A Primer on CDPs That Can Help Your Business Thrive in 2024

A customer data platform (CDP) is an essential marketing tool that can drive growth. By understanding what a CDP is capable of, you’d be able to see how it can help your business achieve its goals. 

How do you choose a CDP that fits your business? Let’s explore what a CDP is and how it can propel business growth.

A Primer on Customer Data Platforms That Can Help Your Business Thrive in 2024:

What is a Customer Data Platform?

A customer data platform or CDP is software that collects customer data from multiple sources or tools and creates a persistent, centralized, and holistic customer database. This database effectively eliminates traditional “data silos” that limit the operational capabilities of an organization. 

a CDP versatile tool with a variety of uses

Traditional data silos make it challenging for organizations to provide customers with consistent omni-channel and multi-device experiences. They can also lead to accumulating “bad data”, which would prevent marketing and sales teams from aligning their strategies and goals. Bad data can interfere with operations, especially when you’re working in a setup that implements data silos. 

But what is “bad data”?

Bad data is data that’s inconsistent, inaccurate, incomplete, and duplicate. A CDP has the power to create a highly segmented database of qualified leads and existing customers by leveraging first-party data. 

It’s also capable of creating a single source of truth (SSOT), which combines data from various systems to create a single location. 

A CDP also makes it possible for businesses to have a deeper and more intimate understanding of their consumers and what they prefer, thus allowing them to offer consistent and more customized consumer experiences across various platforms. 

Say you’re working with a lot of data and you want to leverage your data systems to create personalized experiences. Having a customer data platform lets you integrate all the customer data you’ve collected from different platforms so you can craft a more targeted marketing approach. This, in turn, can pave the way for more qualified leads to interact with your business. 

Another application of CDPs is in email marketing campaigns. Email marketing is a powerful tool used to directly promote your brand, products, or services. By implementing an effective email marketing strategy, you can have more effective initiatives for lead generation, brand awareness, relationship building, and customer engagement. 

CDPs are powered by data science, allowing you to gain deeper insights into your customers’ behavior or preferences. This lets you create content or campaigns that drive engagement, which can spur higher email click through rates.

Types of CDPs and CDP Vendors

There are several CDPs in the market today but not all of them are the same. When looking for the right customer data platform for your business, it’s important to determine their differences and how certain features can best benefit you.

Types of CDP

There are generally four types of CDPs:

  • Data ingestion and integration

Manually integrating data can lead to collecting bad data. Furthermore, it can be a costly and time-consuming process. 

CDPs are capable of automating data ingestion, a process that entails unifying customer data from various sources. They’re also able to integrate data that’s not well-structured or well-organized. Automation ensures that all your data is in the correct format for new platforms. CDPs can reduce errors that may be committed when manually integrating data. 

  • Unification or identity resolution

A CDP creates a unified and persistent customer database. Data on a single customer is consolidated and duplicates are eliminated. This allows marketers and other relevant parties to have access to a customer’s full history across different platforms. 

Unification essentially creates a single customer view (SCV), which contains a customer’s purchase history, site activity, and other data pertaining to customer behavior. A SCV gives you a central, undated database through which you can access important information on each customer. This database also acts as the location where you run targeted campaigns and marketing automation strategies. 

  • Intelligence and analytics

When looking for CDPs, make sure that you opt for one that has robust customer intelligence tools. These let you segment your audience, create personalized campaigns, and discover more chances for growth. 

  • Cross-channel activation

It’s important to pay attention to a CDP’s activation capabilities. A CDP should be able to connect to all of your channels so you can build consistent and personalized marketing campaigns without losing track of customer journeys. 

A CDP also shouldn’t just focus on email marketing. It should ideally be capable of executing and handling omnichannel marketing activations, essentially connecting all of your marketing tools. 

There are also four customer data platform vendor types

1. Analysis

This type of CDP system is capable of providing data assembly and analytical applications, such as customer segmentation, machine learning, and journey mapping. It can be used for the automation of segment list distribution and marketing. 

