What is a Customer Data Platform (CDP) & How to Use One
These days, businesses are constantly seeking innovative solutions to understand and connect with their customers on a deeper level.
Enter the Customer Data Platform (CDP), a sophisticated software solution designed to revolutionise how businesses manage and leverage customer data.
In this article, we’ll explore what a customer data platform (CDP) is and how you can start using one.
This is a webinar write-up of Sharon Flynn’s talk at Privacy4Marketers. You can get the slides here. You can purchase the recordings (8 in total) or get them for free by signing up to a paid Cookiebot plan using our referral link. Just make sure to send a screenshot of the billing confirmation to william@measuremindsgroup.com.
What is a customer data platform?
A customer data platform (CDP) is a sophisticated software solution for managing customer data effectively.
It operates through a centralised database, capable of gathering, integrating, organising, and distributing customer data to various tools. Allowing you to tailor your marketing and customer experience.
Basically CDPs gather consumer behaviour, demographics, and transaction data to monitor and evaluate customer interactions with the organisation.
Initially developed to manage first-party, second-party, and third-party data from disparate sources, CDPs now play a crucial role in aligning customer-centric initiatives across marketing, sales, and customer service departments.
Furthermore, they allow brands to centrally oversee data and consent attributes, ensuring compliance with evolving data privacy regulations.
How do customer data platforms work?
A CDP establishes connections with a broad range of technology platforms, data sources, and channels through built-in connectors, SDKs, webhooks, and APIs.
It retrieves profile data, real-time interaction data (such as behavioural and transactional data), campaign data, product data, customer support data, and data from mobile, point-of-sale (POS) systems, marketing platforms, devices, and Internet-of-Things (IoT) devices.
Once collected, a customer data platform processes these datasets to construct a unified customer profile, a process known as identity resolution or data unification.
Identity resolution involves sophisticated algorithms that combine identifiers from multiple systems and automate the creation of graphs, continuously consolidating data into a profile as customers engage in real time.
Data undergoes validation, cleansing, and deduplication throughout this process to form a cohesive single-customer view.
Profiles are then enriched with first, second, and third-party data sources to supplement missing attributes and update existing attributes with the latest information.
In addition to data integration, CDPs offer analytical and segmentation capabilities, employing rule-based systems or machine learning algorithms.
They can conduct predictive scoring and facilitate journey orchestration. Advanced CDPs may incorporate machine learning and artificial intelligence for predictive analytics and audience segmentation.
With journey orchestration, marketers can analyse customer interactions throughout their journey, enabling them to deliver personalised messages at the optimal moment and through the most suitable channels.
Why do we need CDPs?
There are many reasons why CDPs are vital for marketers to use. Let’s take a look at some of the main ones below.
1. Crafting comprehensive customer profiles
CDPs transcend mere data collection; they meticulously process it into customer profiles, facilitating the formation of single customer views (SCVs).
Also known as 360-customer views, SCVs amalgamate data from diverse sources regarding a single customer. These profiles offer insights into behaviours, information, purchase history, and interests.
For instance, every interaction a customer has with a brand—logging into a mobile app, perusing a blog post, searching for a product, adding items to a cart, or making purchases—contributes to an SCV.
This consolidated view allows marketers to understand their customers better and deliver tailored experiences.
2. Breaking down data silos
The existence of data silos arises when disparate teams or departments each possess distinct sets of customer data. One team may retain a customer’s name and email address, while another holds data on their purchase history and website engagements.
Although valuable in isolation, combining these pieces of information yields a comprehensive understanding of customer needs and behaviours.
CDPs resolve this fragmentation by centralising all customer data, even if it comes from various origins. This consolidation enables companies to access online and offline data across all touchpoints simultaneously, facilitating informed decision-making regarding customer experiences.
3. Enhancing personalisation
In today’s digital landscape, personalised experiences are paramount. A unified view of each customer empowers brands to discern which experiences resonate most effectively. This entails understanding not just what customers wish to encounter but also when and through which touchpoints they are most inclined to engage with the brand, even as preferences evolve.
