“Data is the new currency, it’s the language of the business. We need to be able to speak that.”
The customer has been the central focus of businesses since the very beginning. Feted as being “always right”, the importance of the customer has always been paramount for a successful business. Understanding their problems, needs, and desires while projecting your business’ solution as the best possible offer is the core around which the very concept of marketing has been built over decades.
As the range and depth of modern business expand, both in the virtual and physical world, the complexities of this basic requirement of a business- knowing your customer, have only increased. Marketers today have to tread a fine line between crowd psychology and personalized insights to ensure the maximum gains for their products.
A variety of tools have been developed to understand the modern consumer better. Cookies on websites try and capture customer behavior to understand their needs and shopping pattern. Businesses spend significant resources and energy on CRM software that is used in-house for an enhanced personalized approach toward customers. And initiatives such as loyalty programs are formulated to further hone the personalized marketing tactic.
Each of these methods uses an independent conduit to understand the customer better. Let’s understand what is Customer Data Platform CDP. It is a packaged software designed to gather and harmonize first-party customer data, gathered from multiple sources to build a unified and comprehensive perspective of each individual customer. The Customer Data Platform software provides the opportunity to amalgamate these parallel channels, and many others, into a single cogent stream. The Customer Data Platform harnesses multiple data sources within your company to create unified personalized profiles which can be used to derive customer insights, automate marketing functions, enhance real-time customer engagement capabilities, and empower multichannel campaign management. While other systems like CRM (Customer Relationship Management) and DMP (Data Management Platform) handle specific aspects of customer data, a CDP is designed to unify data from both online and offline sources, creating a holistic customer view. Unlike DMPs that primarily focus on anonymous data for advertising, CDPs emphasize known customer identities for personalized engagement.
Here’s What You Will Learn in This Blog
Key Differences: CRM vs. CDP vs. DMP
When comparing a Customer Data Platform vs Customer Relationship Management (CRM) vs Data Management Platform (DMP), their primary purposes and data utilization stand out as distinctive factors. Each platform focuses on different aspects of customer data to achieve their respective goals. Although all aim to create customer profiles, they diverge in their methodologies and data sources.
Data Source
Data Source
- A DMP primarily utilizes anonymous, third-party data.
- Both CRM and CDP employ a combination of first, second, and third-party data.
Goal
Goal
- DMPs are tailored for prospecting and targeting potential customers.
- CRMs are designed to effectively manage and nurture existing customer relationships.
- CDPs excel in engaging customers throughout all stages of their experience while personalizing interactions.
Internal Management
Internal Management
- Marketing teams typically manage CDPs and DMPs.
- Sales teams often oversee CRMs.
Security
Security
- CRMs and DMPs might require additional external tools to capture customer activities, potentially leading to security vulnerabilities. CDPs intrinsically track activities without relying on external tools.
Data Source
- A DMP primarily utilizes anonymous, third-party data.
- Both CRM and CDP employ a combination of first, second, and third-party data.
Goal
- DMPs are tailored for prospecting and targeting potential customers.
- CRMs are designed to effectively manage and nurture existing customer relationships.
- CDPs excel in engaging customers throughout all stages of their experience while personalizing interactions.
Internal Management
- Marketing teams typically manage CDPs and DMPs.
- Sales teams often oversee CRMs.
Security
- CRMs and DMPs might require additional external tools to capture customer activities, potentially leading to security vulnerabilities. CDPs intrinsically track activities without relying on external tools.
How Does CDP Work?
CDP is an incredibly versatile tool to unify customer identity across multiple data channels within the business. There are numerous benefits of a customer data platform as the platform can be harnessed to guide the entire customer journey with the company from the initial point of contact to a final position of conversion and loyalty with the multiple use cases en route.
To enable this multifarious charter, a CDP primarily comprises the distinct abilities of data collection, data fusion, data activation, and finally customer insights.
Data Collection
Data Collection
CDP can be visualized as the grand central station of data within your company, with the ability to access data from all possible streams of customer touchpoints. From CRM software, service databases, and e-commerce interactions to data from advertising campaigns- CDP accesses and harnesses every single customer data source to build its database.
