Last updated: March 16, 2022 What is CDP? | Customer Data Platform, defined

What is CDP? | Customer Data Platform, defined


What is a CDP? CDP stands for “customer data platform.” Simply speaking, a CDP is a prebuilt software system that collects, organizes, and centralizes customer data to build comprehensive customer profiles. 360-degree customer profiles have long been coveted by marketers wanting to create hyper-personalized customer experiences. CDPs are the latest solution promising to unlock marketing automation as they create a persistent unified profile through responsibly and strategically collected party data.

Does the hype compare to reality? Let’s dive in!

Companions, not competitors: Breaking down CDP and CRM 

While often compared to CRM (customer relationship management) and DMP (data management platform) systems, CDPs are different.

A CDP collects more types of data (behavioral and transactional, structured and unstructured), and provides value throughout the whole customer lifecycle, not just one stage. 

Is a CDP meant to replace your existing data management systems? Not necessarily.

Though there may be some functionality overlap, an effective CDP is accessible to other systems and will work with your existing solutions in a mutually beneficial integration, depending on how robust your CRM is. The goal is to complement or improve your technology stack. 

The CDP will pull the data from your CRM, DMP, etc., and use it to build a more complete customer profile. And your other systems will be able to access the real-time customer insights provided by the CDP.

What does a CDP do? Capabilities and benefits of a CDP

A customer data platform has four big capabilities with massive benefits:

  1. Creating a complete customer profile
  2. Unifying data silos
  3. Building customer trust
  4. Supporting marketing campaigns

Let’s dive into each of those benefits to paint a more complete picture.

Image of graph highlighting the benefits of a CD: Cross channel customer experience, better understanding of customer decisions, improved data, increased speed to market, reduce the misuse of data.

How a CDP can help build complete customer profiles

A CDP’s primary purpose is to build a dynamic, comprehensive profile of all your customers. It does this by pulling data from all your various systems and touchpoints (transactional history, customer service interactions, IoT data from their smart devices), cleaning and organizing that data, and then combining it into a single view. 

Types of data collected by a CDP:

  1. Personal data (e.g., name, contact info, demographics, job title, etc.)
  2. Engagement data (e.g., webpage visits, social media interactions, email open rate, customer service interactions, paid ad conversions, etc.)
  3. Behavioral data (e.g., transaction/subscription info, purchase details, connected device usage, customer loyalty program info, cart abandonment data, etc.)
  4. Attitudinal data (e.g., customer feedback, perceived sentiments, and motivations, etc.)

Not only do you get a more robust customer profile, but since CDPs pull this data automatically, that profile evolves in real-time with the customer.

This single, dynamic, real-time view opens the door to much more impactful, personalized customer experiences that are driving business today. According to one 451 Research report, personalized offers led to $87.5 billion in sales from purchases consumers otherwise wouldn’t have made.

Unify data silos: Yep, a customer data platform can do that

We’ve all experienced the frustration of being transferred from one department to another only to have to completely re-explain our situation. As a consumer, it seems obvious that, for example, a customer service rep should be able to access your order history or pull up past service interactions when you call. 

Alas, as specialized database systems have cropped up to meet the needs of individual departments and organizations, it’s become increasingly challenging to get them to talk to each other. 

CDPs are purpose-built to collect and organize customer data from all these systems and sources into one place, which in turn becomes available to those departments. This makes cross-channel and cross-department engagements more feasible and effective. The combination of a database that is accessible, a single customer view, and enterprise-wide respect for customer experience leads to responding proactively to customer behavior in ways that make customers feel appreciated.

Be true: Build customer trust and loyalty by respecting the wishes of consumers when it comes to their data

In our data-driven world, companies must ensure they respect their customers’ data if they want to earn and keep their trust. That means adhering to strict data privacy regulations and honoring customers’ data privacy preferences.

By centralizing customer data into a single hub, including consent and privacy data, CDPs make it easier for companies to ensure they’re operating against their customers’ most complete and up-to-date preferences. This helps reduce compliance risk and improves the overall customer experience.

Support the efforts of multiple departments to benefit the customer with CDP

The nature of CDP is to deepen insight and broaden access to customer data, while maintaining security to customer data. This means that departments across an enterprise can achieve specific, internal objectives for CX, revenue, and customer loyalty using a single source. Given that marketing is a term used in distinct ways by departments, sharing the single customer view allows for the layers of touchpointswith a brand to reinforce one another. The customer is able to feel wholly supported and understood regardless of where they are in their customer journey.

Business evolved: CDPs are here to stay

Business survival will hinge on a crucial deciding factor in the future: How customer data is managed, and if businesses are using all of that personal information for good.

A CDP can help companies understand what their customers want, and can simplify the entire buying process. As more companies start to unlock the power of unified, centralized data and real-time customer profiles, CDP adoption will only grow – as a business leader, the question is are you ready for what’s next? 

What are the data privacy issues keeping execs awake at night?
We’ve got them – and the solutions – HERE.

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Ratul Shah

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