What is a Customer Data Platform?
If you like to follow the marketing world through subreddits, Facebook groups, and forums, you may have seen professionals talking about customer data platforms recently. Today, we want to clear up any confusion and explain what these platforms are designed to achieve. Are they important for your marketing strategy? Should you invest in this area? Let’s find out!
What’s a Customer Data Platform?
Let’s start at the beginning (it’s a very good place to start, after all!). Sometimes shortened to CDP, a customer data platform is a centralized system containing customer data from various sources. Rather than just containing the data, though, CDPs are designed to normalize all data before then creating unified profiles of customers. Ultimately, what you have at the end is a universal system for the marketing team that can be used in all other marketing tools and systems.
As a marketer, you’ve probably dreamt of having a single location where all customer data is gathered and normalized for many years. The solution seemed so clear, yet it didn’t come. Well, the good news is that solutions now exist to achieve these very goals. As we’ve seen, they now belong to a unique niche of customer data platforms.
Who do we have to thank for this much-needed piece of technology? Perhaps the question should be changed to what rather than who because the pandemic led to many advancements in the field. With businesses closed, most customer interactions with brands took place on digital platforms. Suddenly, businesses needed to learn from these interactions, and this meant collecting data and unifying it to provide actionable insights.
Benefits of Customer Data Platforms
Though this is a relatively new niche, not all companies offering platforms are new themselves. For the most part, they already existed in another room of the marketing house. While some previously concentrated on analytics, others were interested in advertising. Regardless, they invested in CDPs after growing demand from consumers.
In the market, some CDP tools are from new providers while others are completely rebranded companies that now focus on this area. Currently, this means that there’s a perfect blend of new names and established brands all offering what they believe is the best CDP.
When choosing between these names, what features should you seek? What differentiates an advanced platform and a basic one in this new field? Well, many definitions all point to five main features. They say all reliable CDPs must:
When a CDP has these core features, it provides innumerable benefits for businesses. For example, there’s finally a central database where all customer profiles exist. Data is collected, normalized, and unified in one swoop rather than the several fragmented steps required before.
Furthermore, the insights generated on the other side can be used by all teams in the marketing department. Once platforms are connected and the CDP processes data smoothly, you don’t need convoluted IT systems or data science systems.
Depending on your goals, you can use these insights to improve your advertising efforts, make content resonate more effectively with the audience, or develop new products. The right tool also allows for offline and online data management, connection to all external systems, and both unstructured and structured data management.
All in all, you should notice the following benefits after implementing a CDP in your business:
Choosing Between CDPs
We know what you’re thinking, how do I choose between all the different CDPs that all offer these core capabilities? Just because all vendors have the main capabilities, this doesn’t mean that they’re the same. For example, they might have features to use customer data snippets when they come from disparate sources; this leads to identity resolution.
Elsewhere, like all tools, you’ll find differences in the user interface. While some look modern and are easy to use, others use a more complex interface that doesn’t welcome all users with open arms. Let’s say that three unique tools were identical in features, yet they differed in user interface and user-friendliness. Even though they contain the same features, you would still walk away with a favorite after testing each.
These days, APIs are universally available, and this leads to plenty of connection opportunities for businesses. This being said, some developers go further than others by providing pre-built connectors. As well as saving time, this removes a complex step for beginners and makes the platform simpler.
Elsewhere, you’ll find that some tools offer more advanced analytics features with machine learning and artificial intelligence. With this, users have access to advanced audience segmentation, journey mapping, predictive modeling, and other features.
Finally, tools may differ in how they adhere to international data regulations as well as the orchestration for dynamic interactions, tailored messaging, and content recommendations.
Key Components of CDPs
To finish, we want to take this one step further and explore some of the key components of CDPs. In the end, you should understand these key factors and the impact they have on your decision.
1. Data Management
Firstly, this probably doesn’t come as a surprise, but data management is the focal point of all CDPs. If a platform doesn’t handle the data management process very well, nothing else has a strong foundation to stand on. When choosing a platform, know that they tend to differ in data ingestion capabilities, data hygiene, offline/online data, and unstructured/structured data.
For instance, the number of mechanisms available for CDPs to gather data is constantly increasing. This includes APIs, mobile SDKs, built-in connectors, Webhooks, and more. As we discovered before, some platforms have features called ‘identity resolution’ which means that they can link pieces of information together gleaned from different sources like a jigsaw puzzle. It connects purchase data, email addresses, first-party cookies, phone numbers, and other details belonging to the same customer profile.
2. Analytics
Next, all tools tend to also vary in their analytics capabilities. Here are just some of the capabilities that you’ll discover with leading tools:
While some have journey mapping features, others focus on predictive models and revenue attribution. Thankfully, machine learning and artificial intelligence have pushed these areas forward in recent years.
3. Regulation Compliance
As well as complying with regulations themselves, let’s not forget that CDPs also need to help users to comply with national and international regulations. Over the years, businesses have come under increasing pressure to safeguard all customer data. While some CDPs use outside systems to help their users, others have compliance features built into their tools.
Back in May 2018, the General Data Protection Regulation transformed the online world and it’s now a concern for businesses that want to provide services to countries in the European Union. If you handle any European data, you’re governed by the GDPR. What’s more, those handling Canadian data need to remember the Canada Anti-Spam Legislation (CASL). In 2020, California introduced the Consumer Privacy Act, and regulation compliance shifted again.
What’s more, some businesses aren’t just bound by location-based regulations but also industry-related regulations. For example, HITECH and HIPAA regulations govern those in the healthcare sector. Make sure you choose a tool that helps in this complex and complicated process this year.
4. Orchestration
Finally, personalization is one of the biggest trends in 2021 and it will continue into 2022. You’ll need to provide personalized content recommendations, tailored messages, dynamic web experiences, and more. These days, some CDPs offer orchestration features that encompass all these things.
Every so often, updated customer segments are sent to other martech systems to ensure that every part of the business is using the latest insights. Ultimately, this means that you can send updated customer segments to email service providers, marketing automation platforms, web content management systems, and others.
Conclusion
If you’ve stuck with us to the end, we hope you’ve learned lots about customer data platforms and why more marketers are relying on them this year. Although we didn’t mention it in the previous section, another factor to keep in mind is third-party tool integration since modern marketing systems contain several third-party tools.
Customer data platforms collect, normalize, and then unify data for the betterment of the marketing team and strategy. As you develop customer segments and generate other insights, you can send them to every corner of the business and improve your strategy. You provide better content recommendations, more effective ads, and tailored messaging. Why not get started today?