Customer Data Platform 101

The Fundamentals

CDP 101: What Is a CDP?

Customer Data Platforms (CDPs) are rising in popularity right now, building buzz as marketing and customer service leaders alike explore their potential. But we all know how the hype cycle works: As soon as the CDP started gaining visibility, suddenly every vendor’s solution became a CDP. So, it’s important to understand what a true customer data platform is, what it can do, and how to choose the right one for your needs.

Let’s start with the most essential question:

What is a CDP?

According to the CDP Institute, a CDP is “packaged software that creates a persistent, unified customer database that is accessible to other systems.” There are a few key parts of that definition worth noting:

  • Packaged software means the CDP is a complete solution from a single vendor, not multiple solutions patched together to emulate CDP functionality.
  • Persistent, unified customer database means it is capable of taking in data from a wide variety of sources and creating customer profiles that remain in the system to be augmented over time.
  • Accessible to other systems means not only does the CDP take in data, but it is also capable of integrating with a host of other solutions for marketing, sales, and customer service.

Simply put, a CDP consolidates data streams from across the organization to perform analysis, generating insights that it can then act on automatically.

What is a CDP?

Learn: What is a CDP?

The Dummies Guide to Enterprise Customer Data Platforms

The Dummies Guide to CDPs

What Can a CDP Do?

The CDP serves as a foundational layer for marketing personalization, sales enablement, customer experience, and more. It’s not a tool with a single dedicated use — it has a wide variety of potential applications, and CDP users are continually discovering new ways to use it.

The most common entry-level application is mapping the customer journey, creating a 360-degree view of the customer, and using these insights to power advanced targeting and personalization. But the use cases don’t stop with marketing personalization.

Here are a few examples of what our customers have done with Treasure Data’s CDP:

  • Shopping app Wish uses their customer data to fine-tune recommended products to their users, doubling growth in conversions year-over-year.
  • Global advertising agency Dentsu uses their CDP to create customized portals for each client, each one synthesizing petabytes of data into a single dashboard.
  • Game development studio Linden Lab found new customers via lookalike modeling on their CDP, realizing a 300% monthly return on their investment. Now they’re using customer data to drive new product development.

How Does a CDP Compare to Other Data Solutions?

As the data landscape gets more complex, most enterprise-level businesses need more than one type of solution to deal with the data. A CDP isn’t intended to replace most other data solutions; rather, it adds functionality that those systems lack.

CRM: Sales and Marketing Data

A customer relationship management (CRM) system is built to store data that is primarily useful for maintaining a sales pipeline — for nurturing customers and keeping track of customer communication. A CDP can intake CRM data and enrich it with other data sources across the enterprise to form complete customer profiles, and then set rules for automation that can run back through the CRM.

DMP: Anonymized Data for Advertising

Data management platforms (DMPs) have a similar complementary role. DMPs can only deal in anonymized data with limited retention, and are used specifically to create segments for targeted ad campaigns. CDPs can use DMP data, combined with personally identifiable data and ID resolution, for use in a much wider array of marketing tactics.

Data Warehouses: Data for Business Intelligence

Many enterprises already have a data warehouse solution in place as well, and on the surface it seems to serve a similar function to a CDP. Data warehouses consolidate data to process for business intelligence. The difference is that a CDP is aimed at consolidating and analyzing customer data — it is designed specifically to be useful to the customer-facing side of the business.

All of these data solutions have a place in the modern enterprise, and your CDP can add functionality to all of them.

Is My Organization Ready for a CDP?

A CDP has the capability to drastically change the way your martech stack works. In order to achieve the best results, however, your organization needs to be prepared to take full advantage of the solution. It’s important to lay the proper groundwork in three key areas:

  1. Business Strategy. CDPs have a wide range of functionality, which can lead to decision paralysis when it’s time to get started. Before you evaluate solutions, decide which CDP use cases will map most closely to your business goals, and pick one or two that will have the quickest business impact.
  2. Data Readiness. You have systems throughout your organization that capture first-party data. It’s important to map your entire data landscape and identify which sources you want to connect to your CDP.
  3. Mindset. Is your organization ready to break down silos, communicate across departments, and share data? It’s important for leadership to cultivate buy-in for not only the CDP, but for the change in data culture that it represents.

What Should I Look for in a CDP?

There’s a bewildering array of vendors offering CDP, or at least CDP-like, solutions right now. It’s important to make sure your solution has all of the features that a robust CDP should offer. Make sure to evaluate:

  • The vendor’s potential for growth and longevity
  • The vendor’s marketing and advertising technology expertise
  • The solution’s capabilities and limitations for data management, identity resolution, ML-based analytics, reporting, segmentation, activation and security

You can use our free CDP Request for Proposal Template to help evaluate vendors.

Continue Your CDP Education

Now that you know the basics, you can move on to Phase Two of the CDP Academy. There, you will learn how to connect and consolidate data on your CDP.

Still have questions? Contact Us.

CDP 101