What Is a Customer Data Platform?

Your Guide to Boosting Enterprise-Wide Marketing Efficiency

We are living in the golden age of the data-driven economy, with nearly 60% of the global population connected online. Yet businesses lose most of the data generated by websites, mobile apps, social media, and other digital channels every day. They need better tools to capture consumer data and transform it into actionable insights. This article examines the Customer Data Platform—what gives it a superior advantage over legacy systems and how does it boost marketing efficiency? Let’s start with its data collection capability.

What Is a CDP’s Data Collection Capability?

A customer data platform—also called a consumer data platform, or an audience data platform—connects to a wide range of systems and data sources across an organization using built-in connectors, SDKs, webhooks, and APIs. It ingests all types of data, including profile data and real-time interaction data (behavioral, demographics, transactional), campaign data, product data, customer support data, mobile, POS data, marketing data, device data, IoT data, and more.

A CDP collects data from a wide range of data sources.

CDPs Integrate Customer Data From a Wide Range of Data Sources.

Customer data comes in many formats—structured, unstructured, semi-structured—and a CDP integrates these sources to build a single customer profile. By using schemaless ingestion, the CDP can collect raw, event-level data without the need to create predefined tables. This accelerates the collection process and also conforms to changes made at the data source.

Businesses collect customer data in various ways. Batch processing collects batches of data for a period of time and then loads everything into the system in a single batch. Automating this process through workflows makes it part of a data pipeline. You can also set up incremental batch processing to bring in only the last set of data since the previous load.

Data can also be streamed into the CDP as it’s recorded in web logs and mobile applications, giving marketers real-time access to changes in customer profiles.

What Is a Customer Data Platform’s Data Unification Methodology?

How does CDP software unify data? Once in a CDP, customer data must be unified into a single customer profile using a process known as customer identity resolution, or data unification. Customer identity resolution includes sophisticated algorithms to stitch identifiers from multiple systems. Identity stitching automates identity graph creation and continuously unifies data into profiles as your customers continue to engage.

A CDP unifies customer identifiers and data sources to create a single customer profile.

A CDP unifies customer identifiers and data sources to create a Single Customer View (SCV), also called a Unified Customer View (UCV), Customer 360 View or Golden Profile.

During the unification process, customer data is validated, cleaned, and de-duped to create a single customer profile. The identity resolution process is performed in one of two ways:

  • Deterministically: This method uses common information, such as an email address or a name, to match unique IDs for customer records in each system. This high-confidence approach works best when first-party data is readily available.
  • Probabilistically: This approach analyzes a variety of customer data points to estimate the statistical likelihood that two identities are the same customer. While statistical connections aren’t as definitive as authenticated IDs, they can be extremely helpful when first-party data is limited.

Second- and third-party data sources then enrich these profiles by filling in missing attributes and updating them with more recent information.

How Do CDPs Analyze Data? And How Do Predictive Analytics Work?

Customer data platform software is more than a database for storing customer information; it can also analyze and segment customer profiles using rules or machine learning, perform predictive scoring, as well as provide journey orchestration. Some customer data platforms enable machine learning (ML) and artificial intelligence (AI) for advanced predictive analytics. Plus, CDPs make it possible to visualize data through other BI tools with seamless integration.

Marketers have access to rich data sets that allow them to create segments based on attributes and behaviors. They can manually define segments using a rule-based approach or leverage predictive analytics.

Journey orchestration enables marketers to analyze customer interactions throughout the entire customer journey and deliver the right messages at the right time on the right channels.

“Forty-four percent report that a customer data platform is helping drive loyalty and ROI in their organization.” —Forbes Insights: Data versus Goliath

What Is a Customer Data Platform’s Data Activation Capability?

Finally, a CDP makes customer data available to other systems to activate, execute campaigns, and communicate to improve customer experiences. Marketers can use it to personalize website experiences, send targeted emails, provide relevant recommendations, implement retargeting, and much more.

The value of a CDP is that it makes customer data available to business units and departments  across an organization, allowing optimization of various business processes, including:

B2C companies have been quicker than B2B firms to deploy CDPs. But reports have shown that many B2C and B2B companies alike are in the process of deploying or plan to deploy a CDP.

What Is a Customer Data Platform’s Most Common Use Case?

Why do you need a Customer Data Platform? The two most common uses for CDPs are personalized customer experiences and targeted advertising. Why? Because you can’t deliver great customer experiences if you don’t have a complete view of your customers and your relationship with them.

A CDP’s greatest strength is that it helps you get that complete unified customer view and accomplish targeted personalization on a mass scale, so you can provide a great customer experience to each customer efficiently using AI, machine learning, and marketing automation.

The right messages reach your customers at precisely the right moment, whether they are close by, in your store, or on the website.

Creating exceptional customer experiences requires companies to overcome their data challenges. Without a CDP, customer data can often be:

  • Difficult to locate
  • Siloed by fragmented systems (such as channel)
  • Separated by various marketing functions
  • Hard to unify
  • Nearly impossible to analyze

What Are Other CDP Use Cases?

