What is a CDP and why do you need one?

We’ve all experienced it at one time or another – that moment when you took a chance on Spotify’s Discover Weekly playlist, or Amazon’s product recommendations, and they completely knocked it out of the park with their picks for you.

Let’s hear it for the customer data platform (CDP).

Over the past decade or so, digital marketers have been leaning more on the CDP to unify their data and deliver standout personalized experiences. And this demand looks set to continue, especially with the rise of composable architecture.

With a multitude of versions now available, figuring out how to choose the right CDP vendor – and more importantly – the right CDP, can be tricky. A customer data platform is a major investment and there are several important factors worth considering before you take the plunge and commit to a vendor. Understanding what a CDP is and what it does will help you find the best CDP for your business needs.

What is a CDP?

In simple terms, a customer data platform is a valuable tool in every marketer’s tech stack because it allows them to transform their users’ data into impactful customer experiences.

By applying advanced analytics and machine learning techniques, the CDP captures digital signals in real time as users interact with channels. It can then predict what customers want based on current and historical behaviors.

With the support of a CDP, marketers can activate customer insights for optimization and personalization in any channel and share audiences across their entire ecosystem, resulting in improved alignment across marketing campaigns and improved conversions.

But what exactly constitutes a CDP? Well, according to the CDP Institute’s definition, a customer data platform is “packaged software that creates a persistent, unified customer database that is accessible to other systems".

CDP capabilities

How the CDP capabilities work together

Not to be mistaken for a CRM, a data warehouse, or a data lake, the CDP offers a 360-degree view of customers. This is achieved by collecting and analyzing first-party customer data from websites, apps, and mobile browsers, as well as different types of data like transactional data, customer service data, and campaign engagement data, along with details such as age, address, and contact info.

This data is processed and distilled into specific segments within the CDP, triggering a personalized campaign unique to a particular customer or segment. Ready to find out more about how including a CDP in your marketing strategy can improve your organization? In the next chapter, we’ll look at some CDP use cases.

CDP use cases

Before you embark on your CDP shopping spree, it’s worth preparing a use case to pinpoint exactly what you want from the CDP and how you would like the CDP to support and improve your business.

Some reasons you may need a CDP:

  • You have a large amount of customer data, but it’s stored in slow-moving or inaccessible databases, preventing you from innovating quickly
  • You need to join up behavioral (online), CRM, and transactional (offline) data so you can get a 360-degree view of the customer
  • You want to offer memorable and meaningful customer experiences
  • You would like to use your own data to inform targeted campaigns on paid media channels
  • You need to improve your segmentation process

Once you’ve decided on your use case(s), you’re ready to research potential CDPs. It’s worth checking if the CDP you’re considering is already being utilized by customers within your industry. You should also make sure the CDP is compatible with tools that you’re already using such as Google Analytics or social media advertising.

In addition, check that the CDP is GDPR and CCPA-compliant. This means the CDP should have the capability to suppress data collection or delete customer data when requested.


The case for a CDP in a cookie-less world

With third-party cookies set to be phased out, the case for investing in a CDP couldn’t be stronger. Not only do customer data platforms capture and store first-party cookies (cookies that are owned, stored and dropped by the website domain that the user visits), but they also link every interaction with other channels belonging to the website including CRM (Customer Relationship Management), social media, ecommerce platforms, and apps.

The CDP acts as a central repository for the martech stack by gathering omnichannel data, and by merging email addresses, telephone numbers, and other personal information, it improves the accuracy of individual customer profiles.

Rules and algorithms then come into play to determine which information belongs in which profile. The CDP cleans and deduplicates this data, mapping it into single fields to make it consistent.

With the single customer view established, the CDP then ascertains customer requirements, and communication preferences, and can personalize the user’s brand experience based on details of their previous behavior. With segmentation, specific customers can be targeted with relevant ads or personalized recommendations, based on the behavior of similar users within the segment.

As the customer has willingly shared this data, concerns about “creepy” tracking are eliminated, making it much more likely for the customer to engage with your brand, build trust, and ultimately, boost conversion rates, loyalty, and retention.

Types of CDPs

Depending on your use case and business requirements, your CDP will generally fall under one of the following categories, as outlined by Gartner:

CDP engines and toolkits: These vendors are often described as a CDP toolkit or are available as open source and include feature sets ideal for IT-led teams seeking to build new applications on top of a CDP. Controls over data-handling operations dominate over marketing orchestration, and business users would need a substantial lift from SI partners or internal developers in order to take advantage of the platform.

Marketing data integration: A frequent use case for CDPs is data operations — features that enable granular governance of event data streams from within a marketer-friendly interface. There is some control over delivering segments to downstream marketing touchpoints for advertising activation, but analytics and decisioning must be handled in other applications.

Marketing data integration solutions are often chosen for mobile and connected device use cases. Strong real-time use case support dominates in these products over access to historical data. This is often the choice of growth marketers or digital commerce teams.

Smart Hub: These providers emphasize marketing orchestration and personalization that by nature require both granular customer data analytics and controls for event-triggered and planned campaigns or journeys. The solutions are most likely to fit in a hub-and-spoke configuration that allows marketing teams and other stakeholders to focus on sending instructions to execution solutions from a single interface eliminating the need to log into several.

Predictive analytics, segmentation, and whiteboard or canvas-style interfaces for customer journey design are common, and support for real-time offer management may be more suitable for triggered messages than web-based personalization.

Marketing Cloud CDPs: Several enterprise software companies released or announced CDP solutions in 2019, promising to improve the tools that marketing and IT teams already possess. The inflexible data management and profile unification features of marketing clouds were a major driver of marketer interest in CDPs from the beginning.

These new modules aim to shift the integrated suite value proposition to a more open and flexible embrace of enterprise data, leveraging trusted relationships with CMOs and CIOs.

The Sitecore CDP

The Sitecore CDP — as recognized by Gartner — takes the CDP to the next level. This smart hub CDP powerhouse features the solid core data management capabilities of a CDP layered with intelligent decisioning, predictive analytics, experimentation, and orchestration.

Let’s take a closer look at how the components work together:

  1. CDP: Data Management
    Sitting at the heart of the CDP, the data management component is a powerful data-crunching tool that breaks down silos in your organization to connect and streamline your customer data.
  2. Smart: Predictive Analytics and Experimentation
    During this stage, data is leveraged to predict, test, and optimize every customer interaction across every digital channel. By using predictive analytics, decisioning technology, and real-time experimentation, the Sitecore CDP delivers intuitive data-driven customer interactions at every customer touchpoint.
  3. Hub: Orchestration
    The third step in the process is orchestration. This means delivering the right message to the right person in the right place at the right time and creating joined-up omnichannel experiences for each of your customers.
    Working together, these three capabilities provide you with a 360-degree view of your customers at every point in their journey, allowing you to offer experiences that will make your customers feel seen, valued, and understood like never before.

Want to learn more?

Sitecore CDP is helping some of the world’s biggest brands reach their business goals. Get in touch to learn more about Sitecore CDP’s capabilities and pricing today.