8 good reasons to use a CDP

8 good reasons to use a CDP

Klas Bernehjält
Jan 2020
Klas Bernehjält
Computer screen|CDP|CDP datasillos|Role of CDP

An abbreviation that is increasingly mentioned in various discussions on marketing technologies is CDP (Customer Data Platform). In short, it is a digital tool or platform. CDP is still relatively new and is predicted to be "the next big thing" in Martech or Marketing Technologies.

What is the purpose of a CDP?

Our customers are increasingly demanding and expect the same treatment and care regardless of the channel, be it phone, web or social media. The aim of CDP is to bring all customer information together in one place to create a unified customer picture and to solve the problems caused by data silos. Data silos are created as we start to have many different systems containing different information about our customers, each of which gives its own, often limited, picture of our customers. Different information in different systems can lead to customers suffering through disjointed customer experience and complicated customer journey when interacting with a company.

Illustration how much you know about customers different kinds of channels

So a CDP, or customer data platform, is a system for managing information about real customers of a company with the aim of creating a central place where all the data about its customers is stored in order to get together a complete and unified customer picture. A CDP therefore collects data from the company's various systems and databases that contain customer data such as CRM, business systems, websites, web shops, apps or transaction systems. This is then used to analyse and get to know its different customer groups in order to create relevant and coherent experiences, services, communications, offers and campaigns.

CDP and Data Management

Customer data can range from anonymous ad exposures and known purchases to product usage and customer service contacts. There are three main types of customer data:Demographic data: socio-economic information such as age, nationality, income, education, interests and employment.Behavioural data: created through a customer's digital interactions with a company. This type of data tracks which websites are visited, which apps are downloaded and which games are played as well as the number of internationals, duration and intensity.Transactional data: documents an exchange, agreement or transfer that takes place between organisations and/or individuals. Usually has commercial or legal meaning and can include transactions such as purchases, returns, payments, registrations, reservations and subscriptions.Device data: does the customer use one or more devices, if so, which ones? Which devices are preferred for different activities or times.

An explanation of the role of the CDP

Most commonly, a CDP is used to manage first-party data and stores personally identifiable information such as name, email, postal address and contact number, much like a CRM. The difference with a CRM is that a CDP is built to manage more different types of first-party data collected from customers. This could be information about how people interacted with the company across different "channels" such as the website, services or apps. It can also be generated from newsletter subscriptions (marketing automation systems) or purchase transaction systems made through the company's website (CMS, ERP) or Point of Sale (POS) systems in stores.A customer profile can be enriched with information from second-party sources to create a more unified customer picture. Examples of such data include financial data from credit institutions.Purchased data (i.e. second party data) as well as third party data obtained from a collection of different, sometimes unknown, sources can, in many cases, also be handled in a CDP. Usually, one wants to keep first, second and third party data separate because of the large differences in quality.

CDP and data security

There are arguments related to data security for using a CDP, where a CDP can (at least in theory) act as the only strongly encrypted database in a company where personal information about customers is stored. Other systems that are integrated with the CDP then only store the reference ID in their database. This makes it easier for a company to keep track of and secure the management of its personal data. With rigorous permission management, access control and activity logging, there is traceability of who or what has access to and uses the data. A CDP can thus simplify the control and management of personal data, consent and regulatory compliance, such as GDPR compliance.

Segmentation and analysis

A CDP collects a lot of data that is valuable to analyze because it is based on a specific individual and so-called customer identifier, such as an email address or a social security number.In a CDP, you are supposed to be able to analyze different behaviors such as of all those who bought product Y, what ancillary products or services did they buy? can we find a pattern? Another example is to analyse the probability of a web visitor converting into a customer or learn to understand content affinity (i.e. relatedness between different content) based on the customer's interest to visit articles and search for specific products. This knowledge can be used to create better customer experiences with smart product or content recommendations, smarter website navigation and clearer information.

CDP and Marketing Automation

Using technologies such as marketing automation, AI and predictive analytics, it is possible not only to identify which sales or communication channel a particular individual prefers, but also to customise the customer experience and communication with the individual customer. An example is where the next order confirmation is sent via SMS instead of email for those individuals who prefer it. Or perhaps have a profile and behavior that aligns with others who prefer the particular SMS channel for order confirmations.Another example could be using the data to individually control when the newsletter is sent. For example, until 8pm on Sundays for the particular individual who usually opens and reads the newsletter at that time. And 10am on Tuesdays for another. In addition, each newsletter can contain information, inspiration and offers tailored to the specific individual, so no two newsletters sent need be the same. The reason companies and marketers want to do this is to be as relevant as possible. In other words, only communicate what the customer is actually interested in, i.e. on the customer's terms.A CDP can integrate online and offline data and uses customer analytics and machine learning to provide a Marketing Automation system with insights and thus the ability to create personalised communications in a variety of channels such as email, SMS, in-app, on page, social media, ad networks or personalised print.

8 good reasons to use a CDP:

It can:

  1. act as a central hub for customer data.
  2. remove data silos to deliver a unified customer picture.
  3. deliver encrypted storage of personal data with a focus on security.
  4. integrated with various systems such as Marketing Automation systems. Also advertising systems such as facebook and google to enable custom personalized communication and advertising.
  5. capture data anywhere in the customer cycle from a variety of systems.
  6. identify customer traits and behaviours that can be used for personalised communication and individual customer experiences.
  7. store contextual, demographic as well as historical data.
  8. As well as being used for customer analysis and a source for predictive models and analysis.

Some examples of CDP systems:

CDP is still relatively new and is predicted to be "the next big thing". This is evident from the number of solutions on the market as more and more Customer Data Platform systems are launched and significant resources are invested in developing the technology. The major players have almost all recently launched or communicated that they will soon launch CDP solutions. Here is a list of some different examples of CDPs.

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