Understanding what CDP is and isn’t shouldn’t be so hard. Sometimes, it’s easier to understand what a thing is by exploring what it isn’t. We can grasp things through the negative space. So, as we continue exploring the corner of martech carved out by customer data platforms (CDPs), getting to the CDP meaning. Let’s look at what CDP isn’t. Specifically, how they differ from (but work with) other customer experience solutions.
We are going to be digging into a lot of acronyms. It can be dizzying the number of solutions that get bandied about in the martech space. We’re here to demystify in order to allow you to understand how the tools that are out there can be most effectively used. What is CDP in marketing? Let’s establish a basis for comparison, here’s a quick look at the CDP meaning:
A CRM (customer relationship management) system is a customer engagement tool, designed to capture information about customers’ interactions with your company. The data captured is first-party data, with personally identifying information about known customers and prospects.
CRMs are typically associated with sales, and while other departments (including marketing) do use them, they were designed specifically to capture customer and account information for sales reps and other customer-facing team members.
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How is CRM different from CDP?
CRMs do capture customer data, but only data that is relevant to the customer-facing teams using it. And much of the information is entered manually (such as notes from a demo or sales call). CDPs collect a wider breadth of information from the whole customer journey, automatically pulling data from disparate systems (including CRMs) to build dynamic customer profiles.
It isn’t CDP vs CRM. CDPs are not meant to replace CRMs. On the contrary, they often work together and make each other more effective. The CRM system will feed data to the CDP. The CDP will, in turn, clean up the data, removing duplicates and reducing inconsistencies, and share information back with the CRM.
While still focused on building user profiles, DMPs (data management platforms) use third-party data to build profiles for anonymous users, rather than known customers. DMPs were designed to enable more effective targeted advertising, using demographic and anonymous behavioral data to identify potential customers.
How is DMP different from CDP?
Both systems were designed to build user profiles, but the data collected by DMPs is cookie-based, and so access to the information is only temporary (you can’t access past data once the cookie has expired). The user profiles created in these systems offer snapshots in time, versus a living, dynamic profile. This also means that DMPs aren’t equipped to deliver deep insights from long-term analysis.
The other key difference is that DMPs are specifically concerned with anonymous users, not known customers who already have a relationship with your brand. CDPs, on the other hand, were designed to build profiles for known customers and prospects (though now, many collect data for both audiences).
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As with CRM systems, DMPs provide another piece of the customer data puzzle that CDPs use to build a comprehensive database. The systems aren’t necessarily meant to compete with each other, but instead, augment one another. You can integrate CDP and DMP to paint a more robust picture of your customers and prospects that includes both first- and third-party data.
A DPE (digital personalization engines) is a solution that specializes in personalizing a digital user experience based on customer traits or preferences or their segmentation. The DPE adjusts certain elements of the site (such as which visuals are displayed, what products are featured in the recommendations, etc.) based on which the user’s behavioral data or segmentation.
How is it different from a CDP?
DPEs aren’t databases themselves. They are tools that use data to execute a specific marketing strategy.
Since DPEs rely on data to work effectively, connecting them with CDPs that collect and clean up cross-channel data only strengthens them.
Some CDPs do offer their own personalization functionality, whether both are needed depends on the business, and which CDP they are using. The CDP meaning for your business is that it is uniquely matched to your needs.
DXPs (digital experience platforms) are an evolution of content management systems. They were built to drive digital transformation and help companies deliver connected experiences via websites, apps, intranets, smart devices, and more. DXPs consolidate various tools (content management, data, and analytics) to deliver consistent, end-to-end experiences.
How is it different from CDP?
But as with DPEs, DXPs aren’t databases. They rely on an integration with a data source (such as CDPs) to enable personalized experiences. They evolved from content management systems as a way to manage more dynamic engagements and are more strictly operational than CDPs.
DXPs rely on data to inform personalization and customer experience strategies, and CDPs are a comprehensive data hub. Connecting with CDP fuels your DXP with large quantities of high-quality data, which makes it easier to know you’re designing the right experiences for your audience.
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As market needs change, different solutions are built to meet specialized needs. Just as Captain America, Iron Man, Black Widow, and Thor all have their unique skills and powers informed by their background, each of these solutions has its own unique specialties. CDPs are like Nick Fury, connecting the specialists together to form The Avengers.
(All while bringing his own unique talents to the table … okay, it’s not a perfect metaphor).
via GIPHY (Nick Fury: I’ve got my eye on you.)
The point is: CDPs aren’t meant to necessarily replace what martech systems you already have in place. They can work with those systems – either collecting data from them or sharing data with them – and in some cases, make them work even more effectively. The idea is to look at the tools you have as members of a team, how do you maximize what they can do and where are there opportunities to use them to make the whole stronger. The strength of CDP for your data is heroic.
Understanding how CDPs differ from – and work with (not against) – the various other systems makes it easier to grasp what they are, and how they can fit into your business.
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