What is a customer data platform (CDP)?
Businesses are more committed than ever to understanding their customers. Organizations are always collecting data to learn more about their target audience. For every data point stored, teams spend countless hours, planning sessions, and more turning customer insights into new opportunities. Businesses need a platform that collects, stores, and maps data to customer profiles for creating new personalized experiences for every customer. In this article, we'll provide a detailed overview of customer data platforms (CDP) and how to build deeper connections with your customers.
In this post we will cover:
- What is a CDP?
- CDP vs CRM vs DMP
- The purpose of a CDP
- How a CDP works
- The type of a data a CDP uses
- Benefits of a CDP
- Improve your customer experience with a real-time CDP
What is a CDP?
A customer data platform (CDP) is a software solution that centralizes your data across multiple channels and systems to create a single unified customer profile. This integrated database pairs real-time insights from customer interactions with scalable management tools to create more meaningful experiences for your customers.
These powerful platforms use AI-machine learning to help your various systems speak to each other where it would normally require hours of manual work to optimize.
For example, insights from campaign engagement or website interactions are all tracked at the individual customer profile level to help organizations understand every customer — and create unique audience segments around shared interests. These in-depth insights empower teams with advanced targeting abilities to uncover new opportunities and reach customers with more relevant campaigns. With higher-intent segments, customer data platforms help marketing and sales teams deliver campaigns with a higher return on investment (ROI) — in real-time and at an incredible scale.
With customer preferences changing by the minute, personalization is impossible without a solution in place to sift through vast quantities of cross-channel data and map it back to customer profiles. This scalability is an integral component of what makes CDPs a valuable solution in meeting today's customers with the right experiences.
CDP vs CRM vs DMP
CDPs can easily be confused with customer relationship management (CRM) tools or even data management platforms (DMPs). All of these solutions are centered around things like customer data collection and organization for supporting growth functions. However, they differ in how customer insights are put into action. Let's look at some of the differences between the three and gather where CDPs fit in your tech stack.
Core features of CRMs
- CRM platforms work to track and manage interactions with existing and potential customers for relationship management.
- Features focus on streamlining support tickets, sales conversations, or historical customer data.
- Designed to help customer-facing roles across sales and marketing teams scale outreach and deal flows.
Core features of DMPs
- DMP software is primarily focused on automating web display advertisements.
- Features focus on making anonymized customer profiles available to third party marketing solutions for improved targeting.
- Relies on CRM systems and other owned channels to leverage first-party data.
You can think of CDP as an all-in-one solution that combines the magic of both CRMs and DMPs into a single source of truth for teams to operate from. CDPs are a broader makeup of applications that deeply analyze cross-channel data and equip teams with built-in features to act on insights in real-time. Simply put, CDPs provide a continuous loop to gather, learn, and activate meaningful customer experiences with a holistic view of the customer.
The purpose of a CDP
CDPs help companies organize their data under one roof to address some of the largest challenges. The purpose of a CDP can be summarized into three primary benefits:
Collect and unify data
A CDP can help automate customer data collection across different channels — from websites, to email campaigns, and social or even phone conversations. Companies operating from a single source of truth have a unified profile of each customer's lifecycle. CDP solutions also work to brilliantly unite data and break down silos between departments — a longstanding issue between marketing and sales functions. Simply put, CDP solutions connect teams and systems that historically might work from opposite ends of an organization to center everyone around the customer experience.
CDPs collect cross-channel data, but they differ from other customer data solutions in their ability to analyze insights and transform them into well-rounded customer profiles. Consider the opportunities to better reach your customers if you knew how they were engaging with your site and what they shared with your account teams. Managing customer profiles is one of the most valuable features CDP technologies bring to enterprise teams.
Customer data management
CDPs are also responsible for managing the collected data to comply with privacy laws — which help mitigate the risk of data breaches or unethical data sources. This allows companies to actively manage and document data consent and how that data is used in every interaction. Organizing data in a single shared solution allows for information to be sorted efficiently and accurately, which improves targeting capabilities.
