CDP trends: Customer data platforms enter a new era
When first-party data overtook cookies as the top currency for marketers, we entered the CDP era. Discover CDP trends like CIAM that are rising.
When first-party data overtook cookies as the top currency for marketers, we entered the CDP era. Today, there are fundamental shifts occurring in the customer data management space that will help us deliver on the promise of “right person, right message, right time.
It’s time to take a closer look at customer data platforms, what they are, what they do, and what you need to know about implementing a CDP. These technology tools can help a business meet rapidly changing customer expectations, build trust, and grow.
CDP stands for customer data platform. CDP is a software platform that helps businesses collect, organize, and centralize customer data from multiple sources. Businesses can then activate the data in their CDP to create a single view of the customer and build comprehensive customer profiles.
Marketers have long coveted 360-degree customer profiles in order to create hyper-personalized customer experiences. CDPs are the latest solution to promise to unlock marketing automation as they create a persistent, unified profile through responsibly and strategically collected data.
A CDP can build comprehensive customer profiles by pulling data from various systems and touchpoints (transactional history, customer service interactions, IoT data from their smart devices), cleaning and organizing that data, and then combining it into a single view.
Since CDPs pull this data automatically, profiles evolve in real-time with the customer. This single, dynamic, real-time view opens the door to much more impactful, personalized customer experiences.
When first-party data overtook cookies as the top currency for marketers, we entered the CDP era. Discover CDP trends like CIAM that are rising.
Sometimes, it’s easier to understand what a thing is by exploring what it isn’t. So, as we continue examining the corner of martech carved out by customer data platforms, let’s look at what CDP isn’t. Specifically, how do these systems differ from other customer experience solutions?
A CRM (customer relationship management) system is a customer engagement tool, designed to capture information about customers’ interactions with your company. The data captured is first-party data, with personally identifying information about known customers and prospects.
CRMs are typically associated with sales, and while other departments such as marketing also use them, they were designed specifically to capture customer and account information for sales reps and other customer-facing team members.
CRMs do capture customer data, but only data that’s relevant to the customer-facing teams using it. And much of the information is entered manually (such as notes from a demo or sales call). CDPs collect a wider breadth of information from the whole customer journey, automatically pulling data from disparate systems (including CRMs) to build dynamic customer profiles.
It isn’t CDP vs CRM. CDPs are not meant to replace CRMs. On the contrary, they often work together and make each other more effective. The CRM system will feed data to the CDP. The CDP will, in turn, clean up the data, removing duplicates and reducing inconsistencies, and share information back with the CRM.
CDP solutions offer businesses an answer to the consumer privacy concerns that fueled data privacy laws and the customer data revolution.
While still focused on building user profiles, DMPs (data management platforms) use third-party data to build profiles for anonymous users, rather than known customers. DMPs were designed to enable more effective targeted advertising, using demographic and anonymous behavioral data to identify potential customers.
Both systems were designed to build user profiles, but the data collected by DMPs is cookie-based, and so access to the information is only temporary — you can’t access past data once the cookie has expired. The user profiles created in these systems offer snapshots in time, versus a living, dynamic profile. This also means that DMPs aren’t equipped to deliver deep insights from long-term analysis.
The other key difference is that DMPs are specifically concerned with anonymous users, not known customers who already have a relationship with your brand. CDPs, on the other hand, were designed to build profiles for known customers and prospects (though now, many collect data for both audiences).
As with CRM systems, DMPs provide another piece of the customer data puzzle that CDPs use to build a comprehensive database. The systems aren’t necessarily meant to compete with each other, but instead, augment one another. You can integrate CDP and DMP to paint a more robust picture of your customers and prospects that includes both first- and third-party data.
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A DPE (digital personalization engine) is a solution that specializes in personalizing a digital user experience based on customer traits or preferences or their segmentation. The DPE adjusts certain elements of the site such as which visuals are displayed and what products are featured in the recommendations, based on the user’s behavioral data or segmentation.
DPEs aren’t databases themselves. They’re tools that use data to execute a specific marketing strategy.
Since DPEs rely on data to work effectively, connecting them with CDPs that collect and clean up cross-channel data only strengthens them.
Some CDPs do offer their own personalization functionality, whether both are needed depends on the business, and which CDP they’re using. The CDP meaning for your business is that it is uniquely matched to your needs.