Data Fusion
Data Fusion
CDP thereafter carries out the process of customer resolution to create unique and personalized individual customer profiles and verify the same over multiple platforms and devices. This process allows for the creation of an accurate personalized customer profile over a wide range of activities.
Data Activation
Data Activation
This amalgamation of data is thereafter available to the marketers through business-specific tools which allow them to access the relevant portions in real-time with a high degree of accuracy and data integrity.
Customer Insights
Customer Insights
The final step in the process now allows the marketers to draw insights for each customer, thereby achieving personalization at scale, focusing on providing optimal customer satisfaction, and ultimately benefiting the business margins and ROI.
Type of Data CDP Uses
Customer Data Platforms (CDPs) are powerful tools for managing and utilizing data to enhance customer experiences and marketing efforts. CDPs primarily rely on different types of data to meet privacy protection standards for customers. These data types are instrumental in providing a holistic view of customer behavior and preferences while ensuring compliance with various privacy regulations. The four main types of data that CDPs use in this context are:
Identity Data
Identity data refers to sensitive information about an individual person. It includes personal details such as their name, address, contact information, bank account numbers, health records, and other confidential data.
This type of data is considered highly sensitive and private, making it crucial to protect it from unauthorized access and breaches.
Identity data is typically hidden from public platforms and requires stringent security measures to safeguard customer privacy.
Descriptive Data
Descriptive data encompasses information that describes, shows, or summarizes the basic features of individual datasets. It is used to create profiles of customers.
This data helps in segmenting and categorizing customers based on various characteristics, such as demographics, purchase history, and preferences.
Descriptive data assists in personalizing marketing efforts and tailoring products or services to meet specific customer needs.
Quantitative and Behavioral Data
Quantitative and behavioral data provides insights into how customers interact with your business across various touchpoints.
This data includes information collected through marketing systems, call centers, website interactions, mobile app usage, and third-party databases.
It helps in understanding customer behavior, tracking conversion rates, and identifying trends or patterns in customer engagement.
CDPs use quantitative and behavioral data to optimize marketing campaigns and customer engagement strategies.
Qualitative Data
Qualitative data consists of personal information that cannot be easily measured or expressed using numbers.
It is often collected from sources such as audio recordings, text feedback, imagery, or cloud systems.
Qualitative data provides valuable insights into customer sentiments, opinions, and qualitative aspects of their interactions with your brand.
Analyzing qualitative data can help in understanding customer emotions, opinions, and feedback, which can inform product improvements and marketing strategies.
While these four types of data are integral to CDPs’ operations, it’s important to note that CDPs prioritize first-party data obtained directly from customer interactions within your organization. This focus on first-party data helps protect customer privacy and ensures that data remains in the context of the customer relationship. CDPs also adhere to industry standards and privacy regulations to maintain data security and compliance, ultimately contributing to better customer experiences and more effective marketing activities.
Why Should You Opt for a CDP?
Let’s explore the reasons why integrating a CDP into your business strategy can be beneficial.
Suppression:
One of the most interesting things businesses can do with data is identify customers to not target. This is called “suppression,” and it’s part of delivering truly personalized customer journeys. When a customer’s consolidated profile within your CDP includes both marketing interactions and purchase history, you gain the ability to withhold ads from customers who have already completed a purchase. This ensures that customers aren’t exposed to irrelevant ads, optimizing your ad budget by channeling resources toward fresh audiences.
Personalization:
Often, customers explore your website, browse products, and depart without making a purchase. With a CDP, you can seamlessly integrate such visits into a unified customer profile, enabling personalized follow-ups through their preferred channels, be it email or push notifications. Tailoring content to their interests enhances engagement—customers encountering content tailored to their preferences are five times more likely to engage with a brand, making personalization through a CDP highly rewarding.
Insights:
A CDP is a unifying force, bringing together your company’s customer data and analytics, and democratizing access across teams. This breakdown of silos fosters collaborative insights. By incorporating comprehensive customer interactions—linking ecommerce data, website visits, and more—every department, from marketing and sales to service and beyond, gains a deeper understanding of each customer. This knowledge fuels more personalized, pertinent engagements, enhancing the overall customer experience.