  • Customer Profile Unification

    Rationalize customer data records to get a 360-degree view of customers, to do effective personalization, and to reduce ad-spend waste

  • Segmentation

    Marketers can easily drag and drop attributes, user behaviors (web, mobile, POS, social etc.), and other variables in order to build out powerful segmentation

  • Personalization

    Personalize across channels based on segmentation and activity

  • Online + Offline Customer Data Unification
    (Persistent Identity Unification)

    With a CDP, it’s easy to associate multiple identifiers with each customer, stitching together a persistent identity that is retained forever

  • Predictive Scoring

    Marketers will be able to predict customer behavior, such as who is likely to churn, purchase, click, or convert in near future

  • Retargeting

    Improve retargeting accuracy by connecting your customer data with advertising data, creating optimized audience segments, and automating the whole process

  • Multi-Touch Attribution and Customer Journey Optimization

    Enabling marketers to score customers and perform real-time optimizations across a number of display, search, and social channels

  • Recommendation Engines

    Use customer behavior data, such as the products a shopper has liked or rejected in the past to run analytics like continuous A/B testing

  • Predictive Models, Predictive Analytics

    Determine likelihood to buy, propensity to churn, customer lifetime value

  • Mobile Activation

    Collect first-party data through mobile SDKs, which are easy to integrate with existing websites and applications available for real-time use

  • Audience Building

    Tracking a customer’s history over time

  • Programmatic Advertising

    Target customers using programmatic advertising

  • Social Advertising

    Target customers in social paid channels

  • Lookalike Marketing

    Advertise across social media and the web to audiences matching your top customers

  • Measurement and Insights

    Deep customer and business reporting

  • Customer Loyalty

    Measure and predict customer loyalty, churn, and repurchase

A unified view of the customer is no longer a nice-to-have. It is now mission-critical, and if your business is going to survive and thrive, you need to figure out how to create it.

Customer Data Platform—What Is Its Role in Customer Experience?

A customer data platform is more than a marketing tool. You need a customer data platform to:

  • Deliver a consistent experience across multiple channels and devices
  • Deal with complex customer journeys that include high volumes of customers and multiple interactions
  • Improve personalization and targeting, ensuring you are providing relevant messaging to the right customers at the right time and in the right manner
  • Serve as an engagement platform to optimize and grow customer engagement and to monitor (and respond to) granular customer behavior cues and customer interactions

Could you do all these things without a CDP? Possibly, but it wouldn’t be easy. Consider the time and effort required to engage your IT team to build a unified customer profile from all of your systems. They would have to find all the data sources, develop and maintain multiple integrations to ingest disparate types of data into a single location, associate it to the right customer, clean and validate it. That much work alone could take months, maybe longer.

Now imagine engaging data scientists and engineers to help you streamline that process continually, analyzing and segmenting the data to enable your marketing team to deliver marketing programs relevant to each customer. Those months could stretch into the years needed to keep your marketing operations running.

What Makes a Customer Experience Great?

It’s Relevant

It’s Relevant

You understand where your customers are in the purchase process, and you provide them with the right messages and information.

It’s Contextual

You can customize messages to the customer by channel, time of day, the weather, their past behavior or purchase history, and other attributes.

It’s personalized

It’s personalized
You segment your customers using common attributes and tailor messages and information to those segments; in some cases, you send one-to-one messages.

It’s consistent

It’s consistent
Regardless of the engagement channel or device, the experience and information you provide your customers is consistent.

It’s timely

It’s timely
A CDP reduces the time and effort to connect data sources and build a complete, unified customer profile. It enriches that profile with additional data sources and includes capabilities to analyze and segment profiles appropriately. It then makes that data available to external systems for activation and execution.

A CDP enables:

  • Democratization of data: CDPs make customer data accessible to everyone in the company who can benefit from it.
  • Flexibility and agility: It enables the connection of new data sources quickly and updates profiles and segments in real time.
  • Operational efficiency: CDPs reduce the need and time it takes for IT to compile, validate, and make customer data available.
  • Reduced marketing costs and optimized budgets: It helps marketing teams focus on the right customers and implement the right campaigns and programs.
  • Increased revenue: CDPs give sales and service teams the information they need to recognize high-quality prospects and cross-sell and upsell opportunities quickly.

What Is a CDP Myth Many People Mistakenly Believe?

Many people assume implementing a Customer Data Platform requires a “rip and replace” of existing applications. But this is a myth. A CDP easily integrates with existing applications and serves as the customer intelligence hub. It ingests customer data from relevant systems and then provides a consolidated view of all customer data back to the systems that deliver customer experiences.

Does Everyone Need a CDP?

While it’s clear a CDP platform brings value to an organization; it isn’t necessarily for everyone.

You may not need a CDP if:

  • All of your audience management needs are taken care of with a system of record for individual customer profiles.
  • Your marketing technology stack is limited, and you don’t have a lot of different technologies capturing customer data and delivering customer experiences.
  • Your customer data is simple and easy to unify and analyze.
  • Personalization is not a requirement or goal for your organization.

