essential. That’s why identity resolution is a core component of Customer 360.
4. Real-time engagement across channels
Engaging customers in real time is enterprise marketers’ top priority, but it’s also their top challenge. Part of this challenge comes from a misunderstanding of what “real time” actually means. Marketers need to pick what can be done in real time and what can’t. For example, you can’t do an artificial intelligence (AI) model in real time — that takes a long time. However, what you can do in real time is do a lookup, impose a rule, ping a database, or ask questions based on past models. The goal should not be to do all things in real time all the time.
What’s the key to the future of marketing?
It’s not CDPs, DMPs, CRM, or data all by themselves — it’s those technologies that will allow for more creativity in the long-run.
Creativity is often forgotten in marketing today, particularly among data collectors. However, there’s a lot of evidence that creative content — video, design, writing — has a major impact that is sometimes more significant than data-based marketing elements.
In the coming years, you’ll be able to codify elements of customers’ identities that have previously been left up to intuition (given that data is collected consensually). This will allow data-driven marketers to start exploring the emotional dimension of their audiences and campaigns.
As creative becomes more automated and experiences get more personalized, there’s going to be a lot more fun again in marketing. It won’t be about the drudgery of putting together databases. It’ll also be much smoother, and marketers will be able to focus more on storytelling and emotional engagement with the brand. Creativity will be the key, and marketers and customers will both like marketing much better that way.