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.
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.
Beyond audience segmentation, there are three big reasons why your company might want a CDP: suppression, personalization, and insights.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Some CDPs are for highly technical users; others are more accessible. It’s important to find one that your teams can easily operate.
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
Your CDP should be able to resolve customer identities across a wide variety of platforms and devices.
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.
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.
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.
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.
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.