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Quick insight

A customer data platform (CDP) is a powerful tool that eliminates data silos by consolidating, unifying, and centralizing customer data.

What is a CDP?

A customer data platform (CDP) is a powerful tool that eliminates data silos by consolidating, unifying, and centralizing customer data. CDPs collect data from online and offline touchpoints, including websites, mobile apps, email, social media, and in-store interactions, creating a single, comprehensive profile for each customer.

This unified customer profile, often referred to as a “single customer view” or "360-degree view," provides a holistic perspective of customer behavior, preferences, interactions, and demographics.

How does a CDP work?

The primary purpose of a CDP is to create a unified and structured database that enables businesses to understand their customers better and deliver highly personalized, relevant omnichannel experiences based on real-time data. Getting there involves several processes including data integration, data cleansing, identity resolution, and customer segmentation.

Key functions of a CDP

Data collection: Customer data platforms ingest data from your organization’s customer relationship management (CRM) system, email service provider (ESP), data management platform (DMP), point of sales (POS) system, and more via stream, batch, and interactive APIs.

Profile unification: Individual customer profiles are created by cleaning data and linking multiple devices to that single individual.

Segmentation: Segmentation is used by marketing teams for personalized campaigns, for audience segmentation, and to promote products to customers identified as having a propensity for buying a specific product or service.

Decisioning: Using rules and predictive analytics, the decisioning function determines the most relevant customers to talk to, the most relevant subjects to talk about, the most relevant channels to talk to customers on, and the most suitable time to talk to customers. When powered by AI and machine learning, decisioning can deliver truly impactful customer experiences.

Orchestration: Working closely with decisioning, orchestration delivers the next-best actions determined by the decisioning engine and is essential for creating omnichannel experiences.

Activation: The activation function sends segments (with instructions on how to activate them) to engagement tools in order to trigger email campaigns, mobile messaging, and social media campaigns.

Benefits of CDP SaaS

CDP SaaS has the potential to transform marketing efforts for ecommerce brands and businesses of all sizes across various industries. Below are some key advantages of CDP SaaS:

  • Reduced costs: CDP SaaS is cloud-based, eliminating the need for businesses to invest in and maintain expensive hardware and on-premises infrastructure. As CDP SaaS typically operates on a subscription-based pricing model, businesses avoid large upfront costs and instead pay for the service on an ongoing basis. This can improve budget predictability.
  • Quick implementation: CDP SaaS is designed for rapid deployment, often taking significantly less time to set up and configure compared to on-premises solutions. This means businesses can start using the platform sooner and realize benefits faster.
  • Easy scaling: CDP SaaS is highly scalable, allowing businesses to expand or contract their usage as needed. This flexibility is particularly valuable for companies experiencing growth or seasonal fluctuations in data volume.
  • Accessibility: CDP SaaS can be accessed from anywhere with an internet connection, enabling remote work and collaboration among teams regardless of location.
  • Real-time collaboration: Multiple users from different departments can collaborate on customer data in real time, promoting cross-functional alignment and decision-making.
  • Hassle-free maintenance: SaaS providers handle routine maintenance tasks, including software updates, security patches, and data backups. This frees up IT resources and ensures that the CDP is running optimally.
  • Data governance and compliance support: With the end of cookies and third-party data, companies need to update their strategies to ensure they have access to relevant customer information to drive their marketing activities. CDP SaaS often offers features and tools to help businesses comply with data privacy regulations such as GDPR and CCPA, by managing consent, data retention policies, and audit trails.
  • Ecosystem integration: CDP SaaS is designed to integrate seamlessly with other software applications commonly used in marketing, sales, and customer service, such as CRM systems, email marketing platforms, and analytics tools.
  • Intuitive user experience: CDP SaaS often prioritizes user-friendly interfaces and ease of use, making it accessible to business users with varying levels of technical expertise.
  • Disaster recovery: CDP SaaS typically has robust disaster recovery measures in place, ensuring that customer data is protected and accessible even in the event of unexpected incidents.
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CDP vs. CRM

While CDPs and customer relationship management (CRM) systems share similarities, they serve distinct purposes and have different scopes. Understanding the differences between these two marketing technologies is essential for businesses seeking to optimize their customer data management strategies.

Data focus

One of the primary distinctions between CDPs and CRMs is their data focus. CDPs are designed to consolidate and unify customer data from various sources — usually first-party data, creating a comprehensive and up-to-date customer profile. This data includes not only contact information but also behavioral data, transaction history, and preferences, building a full, complete picture of each individual customer.

On the other hand, CRMs primarily focus on managing interactions and relationships with customers. While CRMs do store data within a customer database, their primary function is to track communications, sales activities, and customer service interactions. CRMs are more transactional in nature and may not provide the same level of data integration and unification as CDPs.

Data sources

CDPs excel at ingesting data from a wide range of sources, both online and offline. This includes website interactions, mobile app usage, social media engagement, email interactions, point-of-sale transactions, and more. CDPs are adept at integrating structured and unstructured data from diverse touchpoints to create a comprehensive customer profile.

In contrast, CRMs are typically more focused on collecting and organizing data related to customer interactions that occur within the organization. While they may include data from emails, phone calls, and in-person meetings, CRMs often lack the capability to incorporate data from external sources such as social media or third-party databases.

Use cases

CDPs are geared toward data-driven marketing and personalization efforts. They empower businesses to create highly targeted and personalized marketing campaigns based on granular customer insights. CDPs are instrumental in optimizing the customer journey, improving conversion rates, and driving personalized experiences.

CRMs, on the other hand, are primarily used for managing customer interactions and relationships. They are essential tools for sales and customer service teams, helping them track metrics such as leads, as well as deals, and customer support tickets. CRMs facilitate communication and collaboration among team members, ensuring that customer inquiries and issues are addressed promptly.

Integration

While CDPs are designed to seamlessly integrate data from various sources, CRMs tend to focus on integrating with other business applications. CRMs often integrate with marketing automation tools, email marketing platforms, and customer service software to streamline workflow and provide a centralized view of customer interactions within the organization.

Sitecore CDP

The world’s leading brands rely on Sitecore CDP to deliver impactful customer experiences that drive engagement and revenue. Discover how our advanced CDP SaaS solution can help you activate data and transform your CX.