What is a Customer Data Platform?

Learn how a customer data platform can collect, harmonise, and activate your data for unprecedented insight into your customers and campaigns.

Customer Data Platform Defined

A customer data platform, or CDP, is technology that allows businesses to pull in customer data from any channel, system, or data stream to build a unified customer profile. These tools usually include a customer database and automation, as well as management resources for multichannel campaigns, real-time customer interactions, and connected data. A CDP combines all customer data in real -time for companies, allowing them to create personalised customer experiences.

CDPs are helpful as a central database for user-level data. They tie together databases that traditionally don’t share data, like marketing platforms, service software, and e-commerce engines. This gives you easy access to the insights you need to connect with customers.

In the 8th State of Marketingopens in a new window report, 78% of high performers used a CDP versus 58% of under performers. In this article, we’ll explore customer data platforms' past, present, and future. Then, we'll discuss how this technology can power your customer relationship management (CRM) platform and other components of your tech stack to help you make magical real-time moments from your customer data.

Customer Data Platform Guide: Table of Contents

How does a customer data platform work?

Customer data platforms focus on four primary tasks: collecting data, harmonising data, activating data, and pulling insights from data. Let’s take a deeper look at each one.

1. Collect Your Data

Your CDP is a centralised hub for all the customer data your company has. It’s where anyone from your business can find customer data organised in a single place.

To achieve this, your CDP needs to identify each individual customer by collecting and stitching together data from all of your company’s different CRM platforms, marketing systems, and data streams. Combining and unifying all this disparate data and identifying each customer based on their engagement history is called “customer resolution.”

2. Harmonise Your Data

After your CDP combines all your company’s data and creates customer identities, the next step is to resolve those identities across devices. This means linking identity information from your known customers (such as email addresses and phone numbers) with anonymous data they may have shared before they became customers (such as anonymous cookies and mobile device IDs).

The purpose of cross-device identity resolution is to help you understand the whole picture of your customers’ journeys. For example, you can look at a customer and see that their interaction began with an email campaign and continued on to your website before they shared their information and downloaded content or made a purchase.

3. Experience Your Data

Once your CDP creates and resolves fully unified customer profiles, it activates that data, making it available for your teams to personalise customer experiences in real time.

This personalisation is made possible by connecting the customer data in your CDP to all the different technology platforms you use to engage customers. This may include email send engines, automated workflows, real-time analytics, demand-side platforms, and content management systems.

4. Pull Insights from Data

With the unified customer profiles your CDP creates, it’s easy to see the entire catalog of data each customer shares and to track their whole customer journey. You can also use this data to get insights about customers and segment them into groups, as well as create lookalike audiences and personas to help reach new audiences.

As your CDP collects and organises all your customer data in one place, it’s a great source for information proving your efforts' reach, revenue, and marketing ROI.

History of the CDP

With so many different types of marketing technology out there — each one usually with its own three-letter acronym — you may wonder where CDPs come from.

Even though CDPs are among today’s most popular marketing tools, they’re not an entirely new idea. Instead, they’re the latest step in the evolution of how marketers manage customer data and customer relationships.

In the last decade or so, these updates to the CRM model also led to the creation of CDPs. As single sources of truth for marketing data, CDPs allow marketers to glean greater insights about their customers, allowing better segmentation across different brands. Before recent developments in AI, automation, and machine learning, this level of segmentation was impossible—but now it’s a best practice for everyone.

Previous customer data platforms on the market focus only on marketing and/or commerce and can take hours to sync. It’s impossible to give your customers the experiences they're looking for when basing your engagements on a delayed fraction of what your company knows about them. Customers expect every experience to be connected and updated in real time. When they aren’t, they’re disappointed.

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What are the benefits of a customer data platform?

With the capabilities of a customer data platform, marketers can see how a single customer interacts with the company’s different brands and identify opportunities for increased personalisation and cross-selling.

Of course, there’s much more to a CDP than personalisation. It’s also meant to be an easy-to-use platform for everyday needs, with user-friendly controls for analysing customer and prospect data, building segments, and identifying key audiences.

