What Is a Customer Data Platform?

Learn how a CDP can collect, unify, and activate your marketing data for unprecedented insight into your customers and campaigns.

 
9 Minute Read
A customer data platform (CDP) is a piece of marketing technology with a handful of tools that make it easier for your digital-first marketing team to manage and pull insights from customer data. These tools usually include a customer database and marketing automation, as well as management tools for multichannel campaigns and real-time customer interactions.
CDPs are very useful as a central database for user-level data, giving you easy access to the insights you need to connect with customers. In the latest State of Marketing report, 78% of high performers said they use a CDP, versus 58% of underperformers.
In this article, we’ll explore the past, present, and future of all things CDP, and discuss how this powerful piece of marketing technology can work alongside your CRM and other components of your tech stack to help you make the most of your customer data.

What does a CDP do?

CDPs focus on four primary tasks: collecting data, unifying data, activating data, and pulling insights from data.

1. Collecting Data

Your CDP is a centralized hub, or a home, for all the customer data your company has. It’s where anyone from your company can find customer data organized in a single place.
To accomplish this, your CDP needs to identify each individual customer by collecting and stitching together data from all of your company’s different customer relationship management (CRM) platforms and customer databases, including systems that don't usually share data, like marketing platforms, service software, and ecommerce engines.
Bringing together and unifying all this disparate data and identifying each customer based on their whole engagement history is called customer resolution.

2. Unifying Data

After your CDP brings together 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. Activating Data

Once your CDP creates and resolves fully unified customer profiles, it then activates that data, making it available for marketers to personalize customer experiences in real time.
This personalization is made possible by connecting the customer data in your CDP to all the different technology platforms you engage customers with, including email-send engines, demand-side platforms, and content management systems.

4. Pulling 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 to create lookalike audiences and personas to help reach new audiences.
As your CDP collects and organizes all your customer data in one place, it’s a great source for information that proves the reach, revenue, and ROI of your marketing efforts.
 
 

Where did CDPs come from?

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.
This evolution began with the earliest CRM platforms in the late 1990s, but now nearly three decades later, a lot has changed. CRMs are now cloud-based, and leverage advanced AI and analytics to help marketers make better decisions, faster.
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 that allow 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 every marketer.

Why is a CDP so useful?

For most marketers, the single biggest value of a CDP is its ability to segment audiences. With the capabilities of a CDP, marketers can see how a single customer interacts with their company’s different brands, and identify opportunities for increased personalization and cross-selling.
Of course, there’s much more to a CDP than segmentation. It’s also meant to be an easy-to-use platform for everyday marketing needs, with user-friendly controls for analyzing customer and prospect data, building segments, and identifying key audiences.

Why do you need a CDP?

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

Suppression

One of the most interesting things marketers can do with data is identify customers to not target. This is called suppression, and it’s part of delivering truly personalized 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 made a purchase. They don't have to see ads that aren’t relevant to them, and you get to optimize your budget by directing ads to new audiences.

Personalization

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 personalized offers via their favorite 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 personalization through a CDP can bring significant rewards.

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 marketing interactions linked to ecommerce data, website visits, and more, everyone across marketing, sales, service, and all your other teams has the chance to understand more about each customer and deliver more personalized, relevant engagement.

What problems can CDPs solve?

CDPs can help marketers 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.

Disorganized 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 used by marketers 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 centralized hub for your customer data, CDPs can easily solve many issues surrounding customer identification, bringing together data from multiple sources to create unified profiles for each customer.

Simple segmentation

Organizing 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 makes it simple to segment your audiences and deliver personalized engagement to one and all.
 

Trouble with customer data? A CDP can help.

What’s the difference between CDP and CRM?

In essence, CDPs are a new evolution of customer relationship management (CRM) solutions, dedicated to the real-time, highly personalized needs of today’s digital-first marketing teams.
Your CRM is a log of known customer data. Your CDP uses more advanced technology to create unified customer profiles based on both anonymous and known data from various sources, including your CRM. Your CDP is meant to add to and build on the functionality of your CRM, not replace it.

How do you choose a CDP?

There are hundreds of different CDPs on the market, but the differences between most CDPs really boil down to two key focus areas: insights and engagement.
An insights CDP integrates and manages customer data from your company’s different systems, and provides analytics and activation to ultimately deliver a single view of each customer.
An engagement CDP uses customer data to power real-time personalization and engagement for customers on digital platforms, such as websites and mobile apps.
Insights CDPs and engagement CDPs make up the majority of the CDP market today. Very few CDPs include both of these functions equally.
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.
To narrow down the CDP selection, it may also be helpful to consider these questions.

1. Is it easy to implement this CDP?

Some CDPs are for highly technical users; 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 a lot of 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?

In data-based marketing, respecting customer privacy is essential. 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 publishing platforms?

Just as a CDP needs to integrate with a lot of 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 so easy to manage customer data, there are countless ways a CDP can increase marketing success. In a category where there are too many success stories to count, here’s one of our favorites.
A Midwestern/Southern comfort food and convenience store chain wanted to deliver more personalized digital experiences to its customers. The company knew its customers wanted more relevant engagement, and it also knew 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 make it easier to manage customer data. Before a CDP was added to the mix, it was difficult to engage lapsed customers and suppress nonrelevant email communications. But once all the data was brought together with a CDP, these previously difficult tasks became easy to do.
With customer data in its CDP, the business was able to personalize 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.

The future of CDPs

We’ve established that CDPs are an evolution of — and a complement to — CRM systems, but how will this evolution continue? As with most other forms of marketing technology, future innovations in the CDP category will come mainly from improvements in AI, automation, and machine learning.
With these advanced technologies, CDPs will be able to surface audience insights more quickly than ever, and even automatically queue up certain marketing actions without needing direct input from an actual marketer. Just as CDPs today are helping marketers achieve things that weren’t possible just a few years ago, tomorrow’s innovations will deliver on the full potential of CDPs.
With further innovation, CDPs will become increasingly useful to marketing teams, and will also benefit other teams within organizations, such as customer experience and information technology teams.
In the next few years, it’s likely that CDPs will be used across entire companies to help deliver the most personalized customer experiences possible at every touchpoint. Even right now, it’s worth considering whether a CDP might be able to help people at your organization beyond just your marketing team.

Bringing it all together

Data is at the heart of marketing today, and today’s marketers need data management solutions that can make complicated amounts of data easy to use and understand. That’s why CDPs have entered the chat — and why they’re here to stay.
Now and into the future, it’s essential for digital-first marketers to have an intuitive digital-first customer data platform, with a powerful single source of truth to help guide every customer interaction. With the ability to truly know your customers, easily segment your data, and personalize customer experiences everywhere, a CDP is an essential part of the modern marketer’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 center of all you do across your entire organization — in marketing and beyond.
 

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

 
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