Customer data platforms (CDPs) are rising in popularity right now, building buzz as marketing and customer service leaders alike explore their potential. But we all know how the hype cycle works: As soon as the CDP started gaining visibility, suddenly every vendor’s solution became a CDP. So, it’s important to understand what a true customer data platform is, what it can do, and how to choose the right one for your needs.
Let’s start with the most essential question:
What is a CDP?
According to the CDP Institute, a customer data platform is “packaged software that creates a persistent, unified customer database that is accessible to other systems.” There are a few key parts of that definition worth noting:
- Packaged software means the CDP is a completecustomer databasesolution from a single vendor, not multiple solutions patched together to emulate CDP functionality.
- Persistent, unified customer database means it is capable of taking in data from a wide variety of sources and creating customer profiles that remain in the system to be augmented over time.
- Accessible to other systems means not only does the CDP take in data, but it is also capable of integrating with ahost of other solutionsfor marketing, sales, and customer service.
Simply put, a CDP consolidates data streams from across the organization to perform analysis, generating insights that it can then act on automatically. It can also be referred to as aconsumer data platform.
What Can a CDP Do?
The customer data platform serves as a foundational layer for marketing personalization, sales enablement, customer experience, and more. It’s not a tool with a single dedicated use — it has a wide variety of potential applications, and CDP users are continually discovering new ways to use it.
The most common entry-level application is mapping the customer journey, creating a 360-degree view of the customer, and using these insights to power advanced targeting and personalization. But the use cases don’t stop with marketing personalization.
Here are a few examples of what our customers have done with Treasure Data’s CDP:
- Shopping appWishuses their customer data to fine-tune recommended products to their users, doubling growth in conversions year-over-year.
- Global advertising agencyDentsuuses their CDP to create customized portals for each client, each one synthesizing petabytes of data into a single dashboard.
How Does a CDP Compare to Other Data Solutions?
As the data landscape gets more complex, most enterprise-level businesses need more than one type of solution to deal with the data. A CDP isn’t intended to replace most other data solutions; rather, it adds functionality that those systems lack.
CRM: Sales and Marketing Data
A customer relationship management (CRM) system is built to store data that is primarily useful for maintaining a sales pipeline — for nurturing customers and keeping track of customer communication. A CDP can intake CRM data and enrich it with other data sources across the enterprise to form complete customer profiles, and then set rules for automation that can run back through the CRM.
DMP: Anonymized Data for Advertising
Data management platforms (DMPs) have a similar complementary role. DMPs can only deal in anonymized data with limited retention, and are used specifically to create segments for targeted ad campaigns. CDPs can use DMP data, combined with personally identifiable data and ID resolution, for use in a much wider array of marketing tactics.
Data Warehouses: Data for Business Intelligence
Many enterprises already have a data warehouse solution in place as well, and on the surface it seems to serve a similar function to a CDP. Data warehouses consolidate data to process for business intelligence. The difference is that a CDP is aimed at consolidating and analyzing customer data — it is designed specifically to be useful to the customer-facing side of the business.
All of these data solutions have a place in the modern enterprise, and your CDP can add functionality to all of them.
Is My Organization Ready for a CDP?
A CDP has the capability to drastically change the way your martech stack works. In order to achieve the best results, however, your organization needs to be prepared to take full advantage of the solution. It’s important to lay the proper groundwork in three key areas:
- Business Strategy. CDPs have a wide range of functionality, which can lead to decision paralysis when it’s time to get started. Before you evaluate solutions, decide which CDP use cases will map most closely to your business goals, and pick one or two that will have the quickest business impact.
- Data Readiness. You have systems throughout your organization that capture first-party data. It’s important to map your entire data landscape and identify which sources you want to connect to your CDP.
- Mindset. Is your organization ready to break down silos, communicate across departments, and share data? It’s important for leadership to cultivate buy-in for not only the CDP, but for the change in data culture that it represents.
What Should I Look for in a CDP?
There’s a bewildering array of vendors offering CDP, or at least CDP-like, solutions right now. It’s important to make sure your solution has all of the features that a robust CDP should offer. Make sure to evaluate:
- The vendor’s potential for growth and longevity
- The vendor’s marketing and advertising technology expertise
- The solution’s capabilities and limitations for data management, identity resolution, ML-based analytics, reporting, segmentation, activation and security
You can use our freeCDP Request for Proposal Templateto help evaluate vendors.
