What is a CDP?

Data is a company’s most valuable resource — and, combined with the right strategy, tech, and resources in place, your customer data will revolutionize how your marketing campaigns (and business goals) perform. 

Customer Data Platforms (CDPs) — and the AI that powers them — can now identify marketing personalization opportunities within your customer data by uncovering audiences you didn’t know you had, creating targeted high-value segments, and helping you deliver the right message to the right customer at the right time — at scale.

What is a Customer Data Platform (CDP)?

A customer data platform (CDP) is martech software that creates a unified view of your customer data across various systems in a single place. This unification makes data accessible throughout the entire organization.

The beauty of a CDP is that it operates behind the scenes, providing three key functions: customer data management, unification, and activation, resulting in marketing teams with customer profiles that are both accurate and comprehensive. This empowers marketers to understand customer behavior and infer personalization preferences, i.e., knowing what attracts customers and inspires them to buy.

Customer data collection and management

Data management is collecting and storing data in a secure location. This collection helps companies optimize data usage while still keeping the data protected. 

The two ways a CDP helps with data management are ingestion and access. These pieces work together to get all your data in one place for anyone with permission to view.

Data ingestion is the ability to gather, standardize, and validate data from online and offline sources. Next, this data is stored in a centralized location to be accessed, used, and analyzed. Moreover, this information is also available for every team to view. 

Making data accessible to all departments is crucial to the success of cross-functional teams. Not only does it free up time from having to do manual data pulls, but it ensures everyone is using the same information when running a campaign. All teams being able to view the same data is also essential to cohesive analytics.

First-party data unification

Once the data has been collected and stored in one place, the CDP cleans it and consolidates it into a unified customer profile. In other words, no matter where your data is coming from, a CDP can receive and translate it into a single customer view. This profile is like the holy grail of understanding your customers: everything you need to know about them in one place.

Customer data activation

As any marketer knows, having access to your data is the first step in understanding your customer. Now imagine having access to data insights while gaining the ability to control and play with this data on demand This opens the door to activating your data with tactics like better segmentation. With a centralized hub, every department gains access to the same segments. Additionally, the database updates in real time, meaning the segments an email manager creates are instantly available for the social media manager to use. In the end, each department is now targeting the same customer with their campaigns.

With customer data segmentation, marketers can examine customer data within specific groups or frameworks. This view helps marketing teams determine which customers are most likely to act on a marketing campaign. 

Also, it helps determine how they will respond and how likely they are to continue to value the products and services offered to them. From there, the team can choose the most effective size and distribution of the customer data sample set. This sampling helps generate the most valuable results from any data segmentation initiative.

Why customer data is important

A CDP delivers segmented marketing tests within a single framework and workflow. The resulting insights measure the success of marketing campaigns and inform new ones. This information is valuable because marketing teams are constantly facing new challenges. A strategy that was effective several months ago may now fall short. CDPs enable marketers to customize campaigns and pivot quickly.

To further maximize marketing campaigns, teams can use their aggregated customer data for campaign orchestration. Marketing orchestration is a linear process within larger marketing efforts. Marketing teams examine the entire process: developing the campaign, executing it, and measuring its success through all channels. While customers may not put their finger on why they like seamless cross-channel campaigns, they appreciate a smooth customer experience. 

CDPs tie customer experience together, and that’s why they matter. 

What data is used in a CDP?

There are different types of data that make up the single customer view. Those types of data are identity, psychographic, quantitative, and qualitative. With these, you can create a 360-degree view of the customer and personalize customers just for them.

Identity data

Identity data is the collection of data about an individual person, such as their name, address, bank account number, health records, and other highly sensitive information. 

This type of data is unique to the individual and is usually gathered as part of the sign-up or payment process. Yet, while this data is crucial to building a profile, it does less to tell you who the individual is.

Psychographic data

Psychographic data is information on a person’s attitudes, interests, personality, values, opinions, and lifestyle. This type of data is crucial in understanding who your customer is but is often more challenging to gain. 

The best way is to ask users questions, for example, as part of the welcome experience. This zero-party data becomes a critical part of understanding their wants and needs.

Quantitative data

Quantitative data refers to information that can be represented as numbers. This data comes from things like purchase history or website visits. It gives a clever picture of customer preferences, but often won’t account for changes in lifestyle or taste.

Qualitative data

Quantitative data is another type of data that is less easily gathered. This type of data gives you a sense of how a user feels about something. For example, product surveys or reviews are an important piece of information to capture. Each piece of data is different and valuable in its own way. Together, they give you a complete view of who your customer is.

CDP vs. CRM vs. DMP

The martech space is crowded. It’s difficult enough to sift through CDPs, but what about all the other promising technologies? To that point, we’ve covered the differing and overlapping capabilities of CRMs and DMPs vs. CDPs.

