Top Benefits of a CDP: A 4-Step Approach to Better Customer Experience

4 Benefits of a CDP
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What are the top Benefits of a CDP?

  • Understand your customers by aggregating disparate data across channels
  • Integrate data to create a single, unified, customer profile 
  • Activate data for omnichannel marketing campaigns
  • Manage customer data for privacy compliance

Customer data platforms (CDPs) are becoming mission-critical software for companies that want to thrive in a digital-first, customer-centric world. 

While there are multiple mature data management solutions on the market that may be in use in your company, like data management platforms (DMPs) and customer relationship management (CRM) platforms, those solutions are more focused on applications for advertising and sales support. Companies need a data management solution that can bring together customer data from disparate silos and store it centrally to affect the customer experience using first-party data. Neither DMPs or CRMs are broad enough in application to integrate all forms of customer data like a CDP. 

Unlike a DMP or CRM, the customer data platform (a term coined by David Raab of the CDP Institute in 2013) was designed to ingest and combine first-party data from multiple disparate sources. CDPs are also built, from the ground-up, with application programming interface (API) functionality for easier interoperability and interconnectivity with the rest of the technology stack. This built-in connectivity allows CDP users to deploy best-of-breed solutions for individual applications and use cases, giving organizations freedom from being locked into a single vendor for solutions and support. 

Being able to understand your customers’ wants and needs across all the places they interact with your organization is the critical first step in being able to be fundamentally data-driven and customer-centric. In order to glean actionable insights into your customers and prospects, you must collect data from disparate silos, whether they are digital or physical.

The importance of omnichannel marketing cannot be understated for campaign and business performance. Marketers using three or more channels in any one campaign earn a 287 percent higher purchase rate than those using a single-channel campaign. Customer retention rates are 90 percent higher for omnichannel vs. single channel.

Customers also want omnichannel capabilities. Ninety percent of customers expect consistent interactions across channels. 

CDPs offer several benefits for organizations that need to wrangle their voluminous supply of customer data. They provide the capability to collect disparate data and integrate it into a single, unified profile so it can be activated for omnichannel marketing campaigns, as well as keep companies compliant with evolving privacy regulations.

Here are the top four ways a CDP can benefit any organization that wants to know more about their customers and communicate with them more effectively.  

1. Understand Your Customers by Aggregating Disparate Data Across Channels

A CDP collects data by connecting to a variety of systems and data sources using built-in connectors, software development kits (SDKs), webhooks, and APIs. CDPs can ingest all types and formats of data including:

  • Profile data
  • Real-time interaction data 
  • Behavioral data
  • Demographic data
  • Transactional data 
  • Campaign data
  • Product data 
  • Customer support data
  • Mobile data
  • Point-of-sale (POS) data 
  • Marketing data
  • Device data
  • Internet of things (IoT) data

Being able to deal with different data formats is another benefit of some enterprise-grade CDPs. Whether your data is structured, unstructured, or semi-structured, a CDP that uses schemaless ingestion can ingest raw, event-level data without needing to create predefined tables. The ability to combine data in different formats is a critical step in getting data prepared to activate the customer experience through other martech platforms. Not all CDPs offer schemaless raw data integration, so it is definitely a feature to look for.  

A CDP can collect customer data in batches for a defined period of time and then load it into the system in a single batch. Batch processing can be automated through workflows as a part of a data pipeline. Another feature some CDPs have is the ability to set up incremental batch processing to only bring in the last data set since the previous load. Data can also be streamed into a CDP as it’s recorded in web logs and mobile apps. This provides marketers real-time access to changes in unified customer profiles.  

2. Integrate Data to Create A Single, Unified Customer Profile 

The holy grail of data-driven marketers is the single, unified customer profile. The unified profile serves as the single source of truth regarding a customer, allowing all groups across the organization to align against the same customer data and profile. The unified profile is also known as a single customer view (SCV), a unified customer view (UCV), or a golden profile. 

A CDP unifies customer data into a single profile through a process called identity (ID) resolution. A customer data platform gives marketers the ability to validate, clean, and dedupe customer data during the unification process.

Customer identity resolution works by stitching customer identifiers (email, address, etc.) together from multiple systems, automating identity graph creation and continuously unifying data into profiles as customers continue to engage in real-time. Identity resolution is accomplished in a few different ways. 

First, when using first-party data, unique identifiers for customer records are matched using common data points like email or name. The second approach, which works better with limited first-party data, analyzes customer data points to estimate the likelihood that two identifiers are the same customer. Profiles are then enriched with second-and third-party data sources that fill in any missing attributes and update other attributes with more recent data. 

3. Activate Data for Omnichannel Marketing Campaigns

One of the most desired benefits of a CDP is the ability to make customer data, through a unified, single customer profile, available to other technology systems for activation, campaign execution, and improved messaging for an enhanced customer experience (CX). With this clean and unified data, marketers can personalize the digital experience, send more targeted emails, deliver more relevant recommendations, and implement retargeting.  

A CDP can provide an organization the ability to optimize a variety of business processes, helping to accelerate your digital transformation and establish agile, data-driven processes. A CDP can assist in optimizing audience management, campaign management, customer service and support, product development, and even prospecting and sales. 

4. Manage Customer Data for Privacy Compliance

Unlike DMPs and CRMs, many enterprise-grade CDPs are designed from the ground up to be a centralized source for customer data management, making them the perfect platform to stay in compliance with current and future data privacy regulations. 

Regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) require companies that use customer data to provide their customers, wherever they may be, the right to be forgotten, as well as inform them how and where their data will be used. 

Given the fact that the average cost of initial compliance with the CCPA for businesses with over 500 employees is estimated to be $2 million, deploying a customer data platform can help your organization streamline the operational implementation costs of compliance. As more privacy regulations come out creating more regional requirements, using a CDP to properly segment and control permission for data use throughout the customer lifecycle is critical. All the emerging privacy regulations require the centralized storage of data profiles, with the right to be forgotten and deleted. CDPs are one of the few centralized data platforms designed to manage data centrally for global compliance. 

In Conclusion

CDPs offer organizations the ability to execute truly data-driven, customer-centric marketing and business strategies in four critical ways. 

With a CDP, marketers can understand their customers more completely and persistently over time. By collecting disparate data within one platform, the CDP can build a single, unified profile that will serve as the only source of truth regarding a customer across an organization. It can also enrich that profile with additional data sources, while providing the capability to analyze and segment profiles. 

A CDP can then make that data available to the rest of your technology stack for activation, the execution of marketing campaigns, and messaging that improves the digital customer experience.

Finally, the CDP is the ability to stay in compliance with both current and potentially future privacy regulations by providing a centralized database to manage personal information, and to deliver the operational efficiencies to reduce the cost of regulation compliance. 

CDPs are designed to be leveraged by modern data-driven marketing organizations serving a customer centric business model. They give you the business intelligence you need on your customers to tailor messaging and experiences to provide value for a mutually beneficial relationship between organization and individual. 

Brian Carlson
Brian Carlson
Brian Carlson is the Founder and CEO of RoC Consulting, a digital consultancy that helps brands establish the optimal balance of content, technology and marketing to achieve their goals.
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