2. Campaigns

Campaign CDPs can be used for segmentation as they are able to provide you with data assembly, analytics, and customer treatments. Unlike analytics CDPs, campaign CDPs are capable of specifying approaches, such as outbound marketing campaigns or product recommendations, for each customer within each segment. 

3. Data

Data CDPs function primarily as data collectors, gathering customer data from different systems or sources. These can link customer data to appropriate customer identities and house these results in a unified and persistent database. This type of CDP provides data management and access.

4. Delivery 

Delivery CDPs are tagged as delivery systems and are used to provide functions like data assembly, analytics, and message delivery through methods like email or CRM. 

CDP Key Features

When choosing a customer data platform, check for the following key features:  real-time behavioral insights, single customer view, personalization, testing and optimization, privacy, and security. 

  • Real-time behavioral insights

An excellent CDP should be capable of delivering real-time customer behavior insights. It should ideally have a self-learning algorithm that could accommodate any changes in customer behavior across different platforms as soon as they happen. 

It should also be capable of making all that data available in real time so you can get immediate access to any changes, allowing you to tweak your campaigns accordingly. Furthermore, a CDP with real-time data accessibility and updating capabilities can help you create predictive insights. 

  • Single customer view

An SCV is crucial because it gives you real-time updates that minimize the risk of implementing campaigns that aren’t targeted. Plus, it’s integral for segmentation and omnichannel orchestration.

  • Personalization

Being able to deliver personalized experiences can make a huge impact on your organization. 

Customers expect businesses to create connected experiences for them, be able anticipate their needs, and deliver consistent service and messaging across various platforms and devices. Providing personalized experiences helps make customers feel that they’re valued, which paves the way for brand loyalty. 

Personalization isn’t just about inserting a customer’s name into an email. Its definition has changed with the times. Today, personalization is all about crafting curated messages or campaigns that are able to target your customer’s pain points or needs. It’s about showing customers recommendations that are relevant to them.

Think of Netflix and how it’s able to suggest films or shows that match your interests or how your favorite online retailer has product suggestions that are aligned with your preferences. 

  • Testing and optimization

You should be able to test and optimize a customer data platform to suit your needs. Split testing plays a major role in customer retention by giving you the data you need to improve your campaign performance.  

  • Privacy

As a business, you’re governed by your country’s rules and regulations, such as the EU’s General Data Protection Regulation (GDPR), when it comes to handling or using customer data. 

Being able to secure your customer’s information through data privacy measures is important because of two main reasons:

  • It protects customers’ personally identifiable information (PII).
  • It prevents cyber criminals from accessing the data.  

Moreover, being able to implement stringent privacy measures when deploying a CDP gives you a competitive edge. It lets you navigate a world without third-party tracking and cookies and makes your ads more efficient.

When selecting a customer data platform, make sure that it helps you comply with such regulations. Furthermore, you’ll do well to consider the security and standards that a CDP has to offer. 

  • Security 

Right off the bat, we’ll tell you that security and privacy are two different things. Privacy is more focused on dealing with customer PIIs and the ethical use of data. Security is all about the protection that you can offer to prevent unauthorized access to your data.

Security is one of the foundations of trust. A security breach may drive away customers and may communicate to them that you’re not taking any measures to keep their data safe. If your CDP is able to provide robust security, you can gain credibility and get customers to trust you. 

Additionally, a customer data platform should have the following capabilities:

  • Data quality and identity resolution
  • Data inclusiveness (online and offline)
  • Machine learning
  • Cross-platform configurability 

How to Choose a Customer Data Platform for Your Business

Data is key to understanding your customers, their behavior, and their preferences. It’s also integral to delivering relevant and engaging customer experiences across various platforms or channels. But finding the right CDP for your business can be like looking for a one in a million candidate among a sea of participants. 