DXPs (digital experience platforms) are an evolution of content management systems. They were built to drive digital transformation and help companies deliver connected experiences via websites, apps, intranets, smart devices, and more. DXPs consolidate various tools (content management, data, and analytics) to deliver consistent, end-to-end experiences.
But as with DPEs, DXPs aren’t databases. They rely on an integration with a data source such as CDPs to enable personalized experiences. They evolved from content management systems as a way to manage more dynamic engagements and are more strictly operational than CDPs.
DXPs rely on data to inform personalization and customer experience strategies, and CDPs are a comprehensive data hub. Connecting with CDP fuels your DXP with large quantities of high-quality data, which makes it easier to know you’re designing the right experiences for your audience.
Creating better, proactive customer experience is the next phase of customer data management as brands connect CDPs to back-office ERP systems.
A customer data platform is a solution primarily designed for marketing’s use; it provides unified, consistent, and reliable data for transparency and granularity down to individual customers. The true value a CDP provides to a brand is the ability for it to identify actions, events, transactions customers are taking within their respective customer journeys.
A unified view of CX, operational, and transactional data within a customer data platform provides brand with the ability to optimize customer engagement, deepen customer relationship, and ultimately accelerate a sale and long-term loyalty.
By collecting and organizing data from multiple systems and sources into one place, a CDP makes cross-channel and cross-department engagements more feasible and effective. Sharing a single customer view allows for layers of touchpoints with a brand to reinforce one another, resulting in consistent, personalized customer experiences.
In our data-driven world, companies must ensure they respect their customers’ data if they want to earn and keep their trust. That means adhering to strict data privacy regulations and honoring customers’ data privacy preferences.
By centralizing customer data into a single hub, including consent and privacy data, CDPs make it easier for companies to ensure they’re adhering to their customers’ most complete and up-to-date preferences. This reduces compliance risk and improves overall CX.
The benefits of CDP, to name just a few, include:
There are four types of CDP, as defined by Gartner:
Marketing cloud CDPs are best suited for marketing teams and organizations that already use established marketing CRM and ESP tools that then add on a CDP to their tech stack.
These platforms allow marketing teams and entire enterprises to work off of a single database. According to Gartner, marketing cloud CDPs “have the strongest integrations within their own ecosystem.”
Smart hub types of CDP are best for marketing teams looking for a clear and easy-to-use interface that won’t need as much deep or technical CDP functionality (especially cross-functionally).
Smart hub CDPs emphasize marketing orchestration and personalization from a single interface from the outset.
Gartner defines one of the benefits of CDP as, “a marketing system that unifies a company’s customer data from marketing and other channels to enable customer modeling and optimize the timing and targeting of messages and offers.”
Smart hub CDPs have done this by building a simple, clean, and easy-to-use backend interface to help marketers take advantage of the tool and strengthen customer experience. This may mean that these tools sometimes prioritize platform design over functionality.
The race for great data and data management should not shortcut flavor. CDPs can support the enterprise with processes and standards that invite participation and accountability.
Marketing data integration customer data platforms are best for marketers who work closely with data and development teams that have a need for similar data collection and organization beyond marketing’s purpose. These CDPs are great for cross-functional teams that aren’t on a larger platform
Marketing data integration CDPs focus on the data. They have robust APIs + data governance capabilities, but still provide flexibility and ease of use for marketers.
These platforms will likely need to be used in coordination with additional visualization platforms for the most effective use. Marketing data integration CDPs are considered “pure play CDPs” since they’re focused on proper gathering and organization of first-party data.
In many ways, organizations that have strong data and development capabilities might choose these tools over others, and push collected data off to another platform on which the marketers can make use of it.
Learn how customer data platforms have evolved beyond marketing to provide a deeper view of the customer for better CX and bottom-line benefits.
CDP engines and toolkits are a good fit for well-funded organizations with specific use cases that no best-in-class CDP can solve. CDP engines and toolkits are for organizations that want to build their own solution. These are open-source solutions.
For most companies, building your own CDP isn’t worth the effort – unless your product is that CDP.
Instead, it’s typically considered far better to invest time and resources in improving your own product, customer service, or other key business initiatives, rather than building a completely new tool for which good alternatives already exist. It’s often more expensive, but the added benefits of CDP personalization that cater to specific needs can outweigh those high costs.
