A complete guide to customer data platforms

You may have heard of customer data platforms. They might have been mentioned in an industry publication, suggested by a client as a future project, or put on your radar for the next development cycle.

But you might not know what they are or how they operate in detail. More importantly, you might not know if your company or your client needs one. Some new technologies add incredible value to business operations, while others drain budgets and overcomplicate future initiatives and integrations.

A customer data platform (CDP) is a powerful and useful tool, but it can also be easily confused with customer relationship management (CRM) or a data management platform (DMP). This guide will give you a complete education on CDPs, what sets them apart, and how they work so you can decide if your company needs one — and, if so, learn how to find the best solution for your business purposes.

Each solution has strengths and weaknesses that make them the right (or wrong) choice for your needs. In this guide, we will cover everything you need to know about a customer data platform, including:

• What it is
• CDP vs. CRM
• CDP vs. DMP
• Benefits
• What kind of data a CDP uses
• How it works
• CDP and customer experience
• CDP success story
• If you need a CDP
• Types
• How to choose and implement a CDP
• How to get started

What is a customer data platform?

A customer data platform is a type of software that integrates customer data from multiple sources and tools across the organization into a single database. This centralized database contains information on every customer touchpoint and every interaction that customer has with your product or service.

The data can include purchasing decisions, engagement with marketing messages (including email), website and app behavior, and more.

With the data collated into a central database, you can organize and segment the data in infinite ways. You can then leverage the gathered data to create more efficient marketing campaigns that bring a higher return on investment (ROI).

The platform organizes the data into unique customer profiles to build a complete understanding of that user’s behavior. Measuring the way different demographics of customers interact with business resources and engage with materials for marketing and sales is vital to encourage them to purchase.

A human being could never organize and analyze all the data generated by individual customers, especially for enterprises with thousands of clients. The CDP provides the necessary tools to sort through the vast quantities of data generated by each customer and build those profiles.

Since enterprises derive the most value from data analysis with the largest sample size of customers, tools like CDPs are a vital part of decision-making. As such, they are important for and accessible to both technical and non-technical users within the organization.

CDP vs. CRM

CDPs and CRMs both gather customer data for analysis, but they are more different than they are alike.

The primary difference lies in the type of data that they gather. CRMs organize, manage, and record customer-facing interactions with an organization’s business team. CDPs, on the other hand, collect data on customer behavior as they interact with the product or service.

They may have some overlap in functionality and data gathered, which is why analyzing the benefits of current business tools before making a switch is important.

Characteristics of CRMs:

1. Gather customer-facing interactions like conversations with the sales team and support tickets
2. Meant for customer-facing roles like salespeople and marketers
3. Help improve outreach attempts and streamline marketing design
4. Convert new customers and maintain existing relationships

Characteristics of CDPs:

1. Gather information about every interaction a customer has with a business
2. Meant for non-customer-facing roles like finance, product design, and management
3. Help personalize marketing campaigns or determine tactical effectiveness
4. Only gather data from existing customer relationships

Both types of products benefit marketers and build a complete profile of an individual customer to better target future marketing and outreach efforts. However, a CDP can also provide system engineers with information about conversion funnel bottlenecks on a website or app and which features customers prefer to use.

This technology takes fragmented customer data — which can include information from a CRM — and builds it into a more complete profile than individual segment software alone.

CDP vs. DMP

CDPs and DMPs both organize and use gathered data, but they differ significantly in the source of the data. CDPs take advantage of internally gathered first-party data, as well as some second-party data. By comparison, DMPs are external. They gather some second-party data and focus on the information provided by third parties.

Some CDPs also include this third-party data to gather information from all possible sources.

Characteristics of DMPs:

1. Designed for third-party groups like advertising agencies
2. Able to package and repackage data
3. Use data that is anonymous
4. Provide any organization with access
5. Gather information like browser cookies, devices, or IP addresses
6. Retain data for only a short time

Characteristics of CDPs:

1. Designed to gather data from within one specific agency
2. Organize information inside internal advertising systems
3. Assign information to a named profile of an identified customer
4. Store information internally and maintain it for internal use only
5. Gather information like customer ID, email, address, and name
6. Use long-term data retention to build more complete customer profiles

Because CDPs seek to accumulate as much information as possible about customer behavior, they may also take advantage of gathered DMP information. Enterprises that use a CDP may purchase information packages from the third party that created the DMP and integrate it with existing data.

The additional data can further inform information analysis within the CDP ecosystem and ensure the business gains a more complete picture of customer behavior. If a business decides to purchase a DMP data package, it must act quickly since the marketers who gather this information retain it for only a short period before deletion.

Benefits of a CDP

The benefits of CDPs center on the way they combine all of the data a company can access and assign to individual customers. This sorting method creates an actionable library of information that’s easy to organize and update when regulations or company needs change.

