Customer data platform

What is a customer data platform?

A customer data platform (CDP) is a data management tool that captures, stores and creates unified profiles for customers. This allows companies to see what their customers are doing on their websites and apps, often holistically across multiple platforms, within a single view.

The CDP Institute defines a customer data platform as software that manages and maintains a persistent and holistic customer database that is transparent and accessible by other software and systems. 

A CDP collects, organizes, and shares first-party data and third-party data from many different channels. The platform provides all employees accessible, immediate, real-time views of their customers:

• Accessible: Works with the everyday software all of your employees use -- from marketers to analysts.

• Immediate: Can be accessed directly from your team's software.

• Real-Time: Data is constantly being collected, updated and organized with little-to-no wait time to improve the customer experience.

How a CDP works

There are four concurrent processes underlying every CDP:

1. Data collection: Customer data, such as demographic or psychographic behavior, comes from all types of sources, including privately owned channels (e.g., landing pages) and contracted, third-party channels (e.g., data you purchase). 
   
   CDPs collect customer data from almost any program you use, including your email campaigns, payment systems, support tools and customer relationship management (CRM) tools. 

2. Data governance: Data privacy is extremely important to customers, hence why privacy regulations are becoming stricter. CDPs help you ensure the data collected is legitimate using common, open-source and proprietary data standards that comply with GDPR, CCPA, and other.
   
   Your CDP can assess and categorize the reliability of incoming data. Why does this matter? One ZoomInfo report found that 62% of companies in the U.S. rely on marketing data that's up to 40% inaccurate. 
   
   You can set and create quality rules to block access to data not meeting your quality standards. CDPs can rectify and transform data that has been improperly named or miscategorized. The platform can also be set up to restrict access to certain data based on customer privacy rules.
   
   Governing and assessing the quality of the data collected in the previous phase ensures your team uses or makes intelligent decisions based on the most accurate data. 

3. Data synthesis: Your CDP will segment customer data into groups for easy access and evaluation by everyone in your company. Customer segmentation allows you to create and update customer profiles based on real-time data. It also offers an opportunity to evaluate analytics derived from the categories you've customized on your CDP. 
   
   Your CDP is always synthesizing data. It can identify existing customers in these anonymous profiles by searching for different shopping patterns. The anonymous data can then be seamlessly integrated with the existing customer's data, creating a more complete customer profile. This capability provides insights on lead generation and retargeting.  

4. Data activation and access: Today, all business software should lead to your CDP, as it is intentionally designed to track customer behavior via data automation and integrate easily with other apps. 
   
   CDPs work best only when they are established as the central hub for all of your company's customer-related software. This requires the CDP to connect to all software involved with customer communication, sales and analysis, such as:

   • CRMs

   • Social media accounts

   • Email campaigns

   • Website and landing pages

   • Online ad campaigns 

   • SMS and MMS

   • Surveys

   • Data analysis and visualization tools

   • Mobile apps

The goal of a CDP is to organize all your data on one platform, making it accessible to employees working on different teams and using different types of software. 

The benefits of CDPs

CDPs have become one of the most indispensable pieces of marketing technology.

Data is being created, collected, aggregated, and stored from data sources at an exponential rate. With data strewn about countless data warehouses and data clouds, CDPs are the most efficient and robust way to keep track of the large amounts of customer data that is constantly accumulating. CDPs also eliminate ambiguity when it comes to how to leverage data to make confident decisions. 

A robust CDP can help you get a complete view of your customers and create unlimited audience segments from your data. It acts as the command-and-control hub for your entire operation, streamlining analytics and helping you create campaign strategies to turn your anonymous shoppers into loyal customers. 

The ideal platform integrates seamlessly to collect, govern, synthesize and share customer data with any employee, leading to efficient data collection and offering higher value throughout your customer lifecycle. 

Unify all your data

CDPs are what allow businesses to centralize unified customer profiles and achieve identity resolution, which refers to the process of fully bringing together disparate bits of data into one complete customer picture.

Most customers are engaging with many different touchpoints throughout the customer lifecycle. Harnessing all of these customer interactions is a delicate balancing act that, even when it goes right, is difficult to manage (that’s assuming the data you’re collecting all lines up properly).

Therefore, having a powerful data management platform that streamlines the ingest process will save a ton of time down the road. Instead of trying to connect all of the dots yourself, you’ll already have the proper data integration mechanisms in place to effectively automate the process.

Understand customer behavior

Tracking customer engagement and is one thing, but marketing teams need to know what to do once a customer has interacted with their site. That’s where a CDP comes in.

By tracking real-time behavioral data from many different sources, marketing teams can get as detailed a view of the customer as possible in one single platform. This allows teams to procure actionable customer insights where it actually counts.

Integrations and cross-channel activation

An effective CDP will provide endless integrations (via API or SDK) so that providers can integrate within any data management ecosystem.

By leveraging a unified data management platform that allows unparalleled insights into customer behaviors, you can then provide personalized experiences in order to improve optimization and boost customer retention across all platforms.

Predict customer interactions

Powerful CDPs enable business to provide highly tailored buying experience for customers based on their unique needs and preferences.

Pre-built machine learning and AI capabilities are becoming one of the most important use cases for most CDPs, making marketing automation and ecommerce optimization easier than ever.

When you overcome data silos with unification of data collection, you can then anticipate customer behavior and begin incorporating predictive analytics to amplify the results of your marketing automation efforts and increase sales on ecommerce platforms.

Boost customer lifetime value

When you have a supercharged CDP that’s collecting data from everywhere, storing it in a visible and easy-to-use platform, operating on all cylinders to uncover customer insights to improve the customer experience, and integrates with all your marketing technology tools, building retention and improving customer lifetime value becomes a cakewalk.

How CDPs are different from existing marketing software

A CDP is a database tool that consolidates all of the data created by other applications.

Many contemporary marketing platforms were developed in the past 20 years, as customer needs and expectations have shifted dramatically and grown more sophisticated. 

Offline marketing campaigns -- by snail mail, for example  -- are no longer as effective as they once were. Email campaigns, social media and personalizationhave become game changers in improving engagement with consumers. 

Omnichannel tools such as CDPs bundle all of your existing software solutions and data together, creating a one-stop shop.  

Developing optimized digital journeys with a CDP

With the Optimizely Data Platform (ODP), we provide the power to coordinate, understand and engage with your customers, allowing them to truly unlock their digital potential on their customer journey and helping them be more confident in their decision making, enabling them to be more predictive, rather than reactive.