Defining the Customer Experience with a Customer Data Platform

We are living in a world ruled by data. A factor in nearly every decision made by businesses of all stripes, data’s power is especially felt in the marketing sector, where understanding and shaping the customer experience is essential to maintaining a healthy bottomline. 

Effectively harnessing the many subsets of data — transactional, behavioral, demographic, and more — acquired from customer engagement both online and offline (e-commerce stores, websites, blogs, in-store interactions), has been a mission taken up by many software platforms, including customer relationship management (CRM) and data management platforms (DMP). However, the distributed nature of that data, across organizational and technological silos, has hampered how companies can access and use that data to continually enhance the customer experience. 

Unifying all of this customer data in one place is the goal of a customer data platform. 

What is a Customer Data Platform?

Coined by David Rabb of the Customer Data Platform Institute in 2013, a customer data platform (CDP) “is packaged software that creates a persistent, unified customer database that is accessible to other systems.” 

Designed specifically for marketers, CDPs are the central location for customer data collected from all sources and creates customer profiles that are integral to targeted marketing campaigns. They also allow marketers to create impactful customer experience initiatives and improve customer service.  

CDPs have three defining characteristics:

  • That are prebuilt systems that are configured to the needs of each client, giving businesses more control over the system, even though some technical assistance might be required.
  • A CDP captures customer data from an array of systems, links the information together, and stores it all to track behavior over time. This process effectively creates a comprehensive view of each client defined by personal identifiers that are used to target marketing messages and track individual marketing  results.
  • Data stored in the CDP can be accessed and used by other systems (i.e., a CRM or DMP) for analysis and management of customer interactions. 

“Like most packaged software, a CDP reduces risk, deploys faster, costs less, and delivers a more powerful solution than custom-built alternatives,” says Raab. “With careful planning, a CDP will provide the foundation your company needs in the years ahead to meet customer expectations for exceptional personalized experiences.”

Data Collection

CDPs collect and organize many different kinds of data from a range of sources, including: 

  • Behavioral data: a marker of how a customer has engaged with an organization through a website, app, or browser. This data includes transaction information, online activity, customer service information, and more. 
  • Identity data: unique customer identifiers, including name, location, birthday, address, and more.
  • Transactional data: includes purchases, returns and other interactions made from e-commerce or point of sale systems.
  • Qualitative data: contextual information that is derived from customer feedback, such as company ratings and motivational questions about purchases. 
  • Metrics: data derived from marketing campaigns, including impressions, engagement, reach, etc. 

Also read: Data Protection Compliance: Frameworks for Small Businesses

CDP: Required Skills

Although customer data platforms are designed for marketers, the custom-built database system still requires technical skills and support. The CDP Institute has made skill-based recommendations for organizations building and launching CDPs to get the most out of their systems. 

In addition to marketers, an IT person with knowledge of programming languages such as Javascript, HTML, etc., is needed to help with implementation of the CDP and to manage tasks such as setting up email. 

The CDP Institute also recommends a data scientist or analyst be on the team to manage the data, track custom dashboards, carry out A/B testing, and deliver results to the marketing team. 

CDPs vs CRMS and DMPS

CDPs, CRMs and DMPs all handle and process customer data in some way, but distinct differences set CDPs apart from both of these valuable marketing tools. 

While CDPs harvests and unifies data gathered across both online and offline channels to create customer profiles, CRMs only track intentional interactions that are manually entered. This means that for data collected via a CRM to be useful, users have to answer specific questions and intentionally fill out forms. CRMs are also unable to track anonymous users and  integrate offline and online data — functionality that defines CDPs.

Similarly, data management platforms serve a different data processing need. Best used for advertising purposes, DMPs collect third-party data harvested from anonymous sources such as cookies, IP addresses, and devices to improve ad targeting and audience reach. In contrast, CDPs collect first-party data that is retained long-term as the building blocks of customer profiles and ongoing relationships. 

Also read: Top 10 CRM Software for Small Businesses

Key Benefits of a Customer Data Platform 

Whether you decide to engage a CDP vendor to buy a CDP or hire developers to build one to address your specific business needs, CDPs offer several workflow benefits that are designed to improve departmental communication and enhance marketing campaigns for greater customer engagement.

Unification of Data

The proliferation of customer data across organizational departments has created data silos, leaving some stakeholders isolated, limiting opportunities for interdepartmental collaboration, and slowing down productivity. CDPs challenge this data fragmentation by unifying data across your organization, which ensures the data is accurate and accessible to the teams that need it most. By turning data into a collective asset, CDP helps to improve marketing agility and strategies. 

The CDP Institute notes that this kind of unification is the first purpose of a CDP, which in turns simplifies the process of “reconciling and leveraging the data beyond the company’s technical and organizational silos.”

360 Customer View

Built to collect data from as many sources as possible to then pull it all into a multidimensional profile of customers across platforms, devices, and channels, CDPs give marketing teams 360-degree views of their customers. These comprehensive profiles, which offer insights into customer behaviors and provide the data to create unique customer identifiers , are essential to managing customer relationships and creating more accurate, effective targeted marketing.

Enhanced Marketing Strategies

Delivering a consistent customer experience is the gold standard for marketing strategists. With a 360 view of the customer, organizations can clearly define customers and audiences to create advanced analytics that further break down this data to drive highly specified and targeted messaging. This effectively eliminates blind spots and allows marketing teams to create enhanced customer experiences.  

Read more: Modern Companies Need a Customer Data Platform: Build or Buy?

Refining the Customer Experience

The adoption of CDP solutions is anticipated to grow from $2.4 billion to $10.3 billion by 2025, reflecting a growth rate of 34%. This growing CDP market is indicative of increased organizational spend on marketing and advertising as well as how customer data and experiences are reshaping the tools used to effectively keep them engaged and loyal. For businesses for whom customers are the beating heart, customer data platforms’ ability to harness multiple data sources into a refined customer profile can be the key to shaping unique, powerful customer experiences. 

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