What is a Customer Data Platform?

Summary: What is a CDP?

To get started, let’s look at why they are vital to making your customer experiences the most positive they can be.

It’s reflected in consumer research year after year: people are willing to exchange their personal information – what they want, need, and prefer – for a more meaningful customer experience. For example, last year a report from the Global Data and Marketing Alliance (GDMA) reported that 79% of Americans showed no fundamental objection to engaging with the data sharing ecosystem for this purpose.

It’s about building a mutual understanding: I share with you, and you inform me of relevant opportunities while protecting my privacy. CDPs enable brands to create these holistic, relevant, and respectful experiences, interactions people love.

Selecting the right CDP is just one part of the equation. There’s a lot more that goes into making your CDP investment pay off – and to meeting your customers’ expectations. We hope that’s why you’re here: to learn more about CDPs and how they can, with the right approach, help you deliver amazingly relevant and respectful customer experiences.

Why focus on customer experience?

For brands to succeed, even to survive, they must focus on three principal goals: acquiring customers, growing customer relationships, and retaining customers. In today’s complex, high-speed, multichoice world, meeting and maintaining those goals is impossible without a focus on customer experience (CX.)

McKinsey and Company defines customer experience as “encapsulating everything a business or an organization does to put customers first, managing their journeys and serving their needs.”

When you understand people, conversations and experiences are always better. These richer interactions build trust. And people love to buy from brands they trust. As that trust grows, they become willing to share more information about themselves – which creates the opportunity to deliver even more relevant experiences. Understanding what people want, need, and prefer enables brands to deliver customer experiences so relevant and respectful, people feel confident that they’re finding and engaging with brands on their terms.

“When you understand people, conversations and experiences are always better. These richer interactions build trust.”

How does a CDP work?

A CDP captures customer data from every interaction and channel—shopping, buying, registration, support, reviews, follow-up promotion, in person, online, mobile, etc—cleans and structures the data while ensuring privacy and security compliance, unifies that data into centralized customer records and audiences, and provides the appropriate data from those records to appropriate applications and channels within and outside of the enterprise, at the appropriate time.

How do CDPs differ from CRMs and DMPs?

On CRMS vs. CDPs from CMSWire…

“A CRM and CDP have some overlap in terms of functionality, as they’re both data management platforms. But generally, a CRM system is primarily to support sales, while a CDP delivers a more complete view of customer relationships beyond the sales cycle.

CRMs are also more limited in scope than CDPs, as they do not necessarily provide the development environment or integration flexibility to support the full customer experience cycle. CRM systems are more focused on managing customer behavior, business transactions and process management.”

On DMPs vs. CDPs from CDP Institute…

“The biggest difference between CDPs and DMPs is the type of user data they gather. CDPs primarily gather first-party data—it comes directly from an advertiser’s company. For example, if a customer creates a website account to buy something, their purchase history becomes part of that business’s first-party data. DMPs use third-party data, which is gathered by a data collection company through cookies and other secure browsing trackers and then sold to advertisers.

Next, a big point of differentiation is the use of personally identifiable information (PII). PII refers to data that identifies an individual, such as a full name, phone number, or address. CDPs can collect this type of information with user permission while DMPs use anonymized data to comply with privacy laws.”

How to select the best CDP for your organization?

Brands should consider several factors when evaluating CDPs, such as vendor heritage, experience, flexibility, scalability, and the scope of integration in the enterprise.

It is also important to remember that there are hundreds of CDPs available in the market. Not all do the same thing; some mainly look after the data, and some specialize in decisioning, or analytics, etc. Brands should identify the gaps in their organization and the business goals they want to achieve, and then use these as a guide to evaluate a CDP.

Before a brand begins to evaluate CDPs, it will need to conduct some self-discovery:

1. What challenges does it need to resolve? What KPIs will the CDP produce or improve?
2. What is the use case prioritization and roadmap?
3. What data will fuel the CDP? What are the data origins? How will the brand activate it?
4. Is the organization ready to adopt a CDP? What changes will it introduce?
5. How will the CDP be rolled out?
6. Has the brand identified the right governance model for the CDP’s rollout and operation?

Once those questions are answered, the brand is ready to begin assessing CDPS for:

• Platform fit: Step back from the hype to conduct a careful needs assessment. Is a CDP truly the right solution for the use case, and if so, does it include all the necessary capabilities? A brand should start by reviewing its existing technology and identifying the gaps in its organization and data ecosystem and then use this to determine CDP requirements. For example, does the brand need a solution to unify its data and provide a single customer view? Is a next-best-action engine needed?
• Scalability: Is the solution scalable, both from a configuration and software-as-a-service perspective?
• Time-to-Value: Brands should assess their  key performance indicators and revenue needed to justify a CDP investment to drive their business forward. They should evaluate the expected payback timing for the investment. Is the CDP being implemented as a foundational, enterprise-level component that must serve the needs of many business units and stakeholders from Day 1? Is the goal to have a CDP that can plug into a brand’s  tech stack to drive revenue from 2-3 high-value use cases from day one, with the ability to extend to cover new use cases in the future? This decision can mean the difference between implementations that are measured in weeks or months.
• Decisioning and Real-Time Needs: Does the brand need a decisioning capability in the CDP to inform the next-best action strategy? A good CDP will ingest and activate real-time data, supporting a single customer view, so brands can act relevantly in the moment.
• Usability: Can the wider marketing team run and use the CDP, create segments, customer journeys, and other tasks? Some CDPs need more technical expertise – brands should ensure that their technology and internal skill sets align. If not, a brand should consider engaging a CDP service provider.
• Data Strategy: A brand’s data strategy must support its CDP use case and because aCDP is only as good as the data that feeds it, a brand should explore what data its CDP can manage, making sure the solution can manage data from all systems needed and can provide data governance rules to ensure personal data is used correctly.
• Implementation: Brands must consider whether they have the resources, experience and skills to implement the solution. Will they need third-party technology and services? They should keep in mind that many organizations struggle to realize the full holistic value of a CDP without expert support.
• Measurement: Many CDPs are not designed to support omnichannel analytics and closed-loop measurement use cases. Brands should consider if they have – or require – a solution to achieve this, and whether the declared capabilities of a particular CDP can address all the requirements.

Assessing and weighing these factors is key to deciding the best solution that will align with a brand’s existing technology – and that addresses the full spectrum of the organization’s needs and goals. Of course, this path can be complex, and with many solutions available, it often helps to partner with an objective, experienced expert to help assess potential CDPs.

What’s next?

CDPs are large, important investments. Treat them accordingly.

Today’s “know-me, understand-me” marketplace requires a holistic single source of customer truth to drive marketing personalization, distribution, and analytics in real time across all interactions. Understanding what people want, need, and prefer in the moment helps brands deliver experiences so relevant and respectful that people fall in love with them. Thus, the motivation for investing in CDPs. But are you getting all the value you can out of your CDP investment?

Ask yourself: Are you a new appliance do-it-yourselfer? When you buy a dishwasher or HVAC system, do you break out the toolkit and start the installation, configure the wiring, and tune it for best performance? Most of us don’t. We know these complex machines, designed to make our lives better, also require a level of expertise to implement, configure, and maintain. For a brand, CDPs can be that way too.

To gain a brand perspective on martech service partnerships, Acxiom commissioned independent research from MTM, an international strategy and research agency to uncover the most common reasons brands work with CDP service partners. It’s a free reference to visit when you are at a CDP crossroads.

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