Lexer’s 7-point checklist effectively summarizes the important questions to ask when searching for a customer data platform: 

How to Choose a Customer Data Platform

Source: lexer.io

When choosing a CDP and a CDP vendor, you should examine features and capabilities. Will these be able to address your needs? Will these fit your use cases? What about integrations? 

The CDP you go for should work with the integrations and APIs that you’re currently using. It should also be able to seamlessly and efficiently collect and integrate data from all customer touchpoints. Aside from integration, you should also check whether or not it’s capable of enriching your customer data.

A CDP should also be easy to use. Remember that while a CDP may be feature-loaded, it can pose a problem if it’s difficult to navigate and manage. Assess whether or not your team has the expertise to handle or configure this platform. 

When it comes to selecting a vendor, find one that can help you make the most out of the CDP. It’s advantageous if they offer continued support or consulting services after you’ve deployed your CDP.

Do You Need a CDP?

A customer data platform can do wonders for your business. It can process data faster and help you create considerable improvements to customer experiences. It’s an integral tool that makes for more compelling marketing strategies. It can aid you in keeping up with changing customer demands and expectations. 

But do you really need one? 

That ultimately depends on what you’re looking to achieve and what challenges you’re trying to address. Here are some factors that can help you decide whether or not you really need a customer data platform:

  • Your data management practices
  • How a CDP can address your businesses needs
  • Your use cases
  • The type of CDP you may need if you decide to deploy one
  • Total cost of ownership

The Bottom Line

What good is data if you can’t maximize it and apply it to your strategies to craft optimized marketing campaigns?

Customer data platforms leverage large amounts of disconnected data, ultimately allowing you to create more informed decisions. While primarily advertised as a marketing tool, the CDP, thanks to its capabilities and potential, can help transform your business by enabling you to deliver more compelling and relevant customer experiences.

Aside from creating a unified customer database and giving you in-depth insights into customer behavior, CDPs can be used to create experiences that focus on your current customer base to acquire continuous engagement and higher customer retention rates.  

Given the plethora of CDPs available in the market, finding the best one for your organization can be tough. When looking for a CDP, it’s important to consider its features, your business, and the tools you’re already using. 

Yes, some CDPs may have all the bells and whistles and all of this can be very attractive. However, you should prioritize CDPs that are able to quickly analyze and leverage large amounts of customer data. Furthermore, before selecting a CDP, you also need to define your requirements and your intended use cases. Some of the core features you should pay attention to should be able to address identity resolution, customer segmentation, reporting and analytics, system integration, and cross-channel campaign management. 

When it comes to CDPs, sometimes prioritizing its functionality can help you start your journey to transformation and success. 

Frequently Asked Questions

Who benefits from a customer data platform?

While it’s useful for different teams that are working with large amounts of data, marketers can benefit the most from a CDP. This is because marketers need to develop and improve customer relationships and have a more in-depth understanding of their leads and customers, as well as provide them with excellent user experience.

Where can I source CDPs?

There are many CDP vendors that can be categorized into four vendor types: analytics, campaign, data, and delivery. The Customer Data Platform Institute’s Service Provider Directory is a comprehensive database that helps you find and connect with various CDP vendors.

What should I look for in a CDP?

While there are plenty of CDPs available, they vary largely in the features they offer. If you’re looking for a CDP, make sure that it has these five key features:

Real-time behavioral insights
Single customer view
Testing and optimization

About the Author
Geri Mileva, an experienced IP network engineer and distinguished writer at Influencer Marketing Hub, specializes in the realms of the Creator Economy, AI, blockchain, and the Metaverse. Her articles, featured in The Huffington Post, Ravishly, and various other respected newspapers and magazines, offer in-depth analysis and insights into these cutting-edge technology domains. Geri's technological background enriches her writing, providing a unique perspective that bridges complex technical concepts with accessible, engaging content for diverse audiences.