Customer data activation
There are countless benefits of operating from a single source of truth. One being it helps make the data easily accessible with the ability to activate across multiple teams. Data activation is the goal of collecting cross-channel customer insights to deliver improved customer experiences — and can only be achieved at this scale with customer data platforms.
How a CDP works
By now, you know that CDPs pull in data from multiple sources to equip your teams with insights and a unified view of each customer. This means everyone will have a historical snapshot of a customer’s relationship with your company — not just their daily interactions. Whether engagement begins with an email campaign or visit to a storefront, customer data platforms are equipped with unique cross-device features to help you deeply understand your customers’ journey.
So, how does this robust solution combine so many features to help your teams work smarter? Let's look at how CDPs do the heavy lifting for you.
Data collection lays the foundation for how CDPs construct more cohesive customer profiles for teams to work from. A CDP integrates with numerous marketing tools within a vast network of application programming interfaces (APIs), campaign to event trackers, and imports. CDPs pull in real-time insights which not only remove manual oversight but build ideal customer profiles to help marketers find similar ideal customers.
After data is collected, data is then validated, cleaned, and deduplicated by AI machine-learning processing to ensure clear organization. With this advanced capability, CDP leverages smart intelligence to surface the most valuable data to better understand customer pain points.
The inner workings of CDP platforms are designed to help modern companies create meaningful interactions and gain a deeper understanding of every customer.
The type of a data a CDP uses
One of the key differentiators of CDP solutions is its reliance on first-party data — customer interactions collected from channels such as your company website, CRM, mobile applications, or social pages. While CDPs can manage all types and sizes of data, first-party data ensures customer privacy is protected and touchpoints remain in the context of your relationship with the customer.
Third-party data, on the other hand, is pulled from websites and social platforms outside of your organization which can help with scaling audience reach. However, third-party data can pose risks such as data breaches or lack of visibility into data protection tools. CDPs are held to industry standards and privacy regulations such as Payment Card Industry Data Security Standards (PCI DSS), Apple’s mail protection privacy (MPP), and California Consumer Privacy Act (CCPA). Your CDP solution’s built-in protection features help to ensure compliance alignment with your marketing activities — and ideally save time in routing legal approvals.
As such, there are four main types of data that CDPs use to adhere to privacy protection standards for customers:
- Identity data — refers to the details about an individual person, such as their name, address, bank account number, health records, and other highly sensitive information usually hidden from public platforms.
- Descriptive data — is data that describes, shows, or summarizes the basic features of individual datasets to summarize profiles.
- Quantitative and behavioral data — is data that provides information about a customer's interaction with your business such as information collected through marketing systems, call centers, and various third-party databases.
- Qualitative data — includes personal information that cannot be measured or easily expressed using numbers — typically collected from things such as audio, text, imagery, or cloud systems.
Benefits of using a CDP
Companies get a number of benefits from using CDP solutions. From combining data sources to uniting cross-functional teams, here are some ways a CDP can help streamline your sales and marketing efforts:
- Removes data silos
- Streamlines systems integration
- Improves customer experiences
- Increases regulatory compliance
- Provides greater customer insight
- Empowers better customer personalization
- Improves audience segmentation
- Optimizes customer journeys
- Connects online and offline channels
- Strengthens retargeting capabilities
Improve your customer experience with a real-time CDP
If your teams are still operating in silos with gaps in understanding your customers, it’s a good time to consider the value customer data platforms can bring to creating unified customer profiles and delivering meaningful experiences.
Adobe Real-Time CDP can help you transform your data systems into a single source of truth that helps you unite marketing and sales functions — and reach ROI faster. With a holistic view of every customer and real-time data activation tools, start delivering real-time personalization with Adobe Real-Time CDP.
Ready to start? Request a product demo today.