How is CDP Evolving?
The evolution of customer data platforms necessitates seamless empowerment across your entire organizational spectrum all in real-time. This dynamic shift is essential to empower your brand to respond instantly while ushering in an entirely new echelon of customer engagement.
The customer data platform market is expected to surpass $5.7 billion by 2026, according to IDC, a global market intelligence firm. This is where Data Cloud enters the scene. With its adept synchronization of data refreshed down to the millisecond, Data Cloud empowers your teams to connect with your customers at unprecedented touchpoints, creating an unparalleled level of engagement. The customer data continuously evolves with inputs from all their interactions, quicker than ever before.
In addition to its perpetually updated data, expansive scalability, and unified profiles, Data Cloud opens the door to:
- Spontaneous updates driven by artificial intelligence on a millisecond scale.
- Automated workflows that seamlessly adjust in response to incoming data surges.
- Unmatched precision in analytical insights.
CDP Implementation Process
The modern customer’s behavioral patterns and consumption needs have been refined and re-defined by the explosion of online businesses. Within a span of minutes, a customer can switch between a ride-hailing app, a food delivery app, and an online shopping app- each with its own unique business challenges and customer experience needs. This fervent pace of customer-business interaction complicates customer behavior and makes legacy online tools such as website cookies left wanting in terms of results and efficiency.
CDP aims at tackling this challenge through the large-scale amalgamation of data through traditional customer interaction means like email lists as well as modern channels of information such as e-commerce engines. The larger the access a CDP has to the various customer data flows, the more efficient its product for the marketers becomes.
There are essentially three important phases for CDP Implementation:
Planning Phase
The foundational aspects of CDP integration must be carefully laid out before you begin with the execution. This initial phase encompasses several crucial steps:
During the project scope definition phase, it is important to articulate business goals, use cases, and the sequential plan for integration and implementation. Also, at the time of Tracking Document Preparation, you need to detail customer attributes, permissions, and the events requiring monitoring.
Integration Phase
Once the groundwork is set, technical integration comes into play. While several integration steps align with general data collection processes, specifics can vary based on the chosen CDP type. Here’s an overview of typical integration steps:
CDP Booting
Establish a connection between the CDP and your online and offline data sources, enabling customer identification and behavior analysis. Bloomreach simplifies this process with a code snippet, while other solutions might differ.
Checking Customer IDs and Attributes
After CDP initialization, configure tracking for customer IDs and attributes to collect chosen data. This information aids in audience segmentation, personalized campaigns, and more.
Capturing Customer Insights
Capture customer behavior insights by tracking actions like purchases, clicks, and browsing. Link this data to unique customer identifiers for comprehensive profiles.
Import Data
Capture customer behavior insights by tracking actions like purchases, clicks, and browsing. Link this data to unique customer identifiers for comprehensive profiles.
Execution Phase
With the CDP primed, customer identifiers and event tracking set up, and tools and platforms integrated, the execution phase commences. The execution process will differ based on the type of CDP you implement.
To enable this smooth flow of data from multiple sources one needs to overcome challenges of technology as well as break down barriers between various teams within the same business. The responsibility of managing the CDP, which with time will become the central repository of all customer-related data, is a key decision to be made which can make or break its success.
Nsight’s partnership with leading solution providers for the best Customer Data Platform, such as Adobe and SAP, makes us the right choice for your business’s transformation journey. Our team of experienced and dedicated professionals understands the need to personalize your business needs to create the right solution and enable efficient project implementation so that you can thereafter understand and interact with your partners better.
Embark on This Journey of Customer Management and Supercharge Your Marketing Strategies
About the Author
Jai Pal Charan is a data-driven, results-oriented, and tech-savvy B2B Marketing & Business Strategy Leader with a proven track record of over a decade of building brands, accelerating growth, and leading digital transformation. Inherently passionate about crafting, executing, and managing overall growth strategies, he successfully leads cross-functional Marketing and Demand Generation teams.
Jai has managed digital transformation projects across domains with a constant focus on building a transformational CX strategy. He has supported brands to adopt a value-driven and customer-centric culture.
