What is Customer Data Platform (CDP)?
Customer Data Platform (CDP) is marketer-managed database software that organizes and consolidates customer data from multiple entry points into a consistent and unified actionable record for use across all company systems.
The system creates a holistic picture of customers’ traits and preferences at an individual level that can inform marketing decisions and interventions. A business cannot succeed without understanding the target market and changing trends that influence consumer decisions. To address this, Customer Data Platform rose to provide vendor-neutral consultancy services to CDMs and CDPs.
Successful marketing depends on comprehensive and credible real-time data on consumer behavior to help lay a strategy for sustainability. In simple words, customer data platform definition can be laid out as – CDP platform unifies all pieces of individual customer data collected through multiple touchpoints persistently creating centralized profiles easily accessible for performance analysis and marketing review.
With access to persistent customer history and behavior patterns, marketers can anticipate and respond effectively to the needs of their individual prospects and customers.
What is Customer Data?
Customer data is information gained from customers in the course of interacting with your business that can create a picture of their likes and consumer habits over time.
This information can be gleaned through organized surveys, website activity, social media use, mobile applications, and multiple online and offline channels. So, what is customer data platform and what role does it play?
When a customer data quality platform is used to unify this information persistently, it becomes indispensable to successful business strategy and superior customer experience. Since this information is collected from multiple-layered customer data points, it is important to pool into categories for ease of analysis and reference by different departments.
Key categories of customer data are personal information, engagement, behavioral, and attitudinal data.
- Personal data is the starting point of interaction with the customer and this includes Personally Identifiable Information (PII) and Non-Personally Identifiable Information (Non-PII) that provides names, addresses both physical and electronic, contacts, IDs and credit cards, age, ethnicity, profession, and many more.
- Engagement data traces customer’s interaction with your business through various media while making inquiries, purchasing, or lodging complaints. A peek into their website visits and pages viewed, traffic sources, reactions to paid ads, customer service records, and email use is important for critical marketing response.
- Behavioral and Attitudinal data includes transactional information, product usage, and emotional aspects such as customer satisfaction, preferences and desires, purchase criteria etc.
Why is Customer Data Important?
Customer data helps you gauge customer satisfaction and loyalty. Satisfied customers guarantee referrals and free advertisement of your services or products augmenting your marketing efforts.
To meet customer satisfaction, you must have firsthand knowledge of their personalities and preferences. Good customer data platform companies can help set you up with tools and software to give you valuable insights of your customers and enhance their experience doing business with you.
Proper customer data analysis helps in projections and predictive-scoring that can gain you a competitive edge(1) over other market players. With this data, you preempt your customers’ needs through product improvements and timely placement in the market.
You also get to monitor expenditure on marketing efforts, easily identifying those that are redundant or losing money. This way, you can avoid unprofitable spending by taking care of such marketing campaigns.
Customer data is important for another critical component of business – location analytics. Location analytics will help you understand your customers and competition, allowing you to plan for time and type of goods or services to supply in a given locale.
It could inform you about door deliveries or new branches if the distance is an impediment to your customers. Persistent customer data helps you keep your finger on the pulse that matters, the customer, always working to retain this critical base.
Key Benefits of a CDP
Key benefits to your business that come with using the best customer platform available include access to first-party data, credible customer profiles, seamless data sharing across departments, and centralized cross-channel marketing.
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CDPs collect first-party data
Ensuring that you only get accurate information from target sources. First-party data is gathered directly from customers as they interact with your business through site visits, subscriptions, and social media activities and is therefore current as well as credible for analytic use in your marketing strategy.
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Credible customer profiles
It gives you knowledge and understanding of your target market. The CDP software compiles accurate customer profiles that can help you understand them better. By incorporating CRM, the CDP provides valuable data to build identity graphs and customer journey maps based on persistent behavioral analysis allowing you excellent management of customer relations.
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Seamless data sharing
It is critical to timely and harmonized decisions in a business. To achieve this, relevant data must be available to all across departments in real-time. CDPs make this possible by centralizing data resources away from segmented silos and help create a collaborative environment that enhances productivity and faster decision making.
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Centralized cross-channel marketing
It is important when undertaking multiple campaigns in sharing and compiling all the data coming in for proper analysis. CDPs key quality is the ability to unify data from multiple sources for use by all involved in real-time. This enhances data sharing and eases communication between teams.
CDP KPIs
Key Performance Indicators (KPI) must be seen in the output of your CDP program and its impact on marketing and customer experience. What is customer data platform without verifiable benefits? To measure the benefits of a CDP, a few key performance indicators can help you gauge its success.
