What is a CDP?

To start, let’s take a look at the Customer Data Platform Institute’s definition: "A Customer Data Platform is packaged software that creates a persistent, unified customer database that is accessible to other systems".

They break it down as follows:

• "Packaged software": the CDP is a prebuilt system configured to meet each individual customer’s needs. Some technical resources will be required to set up and maintain the CDP, but it does not require the level of technical skill of a typical data warehouse project. This reduces the time, cost, and risk and gives business users more control over the system, even though they may still need some technical assistance.
• "Creates a persistent, unified customer database": through data integration, the CDP creates a comprehensive single customer view by capturing behavioral data, transactional data, and more from various data sources, linking information related to the same customer, and storing the information to track behavior over time. The CDP contains personal identifiers used to target marketing messages and track individual-level marketing results.
• "Accessible to other systems": data stored in the CDP can be used by other systems for analysis and to manage customer interactions.

This definition paints the CDP as a dynamic multi-tasker, tirelessly working behind the scenes to manage, process, and convert various data points into meaningful customer journeys.

But, as David Raab, head of CDP Institute points out, not all CDPs are created equally. Differences that exist between CDP products include: the types of data they ingest, how they unify customer identities, the support they provide for real-time updates and queries, and ancillary capabilities such as machine learning, customer segmentation, message selection, and campaign management.

As we’ll see, the CDP has been evolving for some time, refining and improving its processes to meet (and exceed) the ever-changing expectations of customers. Managing and integrating customer data is key to this evolution. To explore strategies that can help optimize customer data management, check out this helpful resource.

How do you know if a CDP really is a CDP? Well, to qualify as a CDP, a customer data platform should satisfy the main capabilities of the CDP Institute’s definition. The following are some of the basic ways CDPs work:

• Marketers should be able to manage the day-to-day running of the CDP with just light support from IT departments or tech teams, as and when required.
• The CDP should be able to collect first-party data from multiple sources such as servers, CRM, and email, while unifying that data to create unified customer profiles.
• The CDP should have a web-based UI that allows marketers to segment customers into custom audiences.
• The CDP should be accessible to external systems where data can be shared through emails, apps, social media, web, and mobile.

Now, let’s take a closer look at how the features work together to allow marketers to deliver outstanding customer experiences. Gartner’s Market Guide for Customer Data Platforms 2020 recommended that the product must feature a web-based interface that enables data collection, profile unification, segmentation, and activation.

Data collection

Gartner defines data collection as: “the ability to ingest first-party, customer data from multiple sources, online and offline, in real time and without storage limits. Data persists as long as needed for processing. This includes first-party identifiers, behaviors, and attributes.”

Typical types of data collected by the CDP

• Topline customer information, such as preferred channels, days most active, personal contact information, and insights on spending
• Types of sessions on channels
• Propensity toward ancillary services
• Loyalty data
• Service history

Profile unification

As the single source of truth across an organization, one of the most important functions of the CDP is its ability to consolidate profiles and connect specific attributes to specific identities. This means identifying individuals, cleaning data, and linking multiple devices to that single individual.

Segmentation

Once data is collected, it is assigned to a segment within the CDP. Each segment contains a subset of users that share common demographics, customer behaviors, attributes, or transactions. Here are the most common segmentation use cases:

• Personalization: A marketer within the retail industry could run a social media campaign aimed at members aged 35 and under who have purchased within the past year with the goal to foster customer loyalty and retention.
• Filter audiences: Filter out audience segments, so you’re only showing 100% relevant campaigns to the right audiences at the right time.
• Promote new products: For example, a marketer within the aviation industry could decide to focus on a segment aged 55 and over who purchased flights to different destinations in the same region. In turn, they might be able to identify a gap in the market for a new type of product or offer.

Decisioning

The decisioning function within the CDP uses rules and predictive modeling to make smart decisions about the best customers to talk to, the best things to talk to customers about, the best channels to talk to customers, and the best time to talk to customers. Marketers can target customers within specific segments with relevant offers – one example is highlighting new or similar products to customers who have previously purchased an item or product from a particular brand.

Activation

The final step is the activation process, which involves sending segments (with instructions on activating them) to engagement tools to trigger email campaigns, mobile messaging, and social media campaigns.

Companies are having to raise their digital customer experience game like never before, investing heavily in upgrading their martech stack in order to adapt and survive. In a webinar with Sitecore, Scott Brinker, editor of chiefmartec.com, discussed the pandemic’s impact on the traditional rules of marketing.

To meet new and emerging demands, he advises companies to focus their attention on centralizing, automating, and humanizing everything they do while embracing continuous change as they do it.

Sounds like a complicated balancing act, right? This is where CDPs are designed to sift through data, mold it into personalized marketing campaigns, and offer your customers experiences that truly resonate. With digital marketing, marketing automation, and personalization processes accelerating at an unprecedented pace, there really is no better time to embrace the CDP.