CDP (Customer Data Platform) is relatively new term that recently started to draw the attention of marketing executives. So what is CDP and what it means for your business?
Customer Data Platform, according to CDP Institute, is a packaged software that creates a persistent unified customer database, accessible to other systems. Here are the two main principles of CDP:
1. A CDP is an open and clean database for customer information.
2. A CDP is owned and operated by marketers.
How CDP works
Though the CDP is an emerging thing in marketing technology unto themselves, they have some common attributes:
· A CDP is able to collect, store and normalize big volumes of data;
· A CDP creates a persistent identifier that spans across these data sets;
· CDP enable marketers use this data sets at the individual segment levels.
A CDP is not the new CRM (Customer Relationship Management) software, however a Customer Data Platform serves the online retailer the same way as a Customer Retention Management system serves to a B2B. The main “asset” for B2C is your existing customer file, and here is where CDP comes in to help to leverage this asset.
A Customer Data Platform integrates customer data directly into marketing and advertising platforms, breaking down the silos that typically exist between different systems and platforms. With a help of a CDP, the marketing teams get unified and real time access to customer data, coming from a wide range of sources: product usage data, sales data, websites, mobile applications, emails, customer support calls, customer life cycle trends and many other.
CDPs, built on a modern SaaS architecture, are endlessly scalable, have high performance, and support real-time cases. At the same time, they give marketers, data scientists and anyone within organization a direct access to required customer data, which enable them to create the best solutions for their business.
What can you do with a CDP?
A CDP provides you with a unified view of all customers events and actions and enriches your marketing capabilities. So what exactly can you do with a CDP?
· Unification of customer data. A CDP gives you a 360-degree view of your customer by access to 1st, 2nd and 3rd party data and its unification from different sources, which allows automated and personalized marketing. The CDP integrates all the data sources together into a single repository for all events that can be contributed to a single customer (e.g. Clickstream (website or mobile application) events, email sends and open clicks, purchases, reviews and comments on social media and review platforms etc);
· Customer segmentation. A CDP helps build precise segments of customers for highly targeted marketing campaigns. Whether your marketing segments are simple or extremely complex, the Customer Data Platform enable you to easily manage these segments. What’s more, the CDP updates the customer segments in real time, depending on their behavior changes. The segment-level data help you deliver tailored experience to your customers.
· Personalization. A CDP allows you to improve personalized marketing and target the customers with the relevant messages, content, online advertising and digital promotions. The unified customer profiles created by CDP help you deliver the customized content at the most appropriate time. These real time marketing strategies lead to a boost in conversions.
· Risk management. By analyzing factors that impact churn, and segmentation, done by the CDP, you can identify at-risk customers and target them with purchase incentives. Managing your portfolio of customers helps you understand the risk management process: here is where the CDP helps by constantly enhancing your data asset.
Customer data platforms help mitigate risk by reducing platform risk (data dependency), payback risk (time to value) and regulatory risk (a guarantee of compliant eco-system). As a result, it reduces the risk of platform lock-in and loss of data. Also, it helps you reduce the payback window of your technology investments and marketing campaigns, and ensures data security and privacy;
· Benefits for management & marketing teams and other stakeholders. A CDP provides management & marketing teams with more effective decision-making. It helps your team run predictive models and have different ‘what if’ scenarios. CDP also brings a lot of benefits for merchandising: the categorized profiles and personas allow you to make smarter purchasing and distribution decisions.
· Improving customer experience. Thanks to all the collected and unified data, CDP allows you to give your customers a unique experience, tailored to their situation. It helps you encourage repeat sales and long-lasting relationship with your customers. 44% of organizations, surveyed by Forbes Insights, reported that a CDP helped them drive loyalty and ROI in their organizations.
To buy or to build a CDP?
Before making a decision whether you should buy or build a CDP, you have to consider a couple of factors, such as your available resources, goals and time-to-market needs.
· What customer data drives your business?
The important thing before making a decision is to understand what is more important for your business: a customer data model itself or the amount of times it takes to get actionable insights from it. In the first case, you can consider building your own CDP, but if you need to get the well-timed marketing insights for your business, then buying a CDP might work out better in the long run.
· What resources can you use?
Does your team have enough experience and technical knowledge to build a CDP or its better to trust the experts? Another thing to consider is if your teams has expertise in data governance to make sure your data privacy is protected. This specialized area includes the organization and streamlining of data collection, as well as complying it with the operative directive and laws. If you feel your team lacks these knowledge and expertise, then you can consider either involving some experts into your team (count the related expenses) or buying a ready-to-use CDP.
· How much time do you have?
Buying a ready-to-use CDP gives you a benefit to kick off faster, and stay forward on competitive business scene. However, if you have an opportunity to invest time in building a CDP, your main work will include building integrations with other platforms to collect data and share it with other applications. It will also require maintaining these integrations in the future and constantly adding updates.
· What is your budget?
Consider the maintenance costs for the “build” option. Building your own CDP means you will have full ownership of the code, but maintaining the system requires additional expenses. Ready-to-use CDP gives you a guarantee of competitive reliable service, continuous updates and system enhancements, which is usually included into the price.
The ROI and Customer Data Platform
The smart use of Customer Data Platform increases the ROI (Return on Investment) of your business. How exactly does this happen?
· CDP helps you target an identified segment of the audience, which saves your business from wasting money on uninterested segment of users;
· Customers who see the appropriate message are more likely to respond, as they are targeted with a relevant promotion. The chances of conversion are increasing, and also your marketing expenses are more efficient.
With careful planning, a CDP can give your company an opportunity to create tailor-made experience for your customers, and skyrocket your business.
StackTome provides you with a CDP based on your business data, and enables marketing orchestration across Email, Video, Display, Social Media and Search - sign up for a demo and test drive it for free today.