Customer Data Platforms: What Are the Greatest Advantages Over CRMs and DMPs?

There is often confusion between a customer data platform (CDP) and other marketing and sales technology, specifically other customer databases like CRMs (customer relationship management systems) and DMPs (data management platforms). Before we talk more about CDPs, let’s clear up any confusion.

A Customer Data Platform (CDP) is a unified customer database that builds rich customer profiles using data collected from systems across the company. It provides these profiles back to these systems to improve customer experiences.

A Data Management Platform (DMP) is a solution used by marketers to improve advertising, retargeting, and media buying. Data collected is primarily anonymous data from cookies, devices, and IP addresses, and it’s only stored for a limited time (typically 90 days). DMP data is often fed into a CDP to improve customer profiles. There are other differences between CDPs and DMPs, summarized in the table that follows.

A Customer Relationship Management (CRM) is a solution for tracking and managing interactions with prospects and customers. It is primarily a sales tool used for contact management and sales management. Marketing activity can be fed into the CRM through predefined connectors. Most data is user generated through salespeople entering contact engagement and sales activity manually.

What Is a CDP’s Advantage over DMPs and CRMs?

These solutions sound similar but have very different capabilities and are used for different purposes. The following table explains the CDP vs. DMP question, as well as the CDP vs. CRM issue.

Table 1. While often confused, CDPs, DMPs, and CRMs have very different capabilities and purposes as outlined in this chart.

When you look closely, you can see that these technologies are complementary:

  • A CDP enriches customer profiles by ingesting second- and third-party data from a DMP.
  • A DMP can ingest CDP customer data to improve ad targeting.
  • CDP software can ingest customer data from a CRM.

Customer Data Platform Architecture: How Does a CDP Work?

Customer data platforms–what are their key capabilities and underlying architecture?

Treasure Data CDP collects, unifies, and segments customer data from anywhere so enterprise teams can activate hyper-personalized and profitable campaigns.

Data Collection & Integration

The first step is getting first-party customer data into the CDP, including basic profile data, engagement data, and transaction data. First-party data comes from systems and channels such as web and mobile, email and marketing automation, CRM, surveys, e-commerce systems, and more. The data comes in many formats, structured and unstructured.

Most CDPs will offer pre-defined integrations to common data sources and systems from marketing, sales, and support. The data is ingested in real time or batches, continually feeding the CDP with current customer data.

Customer Data Cleansing/Transformation

Collecting data is the first part. Once ingested, some CDPs have the capability to clean the data, ensuring it’s consistent and correct. Data cleansing includes resolving identities, deduplicating profiles, discarding inaccurate data (including fake profiles), and resolving discrepancies. Some CDPs also include extract, transform, and load (ETL) capabilities that can be used to build data pipelines for these activities.

Customer Profile Enrichment

Once the profile is complete, a CDP can enrich the profile by integrating second- and third-party data sources. This type of data comes from organizations like Bombora and Dun & Bradstreet (business data), Acxiom and Nielsen (demographics data), weather, interest data, and other sources. Enriching the profile with this type of data helps fill in missing or inaccurate attributes and remove duplicate information. It also helps with building a richer set of seed segments for advertising platforms—enhancing prospecting activities with higher match rates and market reach.

Customer Segmentation

A CDP provides tools for marketers to define audience segments based on attributes and behaviors. You use segments to improve targeting and personalization. Segments are rules-based, or they are built using machine learning and AI. Predictive scoring is one example of a machine learning algorithm. With predictive scores, marketers can enrich their profiles with data they wouldn’t be able to tabulate on their own and create more robust target audiences.

Using the customer segmentation capabilities of a Customer Data Platform allows you to:

  • Identify advocates
  • Predict customer churn
  • Identify potential upsell and cross-sell opportunities
  • Identify top-performing customers
  • Deliver relevant recommendations based on a profile’s purchase history

The segmentation capabilities of a CDP help marketers optimize the entire customer journey from discovery through advocacy.

There are many different ways to analyze and segment profile data. Look for a CDP that provides out-of-the-box components, prebuilt code, and visualizations for faster deployment.

Next Steps to a Unified Customer View

A customer data platform provides excellent value to any organization that wants to improve customer experiences and keep operations effective and efficient. It unifies customer data across all your systems and data sources and gives you a single view of the customer. With this unified customer view, you can easily identify critical segments to deliver relevant, contextual, personalized, and consistent messaging.

It starts with understanding your goals and use cases and selecting the right CDP to support those use cases. Then you connect your data sources, unify and enrich your customer profiles, segment and activate those segments in marketing programs, sales activities, customer support programs, and more.

We hope you enjoyed this explanation of Customer Data Platforms. What is their value for your company in the age of the data-driven economy? Find out today.

To learn how to leverage data to improve your customer experience, consult an expert today. Want to learn more? Request a demo, call 1.866.899.5386, or contact us for more information.