Customer Data Platform

Quick definition: A customer data platform (CDP) helps manage customer data for marketing by bringing together multiple data sources from different systems.

Key takeaways:

• CDPs work with data that can be assigned to individual users, helping unify all of your data across several different channels into one place
• Marketers are the primary users of CDPs, employing CDP data to create customer profiles that help them know how to market to individual customers or groups of customers that are similar
• CDPs are most useful for larger organizations that want to perform personalization at scale.
• Before using a CDP, it’s important to determine key use cases, data sources, and data governance rules.

The following information was provided during an interview with Matt Skinner, senior product marketing manager for the Adobe Audience Manager.

What is a customer data platform?
What is the purpose of using a CDP?
What are the different types of customer data platforms?
What is the difference between a CDP and a DMP?
What are the first steps in using a CDP?
What is the process of using a CDP?
What are some drawbacks with CDPs?
Which departments in my organization should manage the CDP?
How will CDPs look in the future?

What is a customer data platform?

A customer data platform helps manage customer data for marketing by bringing together multiple data sources from different systems.

Let’s say that your company has a great marketing strategy. Most likely, you have analytics tags on your company website, so you’re collecting behavioral data about how your consumers engage with the site.

Maybe you’re running advertising campaigns, so you’re bringing in data about who’s been exposed to those campaigns and how they’ve responded.

You might have an email system that’s sending newsletters and special offers to your customers, and you want to understand who’s engaging with those emails. That’s a lot of data to worry about, but a unifying tool like a CDP makes it easier.

What is the purpose of using a CDP?

Using a CDP is necessary whenever an organization is trying to consistently do customer personalization at scale across multiple channels.

If the only thing that an organization does is send emails with no on-site personalization or paid media, then they’re probably also not growing their business or creating the best experience for their existing customer base.

That’s why larger organizations are prioritizing systems like CDPs, because they have much larger customer bases.

And those customers — especially now, with so much shopping and engagement occurring online rather than in store — are looking for personalized experiences.

What are different types of customer data platforms?

In the last couple of years, there has been a huge surge of new ways to pivot the CDP space. Some companies use their CDPs to focus on identity management, which means primarily unifying customer identities.

Others use it as a tag management system to help marketing and IT organizations streamline how much tracking happens on their websites.

Both approaches are great. But there are many services that call themselves a CDP, without a lot of consistency in the capabilities that they provide.

That’s why Adobe has sought to build a powerful CDP that fulfills identity activation, data ingestion, and data governance, all while providing artificial intelligence and machine learning as well.

Adobe’s Real-time CDP is one system, and it handles all the use cases across the customer journey — from the very beginning when they’re an unknown customer, all the way through to when they convert.

What is the difference between a CDP and a DMP?

CDPs and DMPs are very similar, the only key difference being the type of data that each tool works with. CDPs work with data that can be assigned to individual users.

DMPs work with data that can’t be assigned to individuals but that gives good insights into how customers are interacting with a brand.

Both tools make a marketer’s life much easier because they unify data from different channels for marketers to gain insights from that data.

To provide more context on DMPs, they came from a need to work with what is referred to as pseudonymous data, meaning data that doesn’t directly identify users with personal information, but provides key insights about a specific user’s interactions with a company.

This type of data comes from website cookies that collect the data from device IDs but still don’t identify personal info about the users of those devices. Pseudonymous data is used to help a company gain new customers.

On the other hand, CDPs help maximize the experiences of a company’s current customers. Let’s say that you’re a marketer, and that your company has a customer relationship management (CRM) system, a loyalty program, and an email system.

Each of those marketing tools has different data channels for a specific customer, based on something like an email address, a name, or a phone number. CDPs keep that data in one place so that you can gain insights from that data to keep personalizing your customer experiences.

What are the first steps in using a CDP?

One of the first things that an organization should do is take an inventory of what data sources they already have and that they would want to ingest into a CDP.

Ask yourself, “What are the systems that my company has that are producing data that will be relevant to our marketing use cases?” These data channels could come from CRM, email software, paid media teams, social teams, and more.

And each is likely working with their own systems. It’s important to gather all of that information, because these channels are going to be your inputs into your CDP.

