What is a customer data platform?

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

What you’ll learn:

• What is a CDP?
• What is a customer data platform used for?
• What is a customer profile?
• CPD vs. CRM vs. DMP
• What are the benefits of a customer data platform?
• How does a CDP work?
• What data does a CDP need?
• Is a CDP right for my business?

What is a CDP?

A CDP helps businesses manage customer data from different systems and sources.

Let’s say 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 out newsletters and special offers and you want to understand the customer engagement with those emails.

That’s a lot of data to worry about, but a unifying tool like a CDP makes it easier.

What is a customer data platform used for?

Customer preferences are constantly evolving, making personalization a daunting task unless you have a system to sift through massive amounts of cross-channel data and map it back to customer profiles. This scalability is a crucial aspect of CDPs.

What makes a CDP unique is its ability to gather data from every corner of your organization and make it available for activation across all touchpoints. While a CDP is similar to a data management platform or DMP, like Adobe Audience Manager, there is a very important difference between the two.

DMPs focus on managing unknown pseudonymous user data while CDPs can rationalize that information with known customer data. A CDP stores personally identifiable information (PII) like email addresses, street addresses, and phone numbers.

What is a customer profile?

A customer profile is a centralized collection of all the data points you have about an individual customer. The more complete a customer profile, the better the customer experience you can deliver.

But it’s not enough to have all the data in one place. A customer profile needs to be constantly refreshed so it always gives the latest, most accurate view of each individual.

When updated in real time, a customer profile can help a customer service representative know what a customer was doing before they called, giving the rep key information on the kind of help that will be needed.

CDP vs. CRM vs. DMP

What’s the difference between a CDP and a CRM?

CDPs and customer relationship management (CRM) systems 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 it’s important for companies to analyze the benefits of their current business tools before making a switch.

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 customer segment software alone.

How does a CDP differ from a 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.

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.

What are the advantages and disadvantages of CDPs?

The benefits of a CDP

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 from 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 — the CDP 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 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 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.

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.

How a CDP works

CDPs are equipped with unique cross-device capabilities that allow you to analyze your customers’ journey. But how does this powerful tool manage to integrate so many features to empower your marketing teams to work more efficiently?

Data collection

Data collection is the cornerstone of a CDP’s ability to create comprehensive customer profiles. By integrating with a wide array of marketing tools, APIs, event trackers, and import mechanisms, a CDP can gather real-time insights. This not only eliminates the need for manual data management but also aids in the creation of optimal customer profiles. These profiles empower marketers to identify and engage with their ideal customers more effectively.

Data activation — 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.

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.

The type of data used in a CDP

A customer data platform primarily relies on first-party data, which includes customer interactions gathered from various channels such as your company’s website, CRM, mobile apps, or social media pages.

CDPs can also manage third-party data, which is sourced from websites and social platforms outside your organization. This data can help expand your audience reach. However, it’s important to note that third-party data can present certain risks, including data breaches and a lack of transparency in data protection measures.

CDPs adhere to industry standards and privacy regulations such as the Payment Card Industry Data Security Standards (PCI DSS), Apple’s Mail Privacy Protection (MPP), and the California Consumer Privacy Act (CCPA). The built-in protection features of your CDP solution ensure that your marketing activities align with these compliance requirements, potentially saving time in obtaining legal approvals.

CDPs utilize four main types of data to maintain privacy protection standards for customers:

• Identity data. This refers to personal details about an individual, such as their name, address, bank account number, health records, and other sensitive information typically concealed from public platforms.
• Descriptive data. This type of data describes, illustrates, or summarizes the basic features of individual datasets to create summarized profiles.
• Quantitative and behavioral data. This data provides insights into a customer's interaction with your business. It is collected through marketing systems, call centers, and various third-party databases.
• Qualitative data. This includes personal information that cannot be quantified or easily expressed using numbers. It is typically collected from sources such as audio, text, imagery, or cloud systems.

Is a CDP right for my business?

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.

Can a CDP handle the complexity of any business?

Any company looking at a CDP needs to evaluate a vendor’s ability to not only work with an organization of your current size but also their ability to work with the size of organization you hope to become.

A common risk with many CDP solutions is that they’re still in start-up mode — they simply don’t have the resources or technology yet to keep up with customers as they grow. Find a solution that can scale up with you.

As you research CDP options, you’ll also want to pay close attention to the product integrations each offers. When a CDP solution has worked with a partner to design the integration for their product, you receive the benefits of a system with deep product knowledge and oversight.

To evaluate different CDPs, consider starting by identifying the use case for a CDP in your organization. What are the things you need to be able to do to derive value from your investment? Then, work to understand how a potential CDP partner would facilitate that use case to meet your organizational needs.

Choosing the right CDP to implement

If you decide that 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 such as:
   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

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 optimize based 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, 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 the 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 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 inform 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.”

Getting started with a CDP

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.