With Data Cloud, every company can turn data into customer magic, delivering seamless, highly personalised experiences across sales, service, marketing, and commerce that continuously adapt to changing customer information and needs in real-time. See how leading brands Ford and L’Oréal are utilising Data Cloud to provide connected, real-time experiences.

  • Shared view of customer data: Ford embarked on a rapid transformation journey, reinventing itself to deliver best-in-class customer experiences. In just four months, they achieved significant improvements, including creating real-time, personalised updates for customers regarding their vehicle orders. This innovation eliminated approximately 650 hours’ worth of “where’s my vehicle?” phone calls.
  • Data-driven personalised experiences: L’Oréal, a global beauty brand, leveraged Salesforce technology to create unique beauty experiences for their customers. By combining CRM, AI, data, and trust, they achieved a single view of each customer and delivered personalised experiences in real time. Their customer journeys became a thing of beauty, showcasing the power of innovative solutions in the beauty industry.

Why Marketers need a CDP

Beyond audience segmentation, there are three big reasons why your company might want a CDP: suppression, personalisation, and insights.

Account Suppression

One of the most interesting things businesses can do with data is identify customers not to target. This is called suppression, and it’s part of delivering truly personalised customer journeys.

When a customer’s unified profile in your CDP includes their marketing and purchase data, you can suppress ads to customers who’ve already purchased. They don't have to see ads that aren’t relevant to them, and you get to optimise your budget by directing ads to new audiences.

Marketing Personalisation

We’ve all seen it happen: Sometimes, a customer visits your website, looks at a few products, and then leaves. A CDP can add that visit to the customer’s unified profile, allowing you to follow up with personalised offers via their favourite channels, whether that’s email or a push notification.

Customers who see content tailored to their interests are five times more likely to engage with a brand, so personalisation through a CDP can bring significant rewards.

Customer Insights

A CDP brings all your company’s customer data and analytics together and makes it available to all of your teams, breaking down silos and creating opportunities for shared insights. With a view of every customer’s interactions linked to e-commerce data, website visits, and more, everyone across marketing, sales, service, and all your other teams can understand more about each customer and deliver more personalised, relevant engagement.

What problems can Customer Data Platform solve?

CDPs can help companies address the root causes of many of their biggest day-to-day marketing problems. In particular, there are three main challenges that CDPs can help solve.

Disorganised data

When your data is disconnected, it’s more difficult to understand your customers and create meaningful connections with them. As the number of data sources companies use continues to increase, it’s more important than ever to have a CDP as a single source of truth to bring it all together. Integrating your disparate data sources through a CDP makes it simple to surface customer insights anytime.

Customer identification

Only one in three marketers say they’re satisfied with their ability to link customer identities across all their different data sources. As a centralised hub for your customer data, CDPs can easily solve customer identification issues, bringing together data from multiple sources to create unified profiles for each customer.

Simple segmentation

Organising your data and unifying customer identity profiles are the first steps toward better segmentation and targeting. From there, a good CDP will automatically surface shared traits among customers that make it simple to segment your audiences and deliver personalised engagement to one and all.

CDP vs CRM: What is the difference?

CDPs are an evolution of customer relationship management (CRM) solutions, dedicated to the real-time, highly personalised needs of today’s digital-first teams, while CRMs are a log of known customer data.

However, Data Cloud offers real-time CDP capabilities that power the Customer 360, making it the world's first real-time CRM. By harmonising data that’s updated every millisecond, it enables your teams to meet your customers right where they are like never before.
Purpose and Focus

  • A (CDP) primarily manages customer data across the entire customer lifecycle. It collects, cleans, and consolidates data from various touchpoints, including ad clicks, website traffic, offline interactions, and more. The goal is to create a unified view of customer behaviour and traits.
  • On the other hand, a (CRM) system is designed to support sales and customer interactions. It tracks specific interactions between your brand and individual customers, such as communication history, notes from sales representatives, and previous interactions.

Data Collection and Unification

  • CDPs collect data from various sources, ensuring a comprehensive view of customer interactions. They consolidate this data to create a single source of truth and identity-resolved customer profiles.
  • CRMs focus on customer-facing interactions with your team. They log specific details about individual accounts and their interactions with your brand.