Types of CDPs

There are 10 main types of CDP, though many CDPs can serve as multiple types, and no CDP is perfectly bucketed into just one of these categories. However, each CDP has strengths that fall somewhere on the spectrum of these types. Some are geared more for data-driven roles, whereas others focus on serving marketers. Here’s a snapshot of these categories:

1. Data collection CDPs

These CDPs focus on aggregating customer data from multiple sources (websites, mobile apps, CRM systems, and third-party tools) to create a unified customer profile. However, they often require additional tools for data activation and campaign execution.

2. Data cleansing CDPs

Ensuring data accuracy is the priority of these platforms. They deduplicate, validate, and standardize customer records. This type is essential for companies that rely on precise data. However, these CDPs usually lack more advanced segmentation or campaign management features. The end goal: Clean data!

3. Analytical CDPs

Designed for businesses that prioritize insights, these CDPs visualize your data with AI and machine learning for predictive analytics. While powerful for strategy, they typically require integration with other platforms to activate data and work on your insights.

4. Campaign CDPs

Campaign CDPs help you manage and automate marketing campaigns across multiple channels, using customer data to personalize messaging. The caveat for campaign CDPs is they require careful management to avoid conflicting campaigns.

5. Segmentation CDPs

Ideal for targeted marketing, segmentation CDPs divide customers into precise groups based on behavior and demographics. They make personalization a cinch, but over-segmentation can be difficult to keep track of and lead to inconsistent messaging.

6. Content CDPs

Content CDPs bridge the gap between data and content. With them, brands deliver personalized messages based on user behavior. They require well-structured metadata and a handle on privacy controls.

(P.S., segmentation and content CDPs often go hand-in-hand!)

7. Retail CDPs

As you might assume, some CDPs are tailored to retailers. Retail CDPs integrate online and offline customer data (think POS transactions, loyalty programs, a e-commerce transactions) to create real-time customer profiles. Their weakness? They depend on integration with sales and inventory systems, which can be a pain to set up.

8. B2B CDPs

Unlike consumer-focused CDPs, B2B CDPs are designed to manage complex sales cycles and multi-contact relationships. They unify CRM, sales, and marketing data, which is invaluable. B2B CDPs have to adapt to hierarchical business structures and longer decision-making processes.

9. Customer service CDPs

Customer service-oriented CDPs streamline interaction history across channels. This means your service teams can provide personalized assistance. However, they may struggle to capture informal interactions, such as social media engagements, so they’re not the perfect customer service solution.

10. Real-time CDPs

Do you need actionable data? Real-time CDPs process and act on customer data instantly, enabling real-time personalization for your websites and ads. While effective, their performance depends on the speed and reliability of connected systems; your CDP can only have real-time data if your other systems offer it.

How to choose a CDP

Not only will you have to balance the different types of CDP, but you’ll also need to consider potential solutions provided by each. Any request for proposal (RFP) for a CDP should evaluate these solutions:

• Data management: Can the solution seamlessly integrate with all your databases and channels? Does it support real-time data processing?
• Analytics and intelligence: Does the platform offer user-friendly analytics and reporting tools that help your team gain deeper customer insights?
• Cross-channel orchestration: Will the solution facilitate a more cohesive customer experience by enabling seamless data sharing across all your channels?
• Privacy, security, and compliance: Does the platform provide easy management and deletion of customer data in compliance with security best practices and regulatory requirements?
• Platform and services: How do the solution’s features compare to others on the market? What level of support and service does the vendor provide?

Check out our buyer’s guide to learn more about CDPs and how to choose the best for your business.

How companies use CDPs: Real-life examples

So, how do companies use CDP to succeed? Here are a few examples.

RCI generated $13MM in revenue through website personalization

Timeshare exchange and leisure travel company Resort Condominium International (RCI) was looking for a solution that enables website personalization. Simon Data’s Audience API helped RCI access 20 personalization variables tied to their Next Best Action model. 

Better personalization meant geotargeted offers based on member behavior. This shift generated $13 million in revenue from direct bookings and saw a 4.5% increase in bookings from their "Not Likely to Book" customer segment. 

With better access to their customer data, RCI’s call center facilitated solution-oriented conversations based on members’ purchase history and membership status.

What a CDP isn’t — and why CDPs alone aren’t enough

CDPs sound like they can do anything — but they can’t. The companies highlighted above succeeded with the help of a CDP, but they also had the right data strategies, people and resources, and technology in place. Because of this, the CDP could do its job, which is activating customer data.

Choosing the wrong CDP will also staunch your progress. CDPs that require dozens of integrations will be costly and time-consuming, and adding a CDP sometimes creates another data silo in a bloated martech stack.

Simon Data is the champion of “anti-CDP” because we want you to set up for success from the top down. We’re a CDP for teams that are meaningfully breaking down silos and building customer-first data strategies. 

The future of customer marketing is here. Are you ready to embrace it?