Unified data format and single customer view

A CDP integrates data gathered at all points in the customer journey from every tool available. Decision-makers can access all that information in one place rather than manually combine data in multiple tools or only gain a fragmented set of insights from different sources.

This singular view of a customer makes it easy to gain a fuller picture in less time, maximizing marketing ROI for the client profile construction.

Updated profiles

Single profiles unique to each customer gather information automatically every time the user interacts with a system integrated with the CDP. Some systems can even integrate in real time. These insights give decision-makers a live look at the health of the business when those updates spread across thousands of customers.

Actionable customer insights

Because the data gathered from every source is assigned to specific clients — which the CDP can then group into whatever demographics the business needs — it provides behavioral insights to act on. Interactions on websites or unopened emails identify opportunities for improvement immediately.

Compliant privacy and governance capabilities

A CDP stores all of its information in one place, which makes it easy to adjust when necessary. Governmental and industry standards move slower than revolutions in data. When they do catch up, a single-storage data solution eases the compliance adjustment process.

The single source also makes data backups easier to maintain, a key consideration for any enterprise that leverages data.

First-party data

Since a CDP gathers first-party data, the enterprise that uses it has complete control over the information, where it’s used, and when it’s deleted. A CDP requires no external support to gather data and continue to function, which maintains customer privacy and gives the business greater control.

What kind of data a CDP uses

A CDP is capable of handling all types of data that a company might use. It can leverage structured data, semi-structured data, or completely unstructured data and help organize all of it into more rigid formats when necessary.

Integrating with a variety of specialized systems to gather information and assemble it into a single profile, a good CDP can unify and reconcile different types of data, including:

• Customer or buyer attributes. CDPs exceed the capabilities of CRMs because they integrate with CRM tools to gather data about customers' attributes. Through CRMs, CDPs can gather information about customer purchases, engagement, and behavior and integrate it with other profile data.
• Customer service information. CDPs can also gather data about pain points and problems that a customer might face during their journey with the company. It can record phone calls to customer service, support tickets filed, email complaints, and more. Without a view of the pain points suffered by the customer, the company can’t deliver interactions appropriate to their experiences.
• Marketing campaign data. CDPs can gather information about customer behavior on websites and their interactions with other marketing. They can measure the ROI of pay-per-click (PPC) advertisements. This analysis helps determine which ads work and which need more work. A CDP can also measure customer engagement with app notifications and email marketing campaigns, again helping you evaluate effectiveness and course-correct when necessary.
• Transactional data. Finally, CDPs can gather information from financial documents and accounts to determine which customers purchased which items. They can combine that information with website behavior to measure time from access to purchase, customer journey through the site, and more. A CDP can also determine preferred payment methods and make efforts to accommodate them.

How a CDP works

As mentioned before, a CDP collects data from a variety of sources, then unifies them into a single customer profile that gives the business all of the information it needs to interact with the customer. While the system is fairly complex, a CDP involves a few basic processes.

Data collection

A CDP collects data by integrating with most or all of the marketing and transactional systems within the organization’s network. CDPs collect this data through APIs, event trackers, server integration, and manual import. Many modern CDPs can pull this data in real time, which removes the need for manual entry.

Data unification

After the data collection is completed, the CDP unifies the information. It collects all gathered data into a single database that the organization can then sort. A CDP can also start the organization process when it labels the data by its source or type.

Putting the data to work

Most data would be useless without the CDP’s ability to gather and organize it. The organized data can instead be stored for long-term analysis and use — the company can use the data to derive insights about the customer journey and behaviors that can drive it to address pain points or streamline interactions.

https://video.tv.adobe.com/v/29620

Adobe Real-Time Customer Data Platform covers both B2B and B2C enterprises and gives your business the ability to organize data into real-time profiles that users can activate across any channel.

CDP and customer experience

The creation of a seamless customer experience (CX) is the most important use case of a CDP.

Difficult, slow, or frustrating CX drives away potential clients, leading to lost business for you and additional business for your competitors.

The plethora of information a CDP gathers can identify pain points and create a better user experience. It can end the frustration of customers cycling through a website as they struggle to find what they’re looking for and can identify the stages of the buying process that lose the most prospects.

It can also help discover technical issues. A CDP identifies which devices might struggle to load certain pages and can help you find opportunities to improve. By facilitating improvements in long and complicated customer journeys, a CDP better identifies which parts of the site need additional adjustment and increased personalization.

In addition, a CDP can help adjust marketing outreach efforts. A CDP integrates with your CRM software to measure which email outreach campaigns see the most engagement and conversions. It can also detect which campaigns struggle among certain demographics and adjust them for a more appropriate approach.

Unlike other tools, a CDP measures the user experience at all stages. The broader view builds a more complete image of a real customer’s experience and helps you better understand the way they think and operate.

