One of the hot topics in marketing technology today is the customer data platform (CDP). Although CDPs have been around in one form or another for a few years, conversations are picking up steam these days about how a CDP in marketing can supercharge customer insights. And that raises a question – should you be in on those conversations?
CDPs are gaining ground in part because marketers are finally beginning to understand how powerful CDPs can be in helping a company understand its various audiences, manage data and messaging and automate much of its decision-making.
The CDP landscape is also changing rapidly as more tech companies develop and sell CDP software. More products generate more discussions. But how can you tell if those conversations are helpful or hype?
So, what is a Customer Data Platform (CDP)?
A CDP is a type of packaged software that aggregates data to create a unified customer database accessible to other systems. It contains data across all touchpoints, allowing you to segment in a multitude of ways and see a comprehensive view of your customers.
How Does a CDP Work?
A CDP collects data from all touch points. For example, it might collect data from a company website, email, profiles, purchases or other similar locations. Then it consolidates that data into a single view for your customers. A unified customer profile can then be provided to other systems that deliver campaigns and other interactions.
The Benefits of a CDP: 2 Reasons to Consider a Customer Data Platform
Creating a single view of each customer: At its most basic, a CDP helps you stitch together the data you have on each customer revealing who they are, where they came from, and what they’re interested in. Attribute data is typically the focus for marketers, but the vast majority of the data you collect is behavioral such as website visits, paid ad interaction, email activity, purchases, downloads and the like.
Much of this data is locked away in silos, where it’s owned by different teams or living in different platforms or databases. A CDP breaks down those silos so you can create a single view of each customer using all of the data you own.
Once a complete data profile of your audience is assembled, attribute or behavior based segmentations can be built and used to tailor personalized experiences.
Putting your data to work: Data activation is a CDP’s other primary benefit.
“Think of a CDP as a data distribution network,” says Michael Davis, Shift Paradigm’s senior vice president for technology and data strategy. “The value isn’t storing all of your data, the value is unifying your data into audiences and distributing it down to your experience tools.”
“Once you’ve established data driven audiences in a CDP, anyone matching your audience criteria, they can be distributed wherever you needed, such as an ad tool, an email marketing platform or website personalization.”
Real-time audience orchestration at scale is the value of a Customer Data Platform. The ability to orchestrate an seamless experience from anonymous traffic, to identified prospects, to paying customers and beyond has been the marketers dream for years and with a CDP it’s within reach.
Begin with strategy and customer experience
We’re not surprised to see this new enthusiasm for CDPs. Although CDP functions and design will vary from one company to the next, all of them essentially promise to do the same thing: to gather customer data across all different channels and databases in one place and help companies activate that data automatically through automated messaging.
But CDPs are subject to the same overhyping that affects every technology development – the implication that everybody needs a CDP.
“Always let your go-to-market strategy dictate your decision about whether a CDP will drive impact for your company.” Michael says.
Your customers’ experiences and expectations also should guide your decision.
“A CDP empowers an omnichannel experience with a heavy focus on digital channels How are your customers interacting with your brand How do they buy?What experiences matter to them? The answers to those questions should really drive the timing of a CDP purchase.”
One more factor: how much anonymous (cookie) data you need to orchestrate. (More on this in Michael’s post, How Marketing Data Should Flow Through Your MarTech Stack – A Precursor to CDP.)
Do I Need a CDP?
If your business has problems with data management and marketing segmentation, a CDP might be the perfect solution for you. However, our assessment at the bottom of this page can help you determine if you truly need a CDP and if it’s the perfect fit for your company.
CDP capabilities are also suited for companies looking to start creating specialized audiences, targeted campaigns, and looking for deeper customer insights.
Ready to learn more? Take this 10-question assessment!
A CDP isn’t a plug-and-play tool, Michael cautions. “People assume that the CDP does everything for them. They just have to buy the CDP and plug it in, and the CDP will tell them what to do.”
Much more is involved! Before you start searching for technology vendors, take our 10-question assessment to learn whether you’re ready to take this important next step.
Do you have someone who manages your data pipeline?
This person must have access to all of your data no matter where it lives across silos, platforms and databases.
Do you have a team member with an analytics/data science background?
“If you don’t have a database or analytics person that can do data management and pull insights from your data, start there,” Michael says. “Pull your attribute data together and get comfortable managing it. Then you can start looking for additional layers of data to add to it.”
Do you have a plan for your customer experience ecosystem?
Here you need to think about and plan for all of the elements that go into your customers’ experience with your brand wherever they come into contact with it. You need to have a deep understanding of your audiences before you can be confident that you can design an experience that meets their expectations instead of leaving everything to chance.
Do you coordinate touchpoints now?
It’s hard to pull a plan together when your data is imprisoned in silos. You need to know where or how your customers come in contact with your brand and your products or services, what kinds of messages you send at those touchpoints, what keeps them going on their journey with your brand or what prompts them to step away.
Do you use media or email agencies to manage these components, and do they work together or independently?
Once again, this is a question of how coordinated your activities are and how well you can understand the total picture.
How many marketing channels do you use?
The more channels you manage, the more data you generate, and the more data you must manage to create that single customer view. Companies that call on a network of channels are more likely to benefit from a CDP than those that gather data from just one or two.
Are you ready to bring your teams together to build an ecosystem?
Because you are blowing up silos, seeking access to data across all of your channels and databases and analyzing that data for company-wide insights, you need to be able to coordinate a team to manage the process. Are other teams, especially IT, willing to collaborate with you?
Do you have use cases that show how a CDP could solve problems?
This can help you avoid “GMOOT,” or “Get Me One Of Those,” a syndrome that crops up with every new technology, from email marketing and websites in the 1990s and 2000s to the metaverse of today.
This causes problems if you buy a tool without knowing whether you really need it, just because everybody else has one, or your boss sat through a vendor demonstration at a conference.
Use cases can show you where you could use a CDP to create more accurate segments or target audiences, clarify what you want customers to do and identify how to communicate with them – whether in email, remarketing, SMS or whatever channel would be appropriate.
Start with this example from Equine Network, which worked with Shift Paradigm to implement a CDP for its diverse group of brands serving a devoted horse-loving community: The Top 6 Characteristics of the Ideal CDP Partner.
How freely does data move across channels and databases in your company?
The more gatekeepers you have, the harder you will need to work to make a CDP happen. If you’re ready to bring teams together (see Question 7 above), you’ll likely be more successful with your CDP.
How important is the digital experience to selling your product?
A CDP might not benefit a company whose customers generally buy face to face after extensive personal consultation.
A more likely candidate is a company with a highly developed digital experience – owning multiple websites, an active mobile messaging plan, customer portals, etc. – and a customer base that is comfortable with buying online or even prefers it over brick-and-mortar transactions.
More help for your CDP quest
Even if you aren’t ready for a full CDP, don’t stop there!
As Equine Network’s Colin Bunn told Michael in their interview, “The resources you need today aren’t necessarily the resources you’ll need in three months.”
Shift Paradigm can help you sort through the ins and outs of CDPs and other marketing technology tools and platforms so you know what’s involved and how to make informed choices.
Beside the two posts from the Shift Paradigm blog mentioned above, get a copy of our free Customer Data Platform (CDP) Vendor Comparison Tool. You don’t even have to be in the market for a CDP! You’ll learn more about what CDPs can do and the features most CDPs have, what you need and what you don’t.
Finally, call on the tech experts at Shift Paradigm to help you further assess whether a CDP will benefit your company and how to prepare for one. Let’s talk!