We can all agree that modern marketing relies on data. So it comes as no surprise that the Customer Data Platform (CDP) is gaining momentum faster than any other marketing technology. Many marketers are however not yet familiar with the technology, so let me provide you with some insight.
Last week I finally purchased a Korean skincare set online, since it’s been all the craze for the past couple of years. I first typed in Google what I was looking for. I then bounced between several beauty brands’ websites, read a couple of blog posts and testimonials and checked out their social media. I subscribed to a handful of newsletters which offered a discount code with my first purchase. I even went to a physical store to ask for a recommendation.
The path to my purchase was definitely not linear, and truth is, most online shoppers follow a similar customer journey: bouncing between several websites, ecommerce platforms, live chat, email, social media, and physical stores. So how are brands supposed to keep up with all these customer touchpoints?
This is where the Customer Data Platform comes into play. In today’s world with thousands of customer touchpoints, Customer Data Platforms create persistent, unified records of all your customers, their attributes, and their data. How? First, let’s look at what exactly customer data is.
What is Customer Data?
Customer data is information users leave behind as they surf the internet and interact with companies both online and offline – through e-commerce platforms, websites, blogs, social media and in-store interactions. It’s highly valuable to businesses, although recent legal dialogue in Europe (such as the GDPR) has changed how companies can collect and manage this data.
CDP’s gather and organize 4 main kinds of data:
So, What is a Customer Data Platform?
The CDP Institute defines a Customer Data Platform as “packaged software that creates a persistent, unified customer database that is accessible to other systems.” For you, that means having unified data from all sources and touchpoints. You can then segment that database in numerous ways to create more personalized marketing campaigns, customer service, and customer experience improvements.
CDP, CRM, DMP – What's the difference?
CDP vs DMP
An important thing to understand about CDPs is that, although they handle customer data, this software is not the same as a Data Management Platform (DMP). DMPs are typically only used in advertising, and won’t help you with customer segmentation and personalization of your own marketing. Between Customer Data Platforms and Data Management Platforms there are three main differences to keep in mind. The first is the type of data they use. CDP’s tend to use 1st party data while DMP’s typically use 2nd & 3rd party data. The second difference is their use of customer identities. CDP’s collect personal data from users while DMP’s typically use anonymous data, such as cookies, devices, and IP addresses. The third difference is in data retention. CDP’s keep data for long periods of time, while DMP’s typically only retain data for short periods.
CDP vs CRM
Customer Relationship Management (CRM) providers help businesses organize and manage customer-facing interactions, however they don’t collect any behavioral data on how customers interact with your product or service. While both CRMs and CDPs collect customer data, the main difference between them is that CRMs organize and manage customer-facing interactions with your team, while CDPs collect data on customer behavior with your product or service. CRM data will give you a client’s name, their history of interactions with your sales team, and support and organize tickets they’ve filed. CDP data, on the other hand, can tell you each specific step that a customer has taken since engaging with your company, from the channel they found you on to how they engage with your product or service.