CDP success story

As the director of analysis and design at TSB Bank, Mike Gamble is passionate about customer feedback. On top of the responsibility that goes with driving TSB’s digital strategy, Gamble takes time to evaluate every review the bank receives.

This passion for understanding customers fuels every decision for Gamble and his team, including the technologies it uses to collect, analyze, and act on customer data. With more consumers and small businesses banking online and on their mobile phones, TSB turned to Adobe Real-Time CDP, among other Adobe products, to deliver consistent and personalized experiences for every customer whether they bank online or in-branch.

“We needed a complete picture of every person who banks with us,” Gamble said, “from their history, to their needs, to how they move through the customer journey — and that meant centralizing our data on a single platform.”

TSB previously took a linear approach to customer data and personalization. Teams would collect data, segment customers and prospects into broad categories, and then target each of these segments with batch marketing materials. But with people using multiple devices to bank, especially during the COVID-19 pandemic, this led to a fragmented understanding of individual customers and generic marketing that was no longer hitting the mark. It also meant data wasn’t shared between online and offline channels, leading to inconsistent experiences.

Enter Adobe Real-Time CDP, which pulls together data from TSB’s online and offline channels to gain a holistic view of every customer that updates in real time. Data that previously took 15 days to create, crunch, and transform into actionable insights could now be consolidated from multiple sources and applied to campaigns instantaneously.

Being able to deliver more relevant offers and communications to customers in the moments that matter created better experiences for customers and also led to greater returns for the bank. TSB saw a 400% boost in loan applications just one year after going live with Adobe.

The combination of a complete customer view and real-time personalization promises to strengthen TSB’s content and offers over time, particularly when it comes to predicting the next-best action to communicate with each customer.

“The rich insights we get from Adobe Real-Time Customer Data Platform informs our personalization strategy to enrich customers’ experiences,” Gamble said. “Most importantly, we can deliver that richness consistently online and offline because our decisions are based on every interaction in that customer’s past.”

Do you need a CDP?

Not every business needs a CDP to succeed. Smaller businesses, for example, can handle the data they gather manually or with existing tools without the additional software and infrastructure investment.

If you are unsure about your CDP needs, ask yourself these questions:

1. Is your audience data scattered and siloed?
2. Do your marketing, sales, and IT teams lack customer behavior information outside their spheres of operation?
3. Are your marketing programs growing faster than you can integrate them?
4. Do you possess large data lakes full of information that you can’t use?

If you answered “yes” to one or more of these questions, the odds are good that a CDP is the right choice for your organization.

Types of CDPs

Just as CDPs differ from other platforms that gather consumer data, they also differ from one another. Each provides specialized tools and brings unique capabilities to the table for diverse use cases.

CDI

CDI stands for “custom data infrastructure.” Considered by some to be even broader than a CDP, this system provides the same integrated data-gathering opportunities as a standard CDP.

It also organizes data into the proper categories and constructs user profiles. A CDI system can move data to the right place at high speed while simultaneously maintaining data quality and consumer privacy requirements.

However, a CDI does not store data as CDPs do. Instead, it funnels it to another system that stores it on its behalf.

Traditional standalone CDP

A traditional CDP integrates with every system in the organization’s tech stack that gathers customer information, organizes it, and updates it in real time. It can then take action and reach out to customers as it builds and iterates their unique profiles.

Unlike a CDI, a CDP stores the data it gathers itself and does so with the intent to treat it as a long-term investment.

CDXP (orchestrating CDP)

CDXP stands for customer data and experience platform. It represents the next generation of CDP development — combining the benefits of a CDP with an experience cloud to create a centralized marketing platform focused on the user.

As yet another integration of programs, these systems provide even more tools to marketers than traditional standalone CDPs do. The flexible system molds around existing infrastructure and combines the benefits of marketing automation, UX optimization, and data gathered from the CDP to react to customer behavior faster than ever.

How to choose and implement a CDP

After deciding the benefits of a CDP are worth it for your business, the next step is to select the provider that’s right for you. Here are a few things to consider in choosing:

1. Identify your use cases
2. Make a list of capabilities and preferences
   1. Batch updates or live streaming
   2. Standalone or orchestrating
   3. Cost and pricing structure
   4. Ease of implementation
3. Evaluate platforms
4. Ask for demos
5. Test and assess performance

Getting started with a CDP

A CDP integrates with every system that records a customer-facing interaction and uses it to build a holistic profile of that customer. Companies can then use those profiles to provide customers with tailored experiences and identify opportunities to increase the chance of a sale.

Adobe Real-Time CDP collects, normalizes, and unifies known and unknown individual and company data into robust customer and account profiles — that automatically update in real time. Marketers use these profiles to deliver timely, relevant, and personalized experiences to any channel, at scale. Watch the Adobe Real-Time CDP overview video to learn more.

Ready to start? If you’ve decided your company needs a CDP, the next step is to request the Adobe Real-Time Customer Data Platform demo today.