What is a Customer Data Platform (CDP)?

Our CDP 101 is here to provide a simplified breakdown of key features and answer common Customer Data Platform questions. Learn about the basics of CDPs including who should use it and how to choose one.

Amanda Groth, 

15 February 2022


The Customer Data Platform (CDP) market is becoming increasingly noisy. With multiple types of CDPs available and each claiming to tick all the boxes, it can be a tricky market to navigate.

Our CDP 101 is here to provide a simplified breakdown of key features and address CDP FAQs such as:

  • What is a CDP? Customer Data Platform Defined
  • What is the Purpose of a CDP?
  • How Does a CDP Work?
  • Benefits of a CDP: Why Marketers Need a Customer Data Platform
  • CDP vs CRM: What’s the Difference?
  • CDP vs DMP
  • How to Choose a CDP
  • CDP FAQs

What is a Customer Data Platform?

CDPs are transformational pieces of software that compile and aggregate data from multiple sources to build a meaningful single customer view (SCV).

Data is a business’ single greatest growth asset, but it must be managed and utilised effectively to truly leverage its value. CDPs put the power back in the business’ control to build, optimise and accelerate their customer data to provide a better customer experience.

Unified Customer Profile

The complexity of the customer journey is growing with ever-increasing number of new channels and devices through which customers can interact with businesses. The exponential rise in the number of consumer touchpoints makes it increasingly challenging for companies to track, analyse and manage their customer data. The CDP is a powerful solution which enables customer data to be captured from online and offline sources in real-time to create a full, unified view of the customer.

Actionable Data

What good is achieving an up-to-date 360-degree customer profile without action? A CDP can be effectively integrated with other marketing tools to push the most relevant Next Best Actions (NBAs) through the right channels. An effective CDP automates the process of delivering personalised messages, recommendations and campaigns to segmented audiences, allowing businesses to provide a better customer experience with agile and efficient responses to consumer interactions. It’s become a marketeer’s primary objective to send the right message to the right person at the right time; the CDP enables this on a large scale. By using segmentation and predictive analytics, the CDP can provide targeted communications at just the right moment.

Why do you need a CDP?

Implementing the right CDP within your business can provide a wealth of benefits and possibilities:

Improved Data Quality

Break Down Silos: Businesses have access to more forms of data than ever before, from transactional to behavioural and demographic data. In an effort to manage the vast volume of data available, companies are adding more and more systems to their tech stack, resulting in data silos (data stored in isolated systems inaccessible across departments and platforms). Although each data set serves its own purpose, the lack of data integration prevents companies from providing a consistent customer experience across all channels. Not to mention, valuable customer insights may be missed due to the incoherent approach, leaving gaps in the data set. A CDP resolves these issues by eliminating blind spots and creating a comprehensive single view from all data sources, connecting online and offline channels. A CDP provides company-wide access to one full, joined up view of customers, enabling companies to see ‘the big picture’ and take a unified approach to their marketing strategy.

Real-time Data: There is a serious demand for real-time data, not only from businesses but also from the consumer. Customers now expect companies to respond to their actions in real-time, assuming they’ll see value in return for their information. The right CDP can update customer data within minutes of a given action, providing businesses with the most up-to-date SCV to effectively influence customer behaviour and drive incremental change to their business. The CDP works continuously to provide constant, up-to-date, actionable customer data.

Better Customer Experience

For most brands, personalised customer experiences are no longer optional, but a consumer expectation. To keep customers satisfied, companies must deliver a more meaningful level of personalisation. So much so, that, as explained in our 10 Key Trends for CRM in 2022 eBook, empathy is becoming the new personalisation. To gain a deeper connection with their consumer, brands must truly step into their shoes to understand their experience and develop a more meaningful connection.

A CDP empowers businesses to achieve the detailed level of customer insight required to compete in the current market. Once the CDP has created a single customer view, it then uses artificial intelligence and data science to identify similarities between groups of customers based on their past and projected behaviours. This leads to improved audience targeting to provide personalised communications for better marketing effectiveness and efficiency.