Ultimately, the type of CDP you choose will depend on a variety of factors, but, as with most tools, the biggest factor will be your company’s existing tools and your team’s willingness to adopt new technologies and processes.
With the rise of the privacy-first web, marketers need to focus on harnessing the power of first-party data for gaining competitive edge.
A shift in access to data is coming and with it, an entirely new approach to transparency, CX, and marketing will spring. Preparing for the change opens an opportunity to be more deliberate in how we market, how we target, and, most importantly, how we respect customer data.
Some realities we’re dealing with today:
For the last decade, third-party data has been the go-to source of information on prospects and customers, allowing marketers to collect, target, and message to large cohorts of people who never gave them permission to do so.
But the internet is changing, and third-party data is all but disappearing. In its place are data privacy and ethical data collection, forcing a renewed interest in first-party data.
This is where CDP, or customer data platforms, comes in handy. As with all major shifts in technology, though, determining you need a CDP, choosing the right one for your business, and then implementing it isn’t as easily done as said.
Here’s what you can expect when implementing a CDP.
Can marketing survive a privacy-first web? These case studies show that not only can they survive, but they may also thrive.
The date may be a bit of a moving target, but the sunsetting of third-party data is imminent. Marketers and strategists need to prepare for two reasons—first, the way it’s always been done isn’t going to work. And, second, customers will demand it and the law will enforce it. Customer data platforms position companies for CX, growth, and solid legal ground.
Whether you’re already worried about the new seven-day attribution window on Facebook and other advertising platforms, concerned about the lack of visibility into organic search traffic from the iOS app, or just waiting until you lose most of your attribution data –– the first shock wave will be realizing that marketing will never be the same.
That isn’t to say that marketing didn’t used to be like this. The age of attribution –– or the last decade or so –– has been a unique moment in marketing.
The ability to assign performance metrics and revenue to individual channels in real-time meant that the channels that performed the best in the short term earned the biggest budgets. In other words, paid digital channels like paid social and paid search saw budgets skyrocket, and owned channels that worked on overall brand marketing saw their budgets dip.
It’s likely that trend will be reversed in the privacy era, getting us all back to a better-balanced marketing budget.
Our reliance on data isn’t going to just disappear. Instead, marketers will look to customer data platforms to help connect the dots on the data they can collect: first-party data.
With cookies going away, marketing today is all about first-party data. Explore best practices and use cases for first-party data collection.
The value of customer data platforms is the ability to choreograph the types of data, segmenting, and subsets, in ways that satisfy your specific needs. The right CDP for your company will replace what was once superfluous or underutilized data with data that feeds your marketing strategy across every department, platform, and use.
All marketing teams will need to adopt a CDP, but they won’t all choose the same ones. Budgets, existing marketing technology stacks, and individual team and company org charts will all play a part in which CDP a company chooses.
Direct-to-consumer companies may be drawn to cloud CDP providers since they are easier to use, have a great interface, and offer several clear and actionable next steps for putting the data to use.
Start-up technology organizations, on the other hand, will likely choose independent CDPs that can be set up, organized, and run by their tech and development teams. These CDPs collect data and then use APIs to send that data wherever makes the most sense for the team. This way, marketing teams can visualize data in the way they need, and the tech and development teams can do the same.
Larger, more established organizations will likely go with customer data platforms offered by their preferred technology partners. There’s a good reason for that. With all their data already running through a single system, why wouldn’t they just hook up a CDP and turn the data they already have into actionable insights?
Learn what matters today when managing customer data and how an effective strategy improves customer experience and boosts the bottom line.
Once your company has chosen a CDP, you need to figure out which teams in your organization will do the setup. They’ll need to get it on their project management roadmap (i.e., in their sprint), and then test out the data to make sure it’s accurate and helpful.
Most marketing teams won’t be able to set a CDP up on their own. You’ll want to work at the very least with a marketing operations team. In companies that have tech or data teams, those teams should take on the responsibility of setup. But, how do you get cross-departmental support for the initiative, and get it properly prioritized?
Internal communication will be key and will determine the speed of implementation.
When the CDP is live, collecting data, and spitting out actionable personalization insights, marketing teams will need to put those insights into action. The actions inspired by CDPs will be from ethically collected data with cross-company support and should be easy to slot in as priorities for campaigns, product updates, and more.
You’ve already done all the work. Now it’s time to get value out of your new tool –– and start improving the customer experience while you’re at it.