Understanding Everything About Customer Data Platforms and Its Benefits
When it comes to marketing, data is everything. But marketers are left confused when that data is scattered across multiple tools and systems. This is why a customer data platform (CDP) is so valuable. It allows brands to unify and harness their various data sets for the best results. But what exactly is a CDP, and how does it work?
Unified Customer Data
What is customer data platform? A customer data platform (CDP) is a marketing technology software that unifies data from different systems and sources. It ingests, stores, and makes available first-party customer data for use in building unified profiles and audiences. It matches individual customer identities across systems (identity resolution) and reformat the profile data to support marketing processes and campaigns. A customer data platform can make it easy for teams to pull valuable insights, allowing you to understand your audience better and meet their needs. CDPs can help you uncover new opportunities by combining data from different marketing channels and systems, such as sales and support tickets, with operational and IoT data to improve marketing agility and increase campaign ROI. With a unified customer view, all departments can access customer information from one central hub, eliminating departmental siloes and ensuring everyone has the same perspective. This enables you to understand your customers and their needs better, resulting in improved marketing campaigns that drive more significant revenue, increased engagement, and improved customer loyalty. A CDP is a prepackaged software that creates a persistent, unified customer profile and makes it available to other systems across your organization. It collects data from various sources, including your customer relationship management (CRM) system, data management platform (DMP), e-commerce platforms, websites, social media, and email channels. It then cleans and combines that data into a single, structured customer record. These records are then used for highly personalized marketing campaigns.
In the age of omnichannel marketing, it’s essential to know your customer in real-time. With a CDP, you can update unified customer profiles in the background so that all teams can access the most current information possible. This lets you personalize every touchpoint and deliver timely messages relevant to each individual. Real-time data analytics also helps you quickly respond to changing business factors, preventing costly mistakes like fraud, cybercrime, and production outages. By monitoring and reacting to data in real-time, you can be much more proactive than your competitors in improving the experience for your customers. This is why real-time data is a crucial differentiator between a customer data platform and other types of software that manage data, such as a data management platform (DMP) and CRM. A DMP, by design, works with anonymous data, while a CDP is designed for marketers and operates with identified data from multiple sources. This allows marketers to understand their customer base better, deliver personalized messaging and increase ROI. This is why interest in CDPs has skyrocketed among marketers.
Historically, many marketing tools operated in silos that didn’t pass data between them. This left marketers without a clear picture of their audience and prevented them from using customer data to drive marketing campaigns. A customer data platform solves these issues by combining disparate customer profiles into a unified view. It then creates a rich profile for each user and mines that data to find similar audiences. A CDP also works with first-party data and identifies customers across channels, devices, and demographics. This information can then deliver personalized messages and content that resonates with each customer. Consolidation is not something that should be taken lightly, however. Businesses need to ensure transparent processes and consistent methods when performing consolidation. Otherwise, it can lead to inefficiencies and even financial losses. For example, consolidating policies governing support-function topics like accounting, personnel, budgeting, and real estate can lead to consistency and cost savings. A consolidated financial statement is also helpful for businesses when applying for loans and providing information to investors.
Companies using a CDP can create unified customer profiles using data from multiple tools. They do this through a process known as “identity resolution,” which stitched together all customer information, such as name, email address, and phone number, into a single profile. This also helps eliminate duplicates and inaccuracies in the data. Accurate customer data allows marketers to target audiences more precisely and increase engagement. For example, a company can send an offer to customers who recently visited its website to encourage them to purchase more from the brand. It can also improve retargeting by creating optimized audience segments and automating activations. Automation is a technology that removes manual tasks from a workflow, allowing businesses to free up time and resources for other essential projects. It can range from a simple automated email alert to an entire software-based support agent capable of identifying issues, workshopping solutions, and delivering a great customer experience.
Scalability is the ability of a system to increase its capacity to handle sudden surges in demand. It is also the ability to do so without compromising performance or stability. A customer data platform (CDP) ingests bits and pieces of consumer information from multiple systems, standardizing them and reformatting them into unified profiles. Marketing teams can use this profile data to identify cross-sell and upsell opportunities. For example, if a customer calls the help desk with a question about an item, the agent can use their profile to see what other products they might be interested in purchasing. A business with a high level of scalability can grow its revenue without increasing its costs. This makes it more attractive to potential buyers looking for profitable companies. This scalability is partly due to the management processes the company has in place that can keep up with growth and still provide efficient service to consumers.