is a CDP? How does it help marketers get a single view of their customers? //

Customer data platforms (CDPs) are managed by marketers and designed to collect customer information from all sources, normalize the data, and create unique profiles for each customer. This creates a persistent, unified customer base that can be shared with other marketing technology systems.

According to Gartner, marketer interest in CDPs grew by 32% between 2021-2022. CIOs are also interested in this category, possibly because they have become more involved in purchasing committees.

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This trend can be explained by the growing importance of customer experience. This is achieved through timely data collection, AI-assisted segmentation, and personalization of interactions. Marketers are also facing the inevitable, though gradual, loss of third-party data to fuel their marketing campaigns. Businesses are turning to CDPs for help in bolstering their first-party data, and engaging in privacy-compliant practices such as data clean rooms.

By combining data from various software systems, CDPs allow marketers to have a single view on the customer. Cross-device IDs are critical to help service professionals, salespeople, and marketers deliver the best customer experience. High expectations and the proliferation of customer touchpoints make cross-device identifications and identity resolution essential. This allows them to combine and normalize data from multiple touchpoints into a single profile that represents the prospect or customer. CDPs allow for this consolidation and normalization, and make data profiles available to all systems that deliver campaigns and webpages.

Tables of Content

• 
  What’s a Customer Data Platform (CDP)?
  
• 
  There are many types of CDP
  
• 
  Customer data management
  
• 
  Analytics
  
• 
  Orchestration
  
• 
  Data regulation compliance
  
• 
  Integration of third-party systems
  
• 
  What are some of the benefits to using a CDP.
  

What is a Customer Data Platform (CDP)?

The three core characteristics that distinguish a CDP from other systems are what make it stand out.

• A persistent, unified customer database that offers data transparency and granularity at each individual level. The CDP is able to identify customers from multiple data sources by combining information under a unique, individual ID. The CDP then keeps its own copy.
• Native integration allows for control over customer data collection, segmentation, and orchestration. This minimizes the need to involve IT or developers.
• Data integration of known and unidentified customer data with any external source, platform or platform including CRM, point-of-sale (POS), mobile transactional, website and email, and marketing automation.

CDPs can serve as systems of records, storing known and unknow customer profiles in a central repository. This central repository integrates data from all the company’s software systems and operational systems. This data can be used for marketing analysis, segmentation, and insight discovery with the aim of improving the effectiveness and speed of omnichannel marketing campaigns.

A CDP does not include a CRM, DMP, or marketing automation platform. CDPs provide a single, persistent, unified customer database that allows for data transparency and granularity at an individual level. The CDP is able to identify customers from multiple data sources by combining information under a unique, individual ID. The CDP then keeps its own copy.

Marketers also have control over customer data collection, segmentation, and orchestration via CDPs. This integration is native (outside-the-box), which minimizes the need to involve IT or developers. CDPs allow data integration between known and unknown customer data from any external source or platform. This includes CRM, point-of-sale (POS), mobile transactional, website and email, as well as data integration with marketing automation platforms such as email, web, and mobile.

According to the CDP Institute, a ” ” is a ” ” that can do the following five things.

• Real-time data can be gleaned from any source.
• Take full details of the ingested data.
• You can store ingested data for as long as you like (subject to privacy restrictions).
• Create a unified profile of all identified people.
• Any system that requires it can share data.

Almost all CDP vendors who meet this criteria offer the following core capabilities:

• Data management (collecting, normalizing and unifying customer data within a persistent database).
  
  Many times, IDs are matched by another system.
• Features that are intended for the marketing department and other departments.
  
  assistance with IT or data science resources. Some functions, such as building connections to others, may not be possible.
  
  Additional resources are required to build platforms or perform sophisticated data modeling.
• All external systems can be connected to and from each other on a vendor-neutral foundation.
• Management of structured and unstructured data.
• Data management online and offline
  

CDP vendors are different because they offer more advanced capabilities, including but not limited to the following:

• Native identity resolution allows you to combine customer data from different sources.
• There are many pre-built connectors that can be used to connect to other martech systems. Connections are possible almost everywhere APIs are available (with less developer involvement), but pre-built and tested integrations add value.
• User interface (UI). There are many differences between the interfaces offered by vendors in terms of how user-friendly they are and the methods that people use to create segments and view profiles.
• Analytics, which include those powered by AI and machine-learning, surface insights that enable audience segmentation, journey mapping, and predictive modeling.
• Orchestration allows for personalized messaging, dynamic interactions, and product/content recommendations.
• Respect of international and vertical industry data regulations.

Different types of CDP

Although CDPs all share the same category name, their primary focus is very different. The CDP Institute has therefore divided the market into three “types”: data, analytics, and delivery.

These specializations are a result of CDP vendors’ roots in other areas. Some Data CDPs started as web analytics or tag management providers. They used the data they had gathered to link data to customer identities, create unified customer profiles, and store them. These systems can be used to extract segments of the audience and send them to other systems. Analytics CDPs, however, do more. They can also be used for predictive modeling, machine learning, revenue attribution, and journey mapping.

According to the CDP Institute Campaign CDPs “provide data assembly and analytics as well as customer treatments,” which is closer to one-to-1 addressability than segments. You can also use their features to manage campaigns across multiple channels. Similar to Delivery CDPs, they focus on delivering messages and profiles via email, websites and mobile apps. CRMs are also available. These players were initially designed to deliver messages, but later added CDP capabilities.

A new type of CDP is being developed that allows marketers to “compose” their own CDP by linking together software from different vendors or using modules from the same vendor. This is similar to the digital experience platforms (DXPs) that some advocate for. A business can choose modules with different functions and swap them out as necessary, allowing it to be more flexible.