4. Safeguarding data privacy and compliance
Customers who willingly provide first-party data in exchange for personalised digital experiences expect robust data protection measures. By consolidating data sources, generating comprehensive and current profiles, and swiftly accessing these profiles, CDPs aid brands in safeguarding customer data and complying with regulations.
5. Boosting revenue
By leveraging SCVs to deliver personalised experiences, companies can elevate customer engagement and brand loyalty, translating to higher conversion rates and increased revenue.
6. Enhancing omnichannel experiences
A CDP’s key advantage lies in its ability to integrate data from all touchpoints.
Utilising actionable insights, CDPs activate experiences across pertinent channels such as mobile, web, email, and social media, ensuring a personalised and cohesive journey.
7. Enhancing customer experience
By translating unified data into SCVs, brands can better serve customers by delivering personalised content that resonates with their needs. This demonstrates a commitment to customer satisfaction, fostering retention, loyalty, and ultimately, increasing customer lifetime value (CLV).
What are the key components of customer data platforms?
A CDP revolutionises the effectiveness and efficiency of your data-centric marketing. Here are the key components that help do that.
1. Seamless integration with the MarTech stack
Designed to seamlessly integrate with your existing technology stack, CDPs offer pre-built connectors APIs.
This smart integration transforms CDPs into central hubs, enhancing your technology stack’s agility, flexibility, and scalability.
CDPs optimise operational efficiency by facilitating the integration of the best software tailored to your industry and specific applications.
2. Make data accessible to your whole organisation
CDPs democratise data, making it accessible across the entire organisation. From marketing and sales to customer service and support.
CDPs enhance retention rates and diminish churn by enabling businesses to customise communications and foster enduring customer relationships.
Moreover, CDPs serve as potent tools for reducing customer acquisition costs in favour of bolstering retention rates, thereby driving sustained business growth.
How to start using a customer data platform
Navigating the landscape of CDP implementation can be daunting without a clear roadmap.
Below, we’ll outline Sharon’s B-R-I-D-G-E framework that you can follow to start using a CDP.
Follow the BRIDGE framework
- Brave: Embrace the journey of CDP implementation with courage and a willingness to take risks. Recognise that setbacks are inevitable, but persistence is key to overcoming challenges.
- Roadmap: Develop a strategic roadmap for CDP implementation, outlining milestones and objectives. Remain adaptable to unexpected challenges, adjusting the roadmap while staying focused on overarching goals.
- Integrate: Collaborate across IT, data teams, and external partners to integrate data from various sources into the CDP seamlessly. Plan and execute integration efforts meticulously to facilitate data flow and maximise the CDP’s capabilities.
- Data: Establish robust data governance practices to ensure data relevance and quality. Address issues such as siloed data, inconsistencies, and inaccuracies to maximise the effectiveness of the CDP.
- Goals: Define clear goals and use cases to drive the implementation and adoption of the CDP. Use cases serve as tactical guides for solving specific challenges or achieving desired outcomes, guiding the implementation process.
- Executive sponsors: Secure strong executive sponsorship across different leadership levels and departments to align the CDP’s goals with the overall company objectives. Foster ongoing communication and collaboration to ensure support throughout the implementation process.
Uncover insights from your customer data today
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Don’t let valuable data go untapped—seize the opportunity to elevate your marketing efforts with MeasureMind’s proven expertise. Contact us today to schedule a consultation and embark on the path to data-driven success.
About Sharon Flynn
Sharon Flynn is the Principal of Data Strategy at Publicis Sapient in Toronto, Canada. Sharon has worked primarily in the media and financial sector, driving digital transformation. She is conversant in the Salesforce, Tealium, Adobe, and Google suites of digital tools.
Sharon has over 20 years of experience in the digital space, including at Infotrust, Millward Brown, TVO, HBO and Disney Canada, CBC, and The Canadian Media Fund.
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