- Prompt unified actionable data and baseline analytics: in real-time is a key performance indicator to look for in a CDP. Customer data platforms should improve marketing efforts and enhance the customer experience.
- Employee experience: Has the use of CDP improved staff performance and increased productivity? The CDP should generate accurate data that help employees meet targets and improve service delivery.
- Overall operation efficiency: How fast does the CDP ingest and produce data for continuous use in operations? How fast, for example, does it take to retrieve customer records while cutting down on wait time?
- Business objectives: This KPI is seen in revenue trends and a sustainable increase is a confirmation of its success. Conversely, this indicator will also show the state of your customer base, highlighting its growth, stagnation, or decrease simply by looking at revenues.
Ideally, start by setting up a defined transformation program alongside key performance indicators that will measure its success. Integrate this in portfolio development and planning based on the customer experience framework.
Challenges of Customer Data Platforms
The success of a good solution depends on the environment deployed in and the personnel executing it. You may install the best customer data platform; however, if anchored on obsolete infrastructure, it fails unless used as an integrated and dynamic solution on technology that has commensurate capacity.
Similarly, a poorly trained team will not maximize the benefits of using a CDP. It is important, therefore, that you address organizational challenges to streamline the seamless functioning of your CDP.
CDPs come with a range of metrics containing volumes of details and reports that need professional interpretation to gain insight and inform action. Metrics present questions that, if understood, will generate solutions and improvements.
The challenge then is the capacity to interpret accurately and utilize pooled data from your CDP. As per a Gartner survey(2), marketers spend two-third of their budgets in retaining and expanding customer base and they highlight the need for a unified customer data platform and this is making CDP platform quite popular.
How to choose the right CDP for your company
Businesses go for CDPs to increase revenues through the exploitation of collected customer data and its analytical benefits. The purpose is to collect and unify data from internal and external sources for analytics to gain insights that can result in actionable measures to improve customer experience and boost business.
Here is what to look for when choosing the best customer data platform for your company.
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Simple and easy to manage internally
Choose a CDP package that is user friendly and easy to maintain. Easy to customize by your marketing unit without the need for IT once the CDP provider has installed configured and tested initial connections.
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Expanded connector capacity
This is the key to an efficient CDP to allow for the integration of a wide range of sources and contact points, both internal and external. Analytics 360 by Google Customer Data Platform is a good example of a versatile CDP that gives great latitude to connectivity.
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Secure and credible
Customer data guaranteed through superior encryption of data flow between sources and integrated systems. The CDP should demonstrate strong authentication protocols for the protection of customer data against misuse.
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Compatibility
Compatibility with automation tools, visualization dashboards, and app platforms is important as this widens the scope of use.
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Baseline capability
The capability to produce immediate actionable data through basic metrics and segmentation while retaining raw data for detailed analytics.
Best Customer Data Platform
Customer data platform is a fairly novel concept in the market, with many firms offering CDP solutions among the Adobe customer data platform.
However, the role of CDPs is to collect and collate data to inform business decisions and increase revenue exponential to customer numbers. A look at some fundamental characteristics will help you decide on which is the best CDP to suit your needs.
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Flexibility
For credible analytics and decision making in real-time, a wide range of customer data from multiple sources, types, and volumes must be unified in one corpus. For a profitable advantage, a good CDP should be dynamic and agile in function to provide an updated single view of the customer.
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Accuracy
Key features for a reliable CDP should include superior algorithms and processing rules with efficient identity resolution capacity. Customer interactions are multifaceted in scope and function, requiring a CDP to process with speed and precision to serve any purpose at all in marketing. Evaluate its precision capability and efficiency across data silos.
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Turnover speed
As the marketplace shifts online, the volume of business transactions has increased tremendously creating bytes of data in quintillions. You need a CDP that can ingest data in real-time, unify, and make it available for use in pace with the customer. This will create a dynamic and responsive brand preferred by customers.
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Accessibility
You deploy a CDP to make data flow and sharing between business departments easy and in real-time to influence decisions. A good CDP must access all data silos in the business and be accessed by all seamlessly for efficiency.
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Scalability
Scale is key to cope with the growth of the company and resultant data volume. Scale affects the foregoing attributes if the CDP cannot match increased operations rendering the whole setup redundant. Go for a CDP that automatically scales up without the need for frequent IT interventions.
Final Thoughts
Global business trends are leaning towards digital marketing more than ever. This calls for a new way of managing and leveraging volumes of customer data to inform business decisions. Customer data platforms provide solutions for this need, organizing and corralling data for easy access to multiple users in real-time.
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Tiffany Harper is a talented writer from New York who began her career as a journalist in an educational publishing house and later moved to being a writer and editor. You can connect with her on Twitter.