The more the customer feels understood, the more likely they are to trust recommendations and suggestions.

Market Agility

If Covid-19 has taught businesses anything, it’s that they need to be able to react quickly. Although life may feel as though we are returning to a more ‘normal’ state, the pandemic continues and so does the uncertainty and disruption. Not to mention, the impact on spending habits – we cannot be naïve to assume consumers are spending as they did pre-pandemic, or that they will continue to behave in the future as they are now. Brands now more than ever require the agility to survive in unforeseen changes in the market and keep up with their consumers’ shifting interests.

A CDP gives organisations the ability to adapt quickly. It’s dynamic, and therefore, so is the business’ view of the customer. It’s flexible and can be adapted to fit with changing technology trends and marketing channels to fit the business’ needs.

Who should use a CDP?

Marketers! Right?

Not quite.

Of course, one of the main benefits of a CDP is its ability to provide a full, joined-up view of the customer to enable better marketing strategies. However, quality and accurate data is a company-wide asset which informs business decisions in all areas. The right CDP will allow access across teams to full customer data sets and running deep dive analysis for nontechnical marketers and analysts alike. With all departments accessing the same set of data, the business can take a unified customer-centric approach. Not to mention the huge time saving of duplicated efforts across teams.

What is a CDP not?

There is often overlap in the language used when defining data technologies, making it difficult to distinguish between them. Therefore, in addition to defining what a CDP is, it’s important that we also address what a CDP is not.

CDP vs CRM

A CDP is not a customer relationship management system (CRM), even though the two may have similar functionality and may promise similar outcomes. A CRM system is a solution to managing relationships and interactions with customers and prospects by storing transactional data in a centralised location. Its prime function is to support company sales by informing future communications; however, the view of the customer is limited as it relies on direct interactions with the brand. A CDP, on the other hand, reveals the entire customer journey by gathering data from touchpoints online and offline.

It’s not typically an either-or situation. Often, businesses invest in a CRM tool first, and although it’s useful, they realise they need more. The two can work in conjunction as the CRM can use the data from the CDP. With effective integration the CDP can play a complementary role to already existing marketing software.

CDP vs DMP

A CDP and a Data Management Platform (DMP) can also be easily mistaken as both use data to segment audiences for marketers. However, there are significant differences between the two. A DMP uses high-level anonymised data sets collected from second- and third-party sources to segment audiences for digital advertising campaigns. A DMP is geared toward advertising campaigns aimed at gaining new customers, and as such, the data collected is often only stored for a short period of time. On the other hand, CDPs rely heavily on first-party data to build comprehensive customer profiles over long periods; the more data they retain, the more valuable they are.

When should a business use a CDP?

You may find yourself in the position where your brand has access to an abundance of customer data, but you’re struggling to unify and centralise it. Or perhaps you have the data, but you need help interpreting it’s true meaning. Maybe you understand your customer, but you’re struggling to leverage their data to take effective action. OR your somewhere in between! The right CDP can be customised and is adaptable to suit your business needs. Ultimately, if you find your business is not currently leveraging first-party data across channels to provide a connected and personalised customer experience, then a CDP would be beneficial to you.

Following the disruption of the last couple of years, the customer profile has changed radically and will continue to do so. It has never been more crucial to break down barriers surrounding your customer data. So, if you’re considering when to use a CDP… the time is now.

What CDP is right for me?

If you’re in the market for a CDP, you will already understand it can be a confusing space. Vendors promise a range of capabilities and solutions, therefore it’s critical that you don’t rush into the process. It’s important and have a clear understanding of your company goals and needs to ensure your chosen CDP will match them. One size no longer fits all. To avoid any further complexity in your data processes, the CDP must allow for effective implementation into your existing tech stack. Some are more adaptable than others!

If we can leave you with one piece of advice, it’s this: don’t rush, but don’t hesitate for too long either. Like any technology-based product, CDPs will continue to evolve – the right CDP will evolve with you and your business.

To find out more about how Plinc’s Unilyze can help you leverage your data to transform your customer experience, please get in touch.

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