What Is a Customer Data Platform (CDP)?

What Is CDP?
Valeriia Dziubenko Valeriia Dziubenko 23 july 2022, 20:05 0
For beginners

A customer data platform (CDP) is a software system that creates a comprehensive customer database that other systems and tools can use to analyze, track, and manage customer interactions. CDPs allow businesses to create a single view of customers by combining assorted data, such as cross-device IDs, and identity resolution, from the company's existing channels.

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High growth expectations and increased customer engagements make such data crucial for marketers to deliver the ideal customer experience.

CDPs provide normalization and data integration and make data readily available to other systems and tools.

What Is the Purpose of a CDP?

There are three main tasks a customer data platform fulfills.

Collect and Unify All First-Party Data

Marketers use a plethora of tools like email, analytics, CRM, eCommerce, and social media systems which all operate independently and don't share data. That’s why it is so difficult to fully understand and analyze the clients’ demands. A customer data platform aims to solve this problem by connecting all marketing tools and acting as a single source of truth for first-party customer data.

Customer Data Management

CDPs control first-page data, consumer privacy, and data rights by managing data flow between various marketing systems and consent management. To comply with GDPR and other data privacy regulations, your company must actively manage customer consent and data flows.

Your CDP will be able to manage at least some of the following:

Data ingestion tools: CDPs ingest data into the unified customer profile using mobile SDKs, APIs, Webhooks, and built-in connectors to other platforms. Identity resolution: the platform gathers customer data points from various channels, such as email addresses, first-party cookies, phone numbers, and purchase data, and creates a combined customer profile.

Availability of online and offline data: The platform uses identity resolution or an identity graph to gather behaviors, updating a unified profile.

Data security: Users can access the platform to clean or reorganize their customer records.

Customer Data Activation

After receiving permission to collect first-party user data, you can take further action by unifying and structuring it into profiles. CDPs allow you to create audience segments that you can use across all of your marketing platforms and channels.

What Does a Customer Data Platform Do?

Customers interact with companies using a variety of channels. During each interaction, they leave pieces of data – first-party data. A CDP captures this first-party data, defines, and transforms it by matching individual customer identities and combining them into a single consistent and accurate customer profile (this process is called identity resolution).

It then reformats the profile data for use with CRM, marketing automation, A/B testing, analytics, content creation and personalization, and social media outreach, among other marketing processes and systems.

Later the customer data platform continues to gather data from different sources, ensuring customer interactions history is up to date.

What Are the Benefits of CDPs?

Marketing executives control martech applications to manage, analyze, and act on a growing volume of first-party customer data. However, while the emerging martech ecosystem increases efficiency, it also creates data redundancy, accuracy, and integration issues.

Through a CDP, marketers can automate customer data accuracy and integration. Customer data platforms usually offer:

Enhanced Corporate Collaboration

A CDP's primary function is collecting data from various sources and combining it to form a detailed view of the customer across multiple devices and channels. It also provides data access for other marketing systems.

Easier Access to Data

A CDP allows businesses to create and connect a flexible platform that adapts to changing consumer behavior and technology trends. CDPs enable enterprises to collect and use data anywhere to improve customer experiences by focusing on the data foundation.

Data Decentralization

CDP unifies company data systems, from marketing and customer service to call centers and payment systems. Using a single "system of record" for first-party customer data reduces redundancies and errors in data. This system also speeds up the flow of information between marketing automation platforms, email service providers (ESPs), CRMs, and other marketing technology systems.

Compliance with Regulations

A CDP improves internal control over customer data and helps brands comply with global regulations. Healthcare marketers must comply with HIPAA and HITECH regulations. EU-based businesses must also comply with GDPR, while California-based businesses must comply with the CCPA.

Increased Marketing Speed

In many cases, marketing "owns" CDPs, which reduces the need for IT or developer assistance in data collection, analysis, and action. With full control in their hands, marketers spend less time segmenting and building audiences, executing campaigns, and analyzing results.

Differences between CDP, CRM, and DMP

  • A CDP is a marketing platform. It gathers and unifies first-party customer data from various sources to create a single, accessible, comprehensive customer view. Marketers can use this data to create targeted and personalized campaigns.
  • A data management platform (DMP) supports web display ads for the advertising industry. A DMP collects data from cookies to gain new customers. Unlike CDPs, DMPs collect data anonymously and retain it for a limited time, usually 90 days.
  • A customer relationship management platform (CRM) is a software or service that enables businesses to manage all relationships and interactions with their current and prospective customers.

Orchestration

CDP groups offer campaign management and customer journey orchestration features that allow dynamic customized messaging along with web and email content recommendations. For instance, CDP can deliver targeted content to a web visitor during a live interaction by receiving visitor behavior data from a customer-facing system, locating the customer profile in its database, selecting the appropriate content, and returning the results to the customer.