The next thing to do is to think about your company’s use cases, which is very important. Many organizations jump right to deciding the best vendor to work with in order to start building customer profiles.

It’s important to define use cases and what success looks like, and to set time-bound, realistic goals to go along with that. The companies who have the greatest success in adopting a CDP are those who have a clear vision for what they’re trying to achieve and by when.

Some companies might want to make sure they have proper governance rules applied consistently across all their data sources. Some might want to be able to suppress their existing customer base from the offers they would give to new customers.

Or maybe they want to build a new segment of loyalty members who will be delivered a special campaign. Having these types of specific use cases is important because it helps you track your progress and understand the value that you’re getting out of your investment.

One last critical step is to consider organizational structure and the way your organization will use a CDP.

What often works best for this is building a team of members that manage different systems, who come together to determine how to prioritize a CDP.

What is the process of using a CDP?

Let’s say you go onto an online retailer’s website for the first time, and you begin browsing.

What the marketers behind that site want to do is understand your preferences so that, as you browse, you get a personalized experience that will hopefully lead to you becoming a customer, and then a loyal customer over time.

The first step to that personalization is to collect some pseudonymous data from you as you start browsing the website. This data is tied to a cookie or a device ID about how you’re engaging with the site, and it would be deposited into a CDP.

As you interact with the organization across different systems, you would provide more data, which would be used to build a profile made up of these data points.

Eventually, you might buy from the retailer, or sign up for an email newsletter, which then helps identify you further with an email address.

All your behaviors and interactions with the brand across different channels will then be tied to this email address — even in-store transactions if there is some sort of loyalty program connected to your profile.

Marketers can then use that profile to deliver personalized messaging for you and other customers like you by building audience segments of people who have similar behaviors.

These segments could be people who are new customers, who have spent a certain amount of money in the last 30 days on the brand, or who qualify for some type of special offer.

You will continue to enter and leave different segments, receiving personalized offers, so that the relationship between you and the brand will get stronger and stronger.

What are some drawbacks with CDPs?

The biggest challenge with CDPs is the operational challenge of CDP technology. The main goal from using a CDP is to unify a bunch of data across different platforms.

In order to be successful, you need to bring teams together to unify the data. This might create some dysfunctional dynamics in an organization.

For example, other teams could feel threatened by the team that manages the CDP, or personal feelings could impact the use of data.

This might lead to poor management of the CDP, creating a persisting problem of data silos, which could keep your marketers from building a complete profile for customers.

Without those customer profiles, your company will not be able to provide those personalized experiences. It’s a chain of inefficiencies that begins with operational problems.

Which departments in my organization should manage the CDP?

The answer depends on the complexity, size, and goals of your organization. But in general, the two internal departments you would use to manage a CDP would be marketing and IT.

IT should always be involved because you’re bringing a new system into your organization, so IT needs to understand the value it provides and be able to consider which other systems need to be integrated with it, and how it gets managed.

But usually, marketers are the people who are really using the software. When it comes to assigning roles, there are some companies that just include CDP management as part of somebody’s job description.

Some companies have employees that are fully dedicated to managing a real-time CDP.

In others, they’ll have a dedicated team that almost functions like an internal agency, working with the CDP primarily. Every CDP-management plan looks different, depending on company needs.

How will CDPs look in the future?

Even in the next year or two, CDPs are anticipated to become more and more important because of the global theme of consumer privacy. More regulations are coming into effect to protect consumer data and give consumers more control over their own data.

There are emerging data governance rules that are being created to ensure that consumers have rights about how their data gets collected and used. There are also companies taking steps to require consent from end users for the use of their advertising identifiers and other data.

It’s also expected that third-party cookies — the way that a lot of advertising and personalization happens on the web today — could be done away with in early 2022.

All these regulations, while positive for consumers and their privacy, remove the ability to use pseudonymous identifiers.

Marketers will have to rely on things like loyalty programs and other ways to capture email addresses and receive consent from their site visitors. A CDP is the perfect system to do that.

So, as restrictions continue to come into effect, CDPs will become more and more important.

Another expectation for future CDP technology is the convergence of CDP and DMP capabilities to fulfill a complete set of use cases across the customer lifecycle, all in just a single system.

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