A customer data platform: what is it?
A customer data platform is a piece of software that collects several data streams into a single, unified database to assist manage and organize customer data.
A customer data platform (CDP) can be used to aggregate and store all of the customer data that a business collects, whether it be through a point of sale (POS) or customer relationship management (CRM) system, a website, or social media interaction, an email or customer service communication, or any other channel.
Due to its ability to interface with a wide range of external sources and compile data from numerous touchpoints, CDP software is one of the most valuable digital tools available. It is able to create a durable, consolidated customer database that is accessible to the entire business by doing this and intelligently connecting the appropriate interactions and transactions with the appropriate customer profiles.
What function does a customer data platform serve?
It is helpful to look at some definitions from other sources in order to comprehend the function of a customer data platform.
The term “marketing technology” used by Gartner to define a CDP is “a marketing technology that unifies a company’s customer data from marketing and other channels to enable customer modeling and to optimize the timing and targeting of messages and offers.” This demonstrates how important it is to aggregate consumer data in order to target the appropriate audience with the appropriate promotions, adverts, and campaigns at the appropriate time.
“A CDP is an off-the-shelf solution bought from a third-party vendor, as opposed to being built internally.”
However, it goes beyond that. A CDP is described by the Customer Data Platform Institute as “a packaged piece of software that creates a persistent, unified customer database that is accessible to other systems.” A CDP is described as “packaged” if it was acquired from a third-party provider rather than being developed internally.
This is crucial because packaged software is typically made to integrate seamlessly without the help of IT and development teams. This significantly lowers the expense, risk, and downtime linked to custom solutions. Despite this, CDP solutions are still very scalable and made to interface with the rest of your tech stack. As a result, marketers are free to establish their own guidelines for data collecting, segmentation, and orchestration.
The CDP creates individual profiles for each customer and unites them in a single database by gathering consumer data from e-commerce platforms, email marketing, social media profiles and activity, websites, web forms, CRM, and transactional systems. Any department within your business can use these statistics and insights to guide its strategy.
The majority of the time, marketers use CDP solutions to deliver tailored messages based on the wants and preferences of the customer or to retarget interested customers with recurring ads to stay top-of-mind.
What advantages do consumer data systems offer?
Silos between teams, campaigns, and departments pose major issues, which are understood by all businesses. They obstruct collaboration, communication, and production. If marketers must base their decisions on data that is fragmented in several channels and is confusing, tainted, or incomplete, they may even impair the consumer experience.
A CDP is made to eliminate silos by centralizing all consumer data, combining distinctive profiles, and using the power of analytics to identify patterns and forecast behavior. This, therefore, produces fresh opportunities for upsells and cross-sells.
However, a consumer data platform accomplishes more than that. A CDP also offers insight into consumer sentiment by connecting interactions, conversations, and behaviors across a variety of channels, allowing your marketing teams to adopt a more tactical approach to forging, fostering, or mending a connection.
A CDP aids marketers in creating a more strategic image of their ideal customer so they may target potential clients and retarget existing clients. They can also assist you in accurately forecasting the actions of your target customer and adjusting your marketing strategies as necessary.
Why is a platform for client data important?
Customer data platforms are crucial because first-party data is what this technology primarily gathers.
An unaltered and unfiltered view of what customers are doing, saying, and purchasing can be obtained by directly analyzing website traffic, social media activity, and subscription data.
Too frequently, marketing teams must rely on third-party data, which is typically gathered through cookies and trackers and sold or shared between organizations, to guide their tactics. First-party data, in contrast to third-party data, is created exclusively by and used for the advantage of your consumers.
This pertains to compliance, another factor that makes having a consumer data platform crucial. Consumers have the right to see the personal information that businesses collect and keep, as well as the right to have that information “forgotten” or deleted, thanks to stringent data privacy laws like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act. When data is compartmentalized among many information repositories, it is very challenging to comply with that; nevertheless, a CDP makes it straightforward.
CDP solutions may streamline both your marketing initiatives and your data compliance by setting up your firm to have organized, transparent, and aggregated customer data.
What are some of a consumer data platform’s important characteristics?
All CDP systems must comply with the following four requirements, according to the Customer Data Platform Institute:
The ability to accept real-time data from any source is the first requirement.
Second, they must record every single aspect of the data that has been ingested.
Third, they must enable unlimited (and legal) data storage.
The fourth requirement is that they be able to share data with systems that need it.
Vendor-neutral solutions are available on the majority of top platforms, allowing connectivity to and from any external systems. Additionally, they possess the complex data management skills necessary to combine organized and unstructured client data by comparing IDs in different systems.
The greatest CDP systems, above all, are simple to use for marketing teams and other business units. A well-designed CDP doesn’t necessitate complicated IT or data science involvement, making it simple for teams to carry out strategic campaigns from beginning to end, even though additional resources may still be required for some of the more advanced functions.
Back to Blog