To execute mailing campaigns, marketing automation platforms, email service providers, and web content management systems (WCMS) often automate the distribution of customer segments created by marketers.

An audience API from a customer data platform can help with digital advertising by sending customer lists from the CDP to different systems (DMP, DSP, or ad exchange).

Third-Party Systems Integration

CDPs simplify customer data integration by providing native connectors for many martech systems, such as CRMs, DMPs, marketing automation platforms, and campaign analytics and testing software.

Marketing organizations have put together a marketing network that includes a variety of these platforms. However, integrating the data from the martech ecosystem is a huge task that costs American brands millions of dollars every year.

How Does a CDP Help with Data Compliance?

Customer data platforms can help companies comply with new and existing privacy regulations like the EU's General Data Protection Regulation (GDRP) or California's Consumer Privacy Act (CCPA). These laws require businesses to give customers access to their data and the ability to erase it (the "right to be forgotten").

In the highly regulated healthcare market companies must also adhere to HIPAA and HITECH regulations. All organizations that accept, process, store, or transmit credit card information must as well maintain a secure environment that complies with the Payment Card Industry Data Security Standards (PCI DSS).

When spreading assorted consumer data across multiple systems, it can be quite challenging to meet these requirements. Customer data privacy support varies widely among CDP vendors. Some platforms include compliance features, while others rely on third-party systems.

How Does a CDP Protect Customer Data?

A customer data platform collects and organizes customer data. Having the entire customer record in one place, you can easily show data on a customer's request.

If a customer allows only partial storage of their data or requests all information to be erased, you need to quickly identify the storage location of specific data points and their pattern of sharing across your data pipeline.

Consent management platforms allow you to share consent updates and only forward data that contains consent attributes, ensuring that your company can enforce and comply with data policies and regulatory standards.

Top Customer Data Platforms

Segment

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Twilio's Segment customer data platform allows users to collect and channel customer data to various integrated systems. This customer data platform enables you to send data to multiple destinations and track it in real-time.

Features:

  • A single API for analytics data collection across platforms.
  • Standardized data collection eliminates errors.
  • It centralizes data across multiple platforms to facilitate tracking.
  • Compliance with GDPR and CCPA.

Pricing: $0 – $120 per month.

Emarsys

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Emarsys is a customer engagement and data platform that helps businesses streamline data across all platforms. It's appropriate for various companies, including eCommerce, retail, and travel.

Features:

  • Business analytics in real-time.
  • AI-based delivery scheduling.
  • Split testing and AI-driven optimization.
  • Web browsing data access to track clients’ interests.
  • Simplified cross-channel execution with integrated third-party tools.

Pricing: Provided upon request.

Exponea

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Exponea is an end-to-end Customer Data and Experience Platform (CDXP) that combines customer data analytics with support for marketing needs. It allows you to keep track of customer data and create customized marketing campaigns.

Features:

  • Omni-channel orchestration.
  • Realtime customer predictions.
  • Web optimization using Exponea's visual editor.

Pricing: based on the number of events tracked so it scales with your traffic or number of campaigns.

Optimove

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Optimove is a CDP that assists you in creating and optimizing a customized CRM marketing strategy. It merges all customer data from various portals into a single customer database accessible to technical and non-technical users.

It also offers automated web browsing, predictive customer analytics, AI-based optimization technologies, and more to generate a unified database and ingest actionable data.

Features:

  • Helps integrate and advertise across multiple web platforms, such as Facebook, Instagram, etc.
  • ntegrates with lots of ERP, CRM, marketing, and advertising tools.

Pricing: based on the number of monthly active customers; does not limit the number of users/seats/team members or the amount of data shared with it.

Blueshift

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Blueshift Smarthub customer data platform is another great option for delivering real-time experiences across the entire (omnichannel) journey. Their extensive AppHub also gives users access to a wide range of data, audience segmentation, personalization, and predictive intelligence.

Features:

  • A/B Testing
  • Behavior tracking & targeting
  • Behavioral analytics
  • Abandoned cart saver
  • Campaign management & segmentation
  • CAN SPAM Act compliance
  • Customer profiles

Pricing: available upon request.

Conclusion

One day you may realize that you have a lot of customer data but cannot collect, interpret, and utilize it effectively. Your company can make good use of a CDP when it fails to provide a premium customer experience across multiple touchpoints, track customer behavior across all channels, and make recommendations to customers depending on their actions.

Using the right CDP and good data strategies, every marketer can meet their goals by obtaining a unified view of individual customers across online and offline data sources, allowing for real-time insights and proper interactions at the right time.