What is a customer data platform (CDP)?

A marketer analyzing profiles in a customer data platform

Businesses today are more dedicated than ever to understanding their customers. They are constantly gathering data to gain insights into their target audience. Teams invest numerous hours, strategic planning sessions, and resources to transform these insights into new opportunities. What businesses need is a platform that not only collects and stores data but also maps this data to customer profiles, enabling the creation of personalized experiences for every customer. In this article, we’ll delve into the world of customer data platforms (CDP), providing a comprehensive overview of how they can help you forge deeper connections with your customers.

In this post, we will cover:

What is a CDP?

A CDP is sophisticated software that consolidates data from various channels and systems, creating a unified customer profile. This database combines real-time customer interaction insights with scalable management tools, paving the way for more impactful customer experiences.

CDPs use AI and machine learning to facilitate seamless communication between your systems, eliminating the need for time-consuming manual optimization. For instance, data from campaign engagement or website interactions are meticulously tracked at the individual customer profile level. This granular understanding of each customer enables organizations to create unique audience segments based on shared interests.

These comprehensive insights equip teams with advanced targeting capabilities, unveiling new opportunities and enabling them to reach customers with more pertinent campaigns. By focusing on high-intent segments, CDPs assist marketing and sales teams in delivering campaigns that yield a higher return on investment (ROI). This is achieved in real time and on an unprecedented scale.

In a world where customer preferences are constantly evolving, personalization is a daunting task without 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, making them an invaluable tool in delivering the right experiences to today’s customers.

CDP vs. CRM vs. DMP

While CDPs, CRMs, and DMPs all revolve around the collection and organization of customer data to drive growth, they each have unique ways of implementing customer insights. Let’s delve into the differences between these three platforms and understand where a CDP fits into your technology stack.

Core features of CRMs

Customer relationship management (CRM) platforms are designed to monitor and manage interactions with current and prospective customers. They primarily aim to streamline customer support tickets, sales dialogues, and historical customer data. These platforms are instrumental in aiding customer-facing roles across sales and marketing teams to scale their outreach and manage deal flows effectively.

Core features of DMPs

Data management platforms (DMPs) are primarily designed to automate the process of web-based display advertising. Their key features include creating anonymized customer profiles that can be utilized by third-party marketing solutions to enhance targeting precision. DMPs rely heavily on CRM systems and other owned channels to leverage first-party data effectively.

Core features of CDPs

Consider a CDP as a comprehensive solution that integrates the strengths of both CRMs and DMPs, serving as a unified resource for teams. They are an extensive suite of applications that scrutinize cross-channel data and provide teams with inherent capabilities to leverage insights in real-time. In essence, they offer a continuous cycle of data collection, learning, and activation of impactful customer experiences, all while maintaining a complete view of the customer.

The purpose of a CDP

Benefits of a CDP graphic

A customer data platform serves as a beacon in the vast sea of data, guiding businesses toward their goals. The purpose of a CDP can be distilled into three fundamental advantages:

Collect and unify data

A CDP streamlines the process of gathering customer data from various channels, including websites, email campaigns, social media interactions, and even phone conversations. By creating a unified customer profile, a CDP serves as a single source of truth throughout a customer's lifecycle. This ability to consolidate data effectively breaks down the silos that often exist between departments, particularly marketing and sales, fostering a more collaborative and customer-centric approach.

Unlike other customer data solutions, CDPs not only collect cross-channel data but also analyze these insights to create comprehensive customer profiles. Imagine the potential for enhanced customer engagement if you had a clear understanding of how your customers interact with your website and what information they share with your account teams. The management of these customer profiles is one of the most significant benefits that CDP technologies offer to enterprise teams.

Customer data management

CDPs play a crucial role in managing the data they collect, ensuring compliance with privacy regulations. This proactive data management helps to reduce the risk of data breaches and unethical data sourcing, while also documenting data consent and its usage in every interaction. By consolidating data into a single, shared platform, information can be sorted efficiently and accurately, thereby enhancing targeting capabilities. This meticulous data management is a key feature, ensuring data integrity while providing businesses with a reliable and secure source of customer information.

Customer data activation

Harnessing the power of a unified data source brings numerous advantages, one of which is the ease of data accessibility and activation across various teams. Data activation is the process of utilizing cross-channel customer insights to enhance customer experiences. This level of data activation, which is crucial for delivering personalized experiences, can only be achieved effectively with the help of customer data platforms.

How a CDP works

While it’s clear that CDPs aggregate data from many sources to provide your teams with comprehensive insights and a unified view of each customer, you might be wondering how this process works. This unified view offers a historical perspective of a customer’s interaction with your brand, capturing every touchpoint, from an initial email campaign to a visit to a physical store.

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 teams to work more efficiently? Let's look at how they handle the heavy lifting for you.

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

Once the data is gathered, it undergoes a rigorous process of validation, cleansing, and deduplication, facilitated by AI and machine learning. This ensures the data is organized and ready for analysis. The CDP, with its advanced capabilities, leverages this intelligent processing to highlight the most relevant data, providing a deeper understanding of customer needs and preferences.

The intricate mechanisms of a CDP are engineered to assist contemporary businesses in fostering meaningful interactions and gaining a comprehensive understanding of each customer's journey.

The type of data a CDP uses

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. Relying on first-party data not only ensures the protection of customer privacy but also maintains the context of your relationship with the customer.

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.

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

four main types of data graphic

Benefits of using a CDP

The benefits of using a CDP are numerous, and they extend beyond the realm of data collection and management. Here’s a closer look at how a CDP can enhance your sales and marketing efforts:

Improve your customer experience with a real-time CDP

In an era where customer expectations are constantly evolving, it’s crucial to have a deep understanding of your customers. If your teams are still working in isolation, struggling to bridge the gap in customer understanding, it’s time to explore the potential of customer data platforms in creating unified customer profiles and delivering impactful experiences.

Adobe Real-Time CDP is designed to transform your disparate data systems into a unified source of truth, fostering collaboration between marketing and sales functions, and accelerating your journey to ROI. With a comprehensive view of each customer and real-time data activation capabilities, Adobe Real-Time CDP empowers you to deliver personalized experiences in real-time.

Take a product tour today to learn how Real-Time CDP can help your business get the most out of the data it collects.