Customer data management

Data collection and maintenance are core CDP customer data management platforms functions. CDPs all provide a central database which collects and integrates customer information across the enterprise. However, the abilities of CDPs to manage the following are different:

• Data Ingestion Capabilities: CDPs can use a variety of mechanisms to ingest data into the unified customer profile. These include mobile SDKs and APIs, Webhooks, or built-in connectors to third-party platforms. Identity resolution: The platform “stitches together” customer data points such as email addresses and phone numbers from different channels to create one customer profile.
• Identity resolution The platform “stitches together” customer data points such as email addresses and phone numbers from different channels to create one customer profile. Some providers partner with others, while others maintain their own systems.
• Offline/online data: The platform uses identity resolution (or an identity graph) to combine behaviors to create a single profile.
• Data hygiene The platform allows users to standardize and clean customer records.
• Structured/unstructured data: CDPs differ in their capabilities to manage unstructured data (i.e., social media feeds, product photos, barcodes), which may comprise up to 80% of all data by 2025, according to IDG.

Each of these data management capabilities is important for a company’s business goals. It also depends on whether the organization has significant mobile presence, direct mailing budget, brick-and mortar stores, or agents.

Analytics

CDP vendors provide analytics capabilities that allow marketers to create and track customer segments across channels, track customers across channels, and gain insights into customer intent and interest from customer behavior and trends.

This functionality can include revenue attribution, predictive models, and journey mapping. Many of these capabilities can use machine learning or artificial Intelligence to provide insights about prospects and offer proactive suggestions on the next steps to help them move through their buying journey.

Orchestration

A small number of CDPs offer campaign management and customer journey orchestration features. These enable personalized messaging, dynamic content recommendations and campaigns that trigger targeted ads across multiple channels.

Customer data platforms often automate the distribution of customer segments created by marketers on a schedule that is defined by the user to external martech systems like marketing automation platforms and email service providers (ESPs) or web content management system for campaign execution.

The CDP might, for example, deliver targeted content to a visitor’s web page during a live interaction. The CDP must receive input from the customer-facing systems about visitor behavior, locate the customer profile in its database, and select the appropriate content to send back to the customer. An audience API, which sends customer lists to the CDP, will allow digital advertising.

Compliance with data regulation

CDP vendors offer a wide variety of support to ensure compliance with the many international and vertical regulations that protect customer data privacy. Some platforms incorporate compliance features, while others rely upon outside systems. In May 2018, the European Union’s GDPR became effective. It affects all U.S. marketers as well as firms that handle European data or serve customers in the EU. Email marketing by brands to Canadian consumers must comply with Canada’s Anti-Spam Law (CASL).

Legislation). In January 2020, the California Consumer Privacy Act was put into effect.

HIPAA regulations and HITECH regulations must be followed by marketers in highly regulated markets like healthcare. All organizations that store, process, store, or transmit credit card data must also adhere to the Payment Card Industry Data Security Standards.

Integration of third-party systems

CDPs facilitate integration of customer data through providing native connectors (or out-of the box) for many martech systems including CRMs and DMPs, marketing automation platform, DSPs, DSPs, campaign analytics, and testing tools. Marketing organizations often have a variety of these platforms in their marketing stack. Integrating the data in the martech ecosystem can be a daunting task. It costs U.S. companies millions of dollars each year. Most of the CDPs reviewed in this report provide at most a basic API for custom integrations.

What are the advantages of using a CDP

Today’s marketing executives are responsible for managing dozens of martech apps to analyze, manage and act upon a growing amount of customer data. The emerging martech ecosystem is causing problems in data integration, accuracy, and redundancy despite increased efficiency.

A CDP can automate customer data integration and accuracy, which can be a huge benefit to marketers as well as other functions within the company.

These include:

Increased enterprise collaboration. A CDP encourages cooperation between siloed group because it collects data from across the enterprise and supports customer interactions across multiple touchpoints. Unification of data allows enterprises see how strategies for audience and customer experience fit together. It also allows audience portability, which ensures a consistent and informed customer experience.

Increased data accessibility. A central hub that collects customer information from all corners of an enterprise. To create unique customer profiles, data is combined and normalized. This creates a persistent customer database that can be shared across the company more efficiently and easily.

Streamlined system integration. A CDP unifies enterprise data systems, from customer service and marketing to call centers and payment systems. Data redundancies and errors can easily be reduced by creating one “system of records” for customer data. This allows data to flow faster into and out of marketing automation platforms, email service providers, CRMs, and other martech systems.

Improved marketing efficiency. A CDP unifies individual customer data with unique IDs, creating more robust records. The CDP automates many manual tasks, which allows marketers to concentrate on the creative and analytical tasks that they have been trained for. This results in more precise modeling, targeting, personalization, and personalized marketing campaigns. It also means that customers have more relevant experiences with the brand through all channels.

Increased marketing velocity. Many CDPs are managed by marketing. This reduces the need to have IT or developers intervene in collecting, analyzing, and acting upon data. Marketers have more control over their data, which makes it easier to segment audiences and execute campaigns. It also reduces the time required to analyze results and analyse them. Engineers may still be required to conduct deep data analysis and facilitate the integration of data. This is especially important as CDPs go beyond marketing to include sales and service functions.

Better regulatory compliance. A CDP provides greater control over customer data and streamlines data governance to meet the many regulations that affect brands around the world. HIPAA regulations must be adhered to by marketers in the healthcare sector. Businesses that deal with European customers or handle European data must comply with GDPR. CCPA must be complied with by those who deal with Californians.

(California Consumer Privacy Act). Most CDP vendors have been ISO and SOC certified to ensure best practices in handling personally identifiable data (PII).

Download our new report “Customer Data Platforms: a Marketer’s Guide”, now for free.

What’s a CDP? How does it help marketers get a single view of their customers? was originally published on MarTech.