6 types of Customer Data Platforms (CDPs) and how to choose the right one | Simon AI

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Date: August 6, 2024
Read Time: 8 min read

6 types of Customer Data Platforms (CDPs) and how to choose the right one

Author: Lauren Saalmuller
Content Marketing Lead

What is a CDP?

A customer data platform (CDP) is a type of data platform designed to import and integrate customer data from different sources. They organize your customer data into holistic customer profiles that update automatically, combining real-time and historical data into a single customer view as your customers engage with your brand—empowering your marketing team with more effective assets.

What are some of the main features of CDPs?

While there are many types of CDPs, most of them offer some or all of the following key functionalities:

Data ingestion. CDPs import customer data from a variety of sources, centralizing it in a single location.
Data unification. CDPs clean, transform, and gather data from all your different channels into one place so that it conforms to the schema you’ve defined for your customer data.
Out-of-the-box integration. In addition to ingesting data from a variety of sources, most CDPs can also format and send data to other tools and databases, enabling easy automation of many data workflows.
Identity resolution . Many CDPs offer identity resolution as an added feature (often through a partner company). Individual customers are identified so they can be tracked across the different channels where they might interact with your brand.
Segmentation . Better CDPs offer customer segmentation. This real-time process allows businesses to easily define and target specific user segments, and can be entirely automated.

This highly effective functionality has made them quite popular. According to the market research firm Treasure Data, the CDP market was $5.1 billion in 2023 and is expected to hit $7.4 billion in 2024, hitting $28 billion by 2028. Over the next five years, the firm projects it will increase at a compound annual growth rate of nearly 40% per year.

Types of customer data platforms

Customer data platforms can be organized in a number of different ways, but most will fall into one of the following six categories:

Data streaming CDPs
Automation CDPs
Orchestration CDPs
Packaged CDPs
Composable CDPs
Marketing cloud (not a true CDP)

1. Data streaming CDPs

Data streaming CDPs sit on top of your existing databases, ingesting and centralizing customer data and (where possible) resolving customer identities to link all of the records of a customer’s interaction with the company across its various channels and platforms.

2. Automation CDPs

Automation CDPs focus on making the execution of marketing campaigns easier and, as the name implies, more hands-off. Most of them were built with messaging in mind, so they’re particularly good at automating data assembly, segmentation, and the delivery of marketing messages via various channels such as email.

3. Orchestration CDPs

Orchestration CDPs, also called smart hub CDPs, tend to have more features aimed at facilitating modern marketing workflows.

4. Packaged CDPs

A packaged CDP is a prebuilt customer data platform that is designed to be ready “out of the box” with all of the functions and features that a business could possibly want from its CDP.

5. Composable CDPs

A composable CDP can in many ways be thought of as the opposite of a packaged CDP. Whereas a packaged CDP is pre-built and standardized, a composable CDP is typically “unbundled.”

6. Marketing cloud

Though not technically CDPs, marketing clouds are worth mentioning. These are multi-channel marketing solutions that integrate customer data from various channels.

Benefits of customer data platforms

Customer data platforms bring all of your customer data under one roof, and in doing so offer a number of benefits for your business’s sales and marketing efforts:

CDPs help you understand your customers better.

CDPs automate the process of importing and unifying all of that data, making it much easier to see the big picture of a customer’s journey.

CDPs empower you to orchestrate communications across all channels.

When you identify a single user across multiple channels, you can offer a consistent, individualized experience.

CDPs optimize team effectiveness and remove silos.

Collecting lots of customer data in one place makes CDPs valuable for companies.

CDPs empower you to market effectively in real time.

CDPs are built to simultaneously ingest real-time and historical data, giving you the most accurate view of who your customer is at any given moment.

CDP example: The Simon CDP

To better understand how all these features deliver on the benefits promised by CDPs, let’s take a look at a specific CDP — the Simon CDP, which can be considered both an orchestration CDP and a composable CDP.

How to choose a customer data platform

Choosing the right CDP for your business will depend on your business use cases, your existing tech stack, and your goals. However, any request for proposal (RFP) for a CDP should include the following potential solutions:

Data management. Can the proposed solution ingest data from all your databases and channels?
Analytics and intelligence. Does the proposed solution provide intuitive analytics and reporting features?
Cross-channel orchestration. Will the proposed solution enable you to provide a more unified customer experience?
Privacy, security, and compliance. Does the proposed solution allow you to easily manage and remove customer data in accordance with government regulations?
Platform and services. What features does the proposed solution offer in comparison with others?