Scope of Information

  • Data platforms provide a big-picture view of how all customers interact with your brand, considering behaviour across different platforms.
  • Relationship management solutions note interactions between a specific account and your brand, often within the sales cycle.

How do you choose the best CDP?

There are hundreds of different CDP solutions on the market, but the differences between most really boils down to two key focus areas: insights and engagement.

An insights CDP software solution integrates and manages customer data from your company’s different systems and ultimately provides analytics and activation to deliver a single view of each customer.

An engagement CDP software solution uses customer data to power real-time personalisation and engagement on digital platforms such as websites and mobile apps.

Data Cloud was created to be the best of both worlds, with real-time CDP capabilities built directly into the core platform.

To choose a CDP, your company’s stakeholders should consider whether an insights CDP or an engagement CDP would be best for your needs and research the few CDP options that include both.

Considering these questions to narrow down the best software selection may also be helpful.

  1. Is this CDP easy to implement? Some CDPs are for highly technical users, while others are more accessible. It’s important to find one that your teams can easily operate.
  2. Does this CDP easily integrate with our data sources? CDPs need to bring in a lot of data from many technology systems, which requires a lot of integrations and APIs. Make sure the CDP’s data model fits with your data systems.
  3. How does this CDP handle identity? Your CDP should be able to resolve customer identities across a wide variety of platforms and devices.
  4. Is this CDP good for customer privacy? Make sure your CDP follows both the GDPR and CCPA and can easily adapt to future privacy regulations.
  5. Does this CDP easily connect to our engagement platforms? Just as a CDP needs to integrate with many data sources, it also needs to connect with every platform you use to reach customers: email, websites, social media, and more.

Customer success with CDPs

Because CDPs make it easy to manage customer data, they can increase marketing success in countless ways.

For example, an American comfort food and convenience store chain wanted to deliver more personalised digital experiences to its customers. The company knew its customers wanted more relevant engagement and that it was important to showcase how friendly and relatable its brand and staff were.

After launching a loyalty program and reaching 2.5 million active customers, the business started using a CDP to manage customer data more easily. Before a CDP was added to the mix, engaging lapsed customers and suppressing non-relevant email communications was difficult. However, these previously difficult tasks became easy once all the data was brought together with a CDP.

With customer data in its CDP, the business was able to personalise the hero images in each marketing email with a customer’s most recently purchased pizza — a simple adjustment that led to a 16% increase in conversion rates on pizza alone.

What is the next generation of CDPs?

Moving forward, customer data platforms must enable all your teams—across sales, service, marketing, commerce, and more—in real-time. This is imperative to your brand’s ability to act instantly while providing a new level of customer interaction.

Enter Data Cloud. By harmonising updated data every millisecond, a Data Cloud enables marketing teams to meet customers right where they are, like never before.

With a Data Cloud solution, the entire suite of CRM products is now powered with real-time CDP capabilities. This means your customer data is continuously updating with data from any of their touchpoints faster than ever.

Data Cloud solutions support marketing, sales, service, commerce, integration platforms, and more. For example, solutions like Tableauopens in a new window can process more than 100 billion customer records a day.

Data Cloud's constantly updated data, massive scale, and unified profiles also enable:

  • Artificial intelligence that updates outputs every millisecond
  • Automated workflows that can adapt in an instant based on new data
  • An unprecedented level of accuracy in analytics

Next steps with a Customer Data Platform

Today’s businesses need data management solutions that make complicated amounts of data easy to use and understand. That’s why customer data platforms are constantly innovating and here to stay.

Now and into the future, it’s essential for digital-first companies to have an intuitive real-time customer data platform with a powerful single source of truth to help guide every customer interaction. With the ability to truly know your customers and personalise real-time customer experiences everywhere, a CDP is an essential part of the modern business’s toolkit.

By unlocking the true power of customer data (and making it easy to access and manage), you can keep customer experience at the enter of all you do across your entire organisation — in marketing and beyond.

See how customer data helps grow your audience — and your business.