Today’s marketer has access to a vast amount of information about their customers — including behavioural, transactional and demographic data.

This data provides the fuel required to power uber-relevant marketing campaigns. But many companies store their data in a disjointed way, largely due to legacy software and antiquated IT systems.

The inability to marry up different customer data sets presents a huge barrier to growth.

Research by Gartner suggests that 52% of the marketing leaders surveyed said that data integration and formatting is one of their most time-consuming activities.

So how can a customer data platform solve these problems to unlock new opportunities to increase revenue and lifetime value?

Let’s dive in…

Table of contents:

What is a customer data platform?

A customer data platform (CDP) is software that collates vast sources of data into a central warehouse that provides a unified, persistent view of the customer.

What makes a CDP different from other types of martech or analytics software is that a CDP aims to foster long-term loyalty by presenting a holistic view across every single customer touchpoint.

Forrester’s research indicates 39% of marketers polled struggle with the integration of online and offline data. CDPs help to bridge the gap between online channels and the in-store experience.

Assembling data within a CDP allows companies to build up a comprehensive profile of a single shopper, and better understand how an individual customer interacts with the business across multiple channels.

The process of collecting different customer identifiers across devices and touchpoints is known as “identity resolution”. Building a consistent, omnichannel view allows brands to deliver a more relevant experience to their customers

What types of data go into a CDP?

Typically, a CDP can ingest data from many different sources. The types of data can include the following…

Behavioural data

Behavioural data encompasses the information that’s generated from the user’s actions across different touchpoints. This includes:

  • Transactional data – for example, the number of products previously purchased, abandoned carts and purchase frequency.
  • Campaign behaviour – e.g. number of clicks on email campaigns, open rates and optimal send times.
  • Online activity – for example, user engagement on-site, site navigation, as well as receptiveness on social media or response to specific campaigns.
  • Customer service data – e.g. customer service contact and past service history, leading through to issue resolution.

Identity and personal data

In the CDP, personal data acts as a marker for identifying individual customers. This data can include simple information such as name and address. It can also include professional data (such as place of work) and account information specific to the website or company involved.

The CDP can incorporate descriptive data, such as career information, lifestyle data, information about hobbies and interests, or data from surveys. The software aggregates data streams to build up a complete picture of an individual customer — also known as a single customer view.

What’s the difference between CDP and CRM?

To better understand the function of a CDP, we need to define the key differences between a CDP and a CRM system.

CDP and CRM technologies have different aims and objectives. 

A traditional CRM system is a centralised data warehouse that’s used to store information about prospects or existing customers. Typically a CRM database will be used to power specific activities like email marketing or track a sales pipeline.

A CDP, on the other hand, is designed to ingest data from a wide variety of sources (including CRM tools) to help deliver more engaging customer experiences across a variety of touch points.

CDPs can integrate both online and offline data, but a CRM system can only incorporate offline data when an employee manually uploads the information to the database.

In contrast, a CDP can collect data to build integrated customer profiles autonomously, whereas CRM systems track customer actions via manual entry.

In many ways, CDPs represent the next stage in the evolution of marketing automation platforms.

Many marketing automation systems can plug into CRM software and can simplify the work of marketers. While marketing automation tools can fuel data-driven campaigns, the software mostly works using predefined rules set by marketers.

Automation platforms make links between some channels; in contrast, CDPs aggregate data from an extensive range of different sources.

Marketing automation tools may store information in silos, rather than undertaking an integrated approach. CDPs go one step further than marketing automation software by fusing sophisticated, advanced AI algorithms with data from many different sources to deliver bespoke consumer experiences — often in real-time.

What’s the difference between CDP and DMP?

A DMP (data management platform) collects first, second, and third-party audience data.

The data from DMPs is made available to ad exchanges and demand-side platform, to be used for targeted advertising and tailored content.

A CDP aims to provide data for all types of cross-functional marketing, whereas a DMP is much more focused on audience insights for ad targeting. 

CDPs use personal and specific customer identifiers, whereas DMPs use anonymous data.

CDPs also empower marketers to make the most of their data. They give organisations a holistic view of how the customer interacts with their brand throughout the buying cycle.

Essentially, CDPs have a long-term focus. DMPs focus on short-term goals like building targeted ads for a specific marketing campaign.

Five key benefits of a CDP

  1. Gives a cohesive, omnichannel view of the customer, saving time and increasing operational efficiency.
  2. Breaks down organisational silos between different teams and departments.
  3. Improves marketing by providing a highly targeted and personalised customer experience.
  4. Boosts customer lifetime value by creating engaging customer relationships.
  5. Allows marketers to work with big data sets without the need of a dedicated data analysts.

Summing up CDPs

Customer data platforms are fast-becoming an essential part of the marketing toolkit. They help CRM, data, and marketing teams to store their data in an easily digestible format. 

The technology also allows leaders to have a coherent data governance strategy. This makes is much simpler to share insights across different business functions.

Incorporating CDPs into the mar-tech stack is critical for powering a data-driven approach. It puts the customer at the heart of marketing.

Alex Quaye is a digital marketing expert with 10 years experience in data analytics, tag management, and growth marketing. He’s helped companies like Gousto, John Lewis, and Hotel Chocolat to acquire more customers with digital marketing. Follow Alex on LinkedIn.