The core of optimized marketing relies on attracting high-value, targeted demographics. The key to this strategy is reliable customer data, which allows a business to vet qualified customers as well as enhance its products and services.
This has led to an increase in Customer Data Platform development, outpacing the growth of other marketing tools in the sector. Able to intuitively increase a brand’s engagement with its client base, a CDP (Customer Data Platform) is quickly becoming a go-to marketing technology. So, “what is CDP?”
What is a Customer Data Platform?
While vendors’ definition of the term can vary, according to the CDP institute, "A Customer Data Platform is packaged software that creates a persistent, unified customer database that is accessible to other systems." Sometimes called a Consumer Data Platform, this technology unifies first- and third-party customer data from a wide range of sources into a single, comprehensive view of the customer across devices and channels. These customer profiles can power insights, intelligence and orchestrate engagements across all customer interactions in a marketer-friendly way.
CDP software shares similar functionalities with other current marketing systems, such as a CRM or DMP. However, a CDP marketing system acquires data from multiple sources and stores the data of identified customers.
CDP vs. CRM vs. DMP
Collecting customer data to deliver targeted marketing campaigns isn’t a new concept. However, there are key differences between Customer Relationship Management, Data Management Platform and a Customer Data Platform.
Customer Relationship Management (CRM) systems rely heavily on a manual input of customer data and support a limited number of sources and end points. The main drawback between this platform and a Customer Data Platform is that it lacks the scalability and personalization provided by a CDP.
CRMs are not designed to gather data from multiple channels and lack the versatility to parse through data it hasn’t been implicitly instructed to sort. This single-minded functionality also limits its output capabilities. When a CRM is instructed to export data, it is limited to traditional methods.
These shortcomings are overcome by how CDP data is gathered, categorized and utilized. A CDP’s functionality allows it to connect and structure varied customer data from multiple channels. Through this process, a marketer can formulate a complete compendium of their customers on an individual level, all in real time.
The data collection process from a customer data platform might seem in line with a Data Management Platform (DMP), but only at a cursory glance. A DMP is built on the principles of collecting anonymous consumer data relying almost entirely on third-party cookies. This means that information is shrouded through anonymity and was gathered with the intention of advertising and retargeting. Unfortunately, this design leaves a DMP unable to create a persistent identifier as much of the data will expire when the cookie does. Therefore, it can never function as the system of record for customer interactions and its reliance on third-party cookies leaves the category’s future in doubt if a foundational change is not implemented.
A CDP relies upon 1st-party data geared towards building a complete customer profile to address these issues. This allows a Customer Data Platform to send data that doesn’t expire, of a known persistent customer profile, to other marketing systems, providing a tailored user experience for clients outside the singular use of advertising.
Enriching customer profiles and the types of data available
Creating a golden record (or silver record) is the first step—and it’s a huge step—but marketers also need to expand their knowledge about each customer. There are several categories categories of data: demographic data, transaction data, interaction data, interest data and location data. Knowing where to acquire this kind of data in a privacy safe ways is critical.
- First-party data:This is the most value data you have. It’s your history of your consumer interactions and the hints they've left you along the way. It tells you what someone has bought, what causes them to engage (or ignore) your brand, overall satisfaction. Improving this isn’t just an exercise in data management and linking multiple profiles together. Adding the ability to recognize customers when they aren’t logged in on your website or when they visit your stores can unlock huge insights and help make your marketing more efficient.
- Second-party data:This is someone else’s first-party data and is the next best thing to having your own consumer data. It’s shared via strategic partnerships or in environments where permissions and the level of identifiable information can be carefully controlled. Think of an airline sharing data with a hotel to target known travelers or adjust room rates. Or a retailer and their credit card company sharing loyalty program data.
- Third-party data:This is aggregated data collected across many sources. The accuracy of the data can very. Typically demographic and transaction data are the most valued types of third-party data. Interest data which is often inferred based can be less valuable due to accuracy concerns. The same goes for declared data because it isn’t as accurate as observing someone engage repeatedly and how that changes over time.
- Zero-party data: This is a newer category, but it is things that consumers tell us they are or are not interested in. It’s basically a special category of first-party data that is at the intersection of progressive profiling and consumer privacy and consent. The ability to collect and apply this type of data to the customer journey can help brands add a layer of personalization and relevance.
Benefits of using a Customer Data Platform
Incorporating a CDP into your organization’s marketing workflow can forge better customer relationships while integrating seamlessly with your current system. A CDP offers a range of benefits that a simple CRM or DMP can’t replicate, including:
Gaining a single view of the customer
CDPs mitigate data isolation issues, or data silos, found with other software by creating a collaborative working environment to increase productivity. The platform unifies customer profiles across multiple systems to give a company a single, comprehensive customer overview. Its ability to build the profile from various sources at an unprecedented scale can structure the information in a usable format for the different departments within an organization.
Uncovering new insights and segmentations
Accuracy is key to delivering an effective marketing campaign, and with the sheer volume of data, it can be challenging to decipher if the data collected is credible. Knowing that CDP data comes from the source can give a company the confidence necessary to construct an actionable marketing strategy.
CDP data pulls its information directly from customers through their interactions with sites, social media and subscriber base. It does this by gleaning data from pixels and other similar tracking software.
Orchestrating personalized, real-time customer engagements
A CDP platform provides clients with enhanced personalization, which leads to an increase in a customer's lifetime value. The platform can leverage unified customer profiles to deliver personalized recommendations, like next best offer, and help guide the customer journey. CDPs also capture more accurate measurement for repeat purchases.
Unified profiles help with more than just customer engagements, it can also tell you what marketing activities and types of engagements have the greatest impact on sales. The more visits you can recognize across both paid and direct channels, the better you’ll be able to tell what works. However, to truly understand what is driving first time purchases, you will likely need other solutions like a clean room, especially in the face of data and privacy challenges.
However, most CDPs are not enterprise-ready
While there are many benefits to a CDP, large enterprise brands beware: not every CDP is enterprise ready.
Most CDPs were built by technologists that saw an opportunity to link customer marketing profiles together with basic data management—and while there are some market segments that can get value from this—they are not enterprises. Enterprises tend to have existing internal talent or investments, which means they need a partner that can deliver on their unique needs (and this rarely be done with out-of-the-box technology). This is something many CDPs have not yet figured out: how to deliver actionable customer intelligence that can solve specific needs at scale.
Some enterprises are on the difficult path of building custom internal solutions to address identity resolution and personalization. But this path will be a much slower trek towards the goal, whereas looking at enterprise CDP packages can accelerate progress. But brands don’t have to go at it alone.
How Epsilon can help
For any marketing strategy to be effective, it needs to be backed with accurate data. As it stands, it isn't easy to find a Customer Data Platform built with enterprise-level companies in mind. At Epsilon, we've developed Epsilon PeopleCloud Customer, an enterprise-ready customer data platform that can handle any task, regardless of scale. Powered by first-party consumer analytics and data, your marketing department can deliver personalized targeting across the right channels at the right time and measure performance.
In fact, Epsilon was named a Leader with highest ranked Current Offering in The Forrester Wave™: Customer Database and Engagement Agencies, Q1 2021. To learn more, download the report.