Customer Data Platform (CDP): The Ultimate Guide - SmartKarrot Blog

Customer Data Platform (CDP): The Ultimate Guide

Customer Data Platform amasses customer data from multiple channels and stores it in a single database. Learn about the types, functions, benefits, and more

Customer Data Platform

The new generation of Customer Success saw the christening of an innovative version of the technology, namely the Customer Data Platform (CDP). In no time, it started garnering attention mainly due to its stellar capabilities of clubbing disparate information under a single umbrella. Be it connecting different data sources, such as email and marketing automation, or be it steering away from the data silo troubles, CDP has packed a punch, time and again.

Now, you can centralize all the customer information bits and unify them into a wreathed single customer view, thereby making things a lot easier to deal with. This article here today will walk you through the nuances of the topic in minute detail. Here is what we shall be learning:

  • What is a Customer Data Platform?
  • Types of Customer Data Platform
  • Functions of Customer Data Platform
  • Why do you need it?
  • Difference between CDP, CRM, and DMP
  • The Customer Data Platform’s Architecture
  • 3 Questions to ask before getting a CDP

What is a Customer Data Platform?

Simply put, the CDP is an application that amasses the customer data from multiple channels and stores it in a single database. This is essentially used by the customer experience and marketing teams to propel ingesting every byte of customer data from suitable channels, devices, and platforms and transforming it into a unified customer profile.

Often companies leverage the CDP Software as an undisputed point of customer information. Further, this acts as a solid base for reporting and managing customer insights. With this, accessing data – be it online or offline becomes really seamless. Start collecting, unifying, analyzing, and activating the customer data and stay alert at your fingertips.

Types of Customer Data Platform

  • Basic – Customer Data Platform: Although basic in nature, they have strong abilities to collect data right from the sources. Moreover, they provide customer profile management, create united customer profiles accessible to other channels and support the process of customer segmentation. For this, they take control of integrations and tag management to consume data in the right manner.
  • Analytics – Customer Data Platform: Here, the platform pushes the customer segments over to campaign management tools and the marketing automation to activate the data. This is where you can find data ingestion and integration coupling up with analytical applications. This can be safely said to be one step higher version of the basic module.
  • Applications – Customer Data Platform: This type of CDP offers profile management along with customer engaging applications (customer journey mapping and marketing automation). These activated tools work well for both inbound and outbound communications and help in forecasting recommendations and personalizing messages. In fact, many such CDPs are rooted in marketing automation, campaign managing solutions, and online personalization as well. These are the spots where the demand for a single point of data ensures a sure shot success from the above facets.
  • Clouds – Customer Data Platform: The past years saw the emergence of marketing clouds and aiding the CDP suite. This has not only helped boost up the popularity with the prospects but also has granted a unified data set. They do so by clubbing an eclectic arena of acquired solutions and present it as a one-stop solution for the customer experience as well as the marketing teams.

Functions of Customer Data Platform

  • Find Segments: A CDP helps in analyzing the customer data by deploying a rule-based model – this can either be by using artificial intelligence (AI) or Machine Learning (ML) tactics. This can then be truly useful in finding segments on the basis of mutual attributes and segregating them, thereby reducing the additional need for time and resources behind it.
  • Analyzes Data: The thing about CDP is that it can totally rely on machine learning suggestions and predictive scoring to conduct an in-depth analysis of the customer’s data. Also, it can render a revamped picture of the customer’s journey across various channels discovering relations and trends that can give the customer experience score a notch up.
  • Unites ID: A CDP helps in uniting all of the customer data under one unique identifier. This includes ads clicked, the total of web pages viewed, services purchased, and kicks out the duplicate profiles by combing them all into a unified profile.
  • Provides Activation: It also helps in offering real-time profile data to the marketing systems to pull out a seamless, personalized, and targeted experience in and across all the mediums, channels, and devices. This sees that the profiles get activated in no time and the data can be accessed almost instantly.

Why do you need it?

  • To augment Data Compliance: With the creation of a unified, structured customer data platform, you can now easily mitigate some of the associated risks with data compliance. Further, you can track the overall data usage and screen it. On top of that, you can carry out an audit trail of granting permissions to specific channels and choose from multichannel preferences. This will vehemently help in centralizing the management of all marketing permissions.
  • To do an in-depth and accurate Analysis: When you have the right tools, you can create wonders in no time. CDP gives marketers the chance to leverage the data by putting them in the spotlight with all the limitless power. Now, they no longer have to depend on the IT team and await a response from their end to proceed further. This has led to reduced time to ascertain data and can focus on reducing the overall marketing costs.
  • To imbibe Engagement and Personalization: A well-defined CDP can better zero in on the important strategies such as e-mail marketing and personalized content. Moreover, it ensures that the journey of a customer is consistently maintained in both the online as well as the offline portal. Now you have the power to create more direct and targeted communications and provide a customer experience that is not easy to forget.
  • To see a 360° Customer View: What sets the tone for supremely effective marketing is having a 360° view of your customer’s accounts. Find all their information on one dashboard and increase the scope of enhanced customer acquisition. You can now see churn rates taking a backseat and an upsurge in the average order values too. Finally, you will be able to cut down on the costs and start to save more with this deployed in your systems. In fact, according to Gartner, fewer than 10% of companies have a 360 degree customer view, and only about 5% are able to use this view to systemically grow their businesses.

