The ultimate guide to Customer Data Platforms (CDPs)

Author
Lauren Saalmuller
Content Marketing Lead

Marketers today face an incredibly complicated and tricky state of affairs.

On the one hand, customers are better informed than ever before, and they don’t hesitate to share their opinions with people all over the world. On the other, these customers demand an increasingly personalized experience and relationship with your brand.

These two realities mean that campaigns and strategies that worked well in the past can quickly become irrelevant, outdated, and obsolete with little more than a click, tap, or swipe.

How can marketers stay ahead of the curve and become the most valuable people (MVP) for their companies? Here at Simon Data, we believe that the answer lies in using a customer data platform (CDP) to ensure that you’re leveraging all of your valuable customer data as efficiently and effectively as possible.

Below, we take a closer look at what customer data platforms are, what they should be capable of doing, and why legacy tools are falling short. We also discuss how CDPs fill this gap, before walking through several potential use cases for CDPs within your organization.

What is a customer data platform?

A customer data platform (CDP) is a marketing platform that helps you understand who your customers are and what motivates them to buy your product or interact with your brand. It does this in two key ways:

1. First, a CDP unifies customer data from disconnected data sources (like your company’s website or app, CRM, POS system, accounting system, and more) to create a single profile of each customer
2. These customer profiles can then be used to create more targeted segments and audiences and more personalized marketing campaigns (email, social, etc.).

In other words, a customer data platform (CDP) makes the right customer data available where you need it to activate your customers at the right moment. Think of it as your customer nervous system — it combines four key capabilities: data collection, profile unification, segmentation, and campaign orchestration.

What should a Customer Data Platform do?

Today’s marketing world is all about relationships between companies and consumers. The more meaningful the connection, the easier it is to grow and sustain a loyal base of enthusiastic people. However, this leaves marketers with a difficult dilemma: How can they build trusted relationships at the scale needed to remain either in a growth phase or at the scale they need to be to remain competitive?

The answer is in your data — from first-party and zero-party data you collect yourself all the way to third-party data you source from partners. Customer data is powerful, and brands need it to thrive in this constantly changing digital era. It is your biggest and most unique competitive advantage.

CDP use cases

A CDP can help your business significantly improve your processes and move several important needles toward growth. This includes:

1. Increasing operational efficiency

The bottleneck between marketing and their technical partners in IT, data science, and engineering is very real and time-consuming. Anything that cuts down on that strain is appreciated by everyone.

A quality customer data platform democratizes this kind of critical customer intelligence so marketers can focus on marketing without the wait.

2. Increasing revenue generation

The more available and accessible customer data becomes across the marketing program, the better you will know your customers. As a direct result, the speed at which new campaigns can be tested and deployed allows teams to do more and be more granularly personal, which generates more revenue.

3. Reducing media spend

On average, media spend generally accounts for one-third of all marketing costs. A CDP can dramatically cut this number down.

4. Streamlining technology costs

A CDP enables you to see your data all in one place. This in turn allows you to focus on getting the most out of every capability in your current stack.

5. Optimizing workflows

When your team has a home base from which they can operate the entire stack, the manual work of marketing becomes a natural extension of thinking.

Why don't other martech solutions fill this need?

In a nutshell, legacy tools only ever filled in a part of the great customer data puzzle. Most, if not all, legacy marketing technologies were purpose-built with a set amount of functions in mind. This led to many organizations and companies cobbling together a system of multiple moving parts.

How customer data platforms fill the gap

Each step in a quality customer data platform’s workflow guides the user toward driving value with a full view of the customer, critical insights around an opportunity sizing, and profoundly embedded support for experimentation.

Customer Data Platforms + other marketing tools

Do you find yourself confused by the sheer number of initials, acronyms, and abbreviations used in the martech world? Have you tried to figure out how all of the solutions interface with each other and your needs, only to find frustration and disappointment?

Cloud Data Warehouse (CDW)

What they do: Cloud data platforms like Snowflake are cloud-based databases designed to aggregate, process, organize, and store data from multiple sources.

Data Management Platform (DMP)

What they do: DMPs, like The Trade Desk and Nielsen DMP, are platforms that collect anonymized third-party data.

Customer Relationship Management (CRM)

What they do: CRM tools like HubSpot and Salesforce collect and track customer information.

Email service provider (ESP)

What they do: An ESP empowers organizations to collect customer email addresses.

Multi-Channel Marketing Hub (MMH)

What they do: MMHs are software designed to orchestrate personalized communications across multiple channels.

Digital Personalization Engine (DPE)

What they do: A DPE tracks and analyzes customers’ interactions to identify the best user experience.

Master Data Management Platform (MDM)

What they do: An MDM platform consolidates and manages an organization’s data for effectiveness.

Data Lake

What they do: A data lake is a centralized repository designed to store all of an organization’s data.