Difference between CDP, CRM, and DMP 

FUNCTIONSA CDP ingests customer data from multiple channels and clubs under one umbrella.A DMP addresses display ad experiences and platforms.A CRM maintains the customer data and renders insights for further campaigns.
 DATA TYPESDelves into primary, secondary and tertiary.Delves into primary, secondary and tertiary as well.Delves into first-hand data only.
CROSS-CHANNEL PERSONALIZATIONA CDP is enabled to do so.A DMP is not enabled to do so.A CRM is not enabled to do so.
CUSTOMER SEGMENTATIONCDPs can automatically segment without human intervention.DMP can segment with human intervention.CRM can segment based on the basic parameters.
DATA PRIORITY: FIRST PARTYA CDP is enabled to do so.Nonetheless, a DMP cannot do this.A CRM is enabled to do so.
DATA PRIORITY: THIRD PARTYA CDP is not enabled to do so.A DMP is enabled to do so.A CRM is not enabled to do so.
USE CASESCDP can be used through various industries and customer lifecycle stages.DMP is used to create similar looking models by the marketers.CRM stores the customer data for high-quality inputs for campaigns.
REAL-TIME CAPABILITYA CDP is enabled to do so.A DMP is also enabled to do so.However, a CRM is not enabled to do this.

  • CDP vs. CRM: Customer Relationship Management and CDP equally store customer data and add value to the company. However, while CDP binds various data points and unifies customer profiles on both online and offline portals, CRM only tracks their interaction via a common entity. Additionally, when CDP collects data about unknown users, CRM sticks to the known profiles or the potential prospects.

    Aside from this, CDP delves into customer journeys and lifetime behavior, CRM predominantly analyses sales forecasting. While CDP has the ability to divulge information taking from both online and offline mediums, CRM fails to do so and picks up data on an online front. Unless the data has been fed manually, it will not be able to take up offline data. On top of that, CDP can easily handle a multitude of data points but CRM can only ascertain data that has been fed individually. 
  • CDP vs. DMP: Data Management Platforms and CDP both share their tokens on adding functionality to an organization. CDP works well with both unknown and known individuals and stores data related to names, addresses, email, phone numbers, etc. DMP on the other hand works best with the unknown or anonymous bits, including IP addresses, cookies, and system information.

    While CDP stores only the first-party data or the information directly linked to the source, DMP amasses only those data that are from a data provider or in simple terms, third-party information. Over and above, CDP has the capacity to withhold data over a longer span of time, and on the other hand, DMP can retain information for a much shorter duration. Further, CDP influences all the forms of marketing, whereas DMP primarily targets influencing ads and reaching the right audience. 

The Customer Data Platform’s Architecture 

  • Relational Database: When a CDP is coupled with a relational database, it will have to define the connection between an anonymous user and a campaign to retain their unknown status. Simply put, the relational database will not let the modern digital marketers move around with flexibility. This in fact accounts to be one major drawback in this type of architecture. 
  • Event-Stream Database: In an Event-Stream, you get to see a 180 degree opposite version. Here, you are allowed to store an exponential amount of data – be it raw, structure, or unstructured. Although the marketers will have a ton of facets linked with the contacts using this sort of customer data platform, what they will miss out on is the ease of tying them into a single customer profile, which is what CDP is all about.
  • Profile Database: As both the relational database and event-based database had some smearing difficulties and limitations, most of the modern-day brands turned to the third type of architecture that is CDPs having a profile-based database. Here, the database puts out ideal customer profiles in an individual space.

In simpler terms, you can now figure out the most comprehensive and updated data about your customer’s accounts. As a matter of fact, it is said to be the proxy of the user, per se. This will also enable you additional information such as the frequency of data updated, consent status, and behavior segmentation – all of which is a must to know in a marketing schedule. 

3 Questions to ask before getting a CDP 

1. Does CDP permit marketers to access and act on the data without the help of the IT department? 

Ensure that the CDP you buy is absolutely market-friendly. See that the marketing team will be able to handle targeting, campaign management, and segmentation and does not necessarily have to rely on the IT Department for functioning. 

2. Will CDP add on to the Security? 

As per the European Union’s General Data Protection Regulation (GDPR), marketers must handle data with safe hands. Check with your vendor if they have all the security measures enforced that complies with your company’s privacy directives and laws. 

3. Can the CDP consume Data from Multiple Touchpoints?

This should be the first thing you must discuss before you purchase a CDP. It will all simmer down into nothingness if the CDP does not have the ability to ingest data from CRM, POS, ERP, App Data, Data Warehouse, or MAP (Marketing Automation Platform). 

That’s a Wrap

report by RearchandMarkets suggested that the CDP industry will see a 29% compound annual growth rate by the year 2023, which means that the value will manifold to up to $3 billion. Before you set into this vast sphere of opportunities, all you need to do is understand your objectives and pick the right CDP to support the use cases.

Once you connect to the data sources, you will soon be able to enrich your customer accounts, segment and upscale the sales activities, customer support programs, and more. As your business thrives on customers, what matters at the end of the day is to see a happy and satisfied customer.

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