As a leader or a customer experience manager, you know that your success depends on understanding your customers. And to understand them, you need access to accurate and timely customer data. But gathering and consolidating customer data from across all of your channels can be daunting. That's where a customer data platform (CDP) comes in. A CDP helps you centralized all of your customer data so you can better understand what your customers are doing, why they're doing it, and how you can meet their needs.
Implementing a CDP (Customer Data Platform) can help you gain more insight into customer journeys. Data is only valid when it is transparent enough to arrange and comprehend. You can provide your customers with a seamless experience using a CDP that gives you a complete picture of who they are.
Take a walk with me through this blog to explore how and why leveraging a CDP will benefit analytics and marketing managers.
What is a Customer Data Platform (CDP)?
A CDP is a system that collects data about customers from various sources, cleans and merges the data into a single view, and then makes it available to marketers and other analysts. The goal of a CDP is to help companies better understand their customers so they can create more relevant and effective marketing campaigns. If you're looking for ways to improve your customer understanding and engagement, a CDP may be the solution you need.
What Are the Key Benefits of a CDP?
A CDP can help you collect data about your customers and use it to create more personalized interactions. Plus, a CDP can help you ensure that all of your customer data is organized and accessible.
1. Connects Data from Multiple Sources
A CDP ensures that you give your customers the correct information and experience. Online buyers today are knowledgeable and need a seamless, personalized experience. Thus, they desire the best of both worlds that blends the efficiency and convenience of digital transactions with the customized touch of in-person sales.
To send the relevant information through proper channels, businesses must comprehensively understand the situation. Knowing the brand's actions, behaviors, preferences, and touchpoints, both online and offline, is necessary.
2. Builds a Strong Data Foundation
A CDP can quickly develop new business models. Due to shifting consumer demands and interruptions to conventional offline channels, businesses must develop or test new strategies for marketing, selling, and delivering goods and services.
Building a solid base of unified customer data positions businesses to test new marketing or go-to-market strategies more quickly. The ability of new technologies to integrate swiftly into the stack, utilize data from existing tools, and return data to the system makes it much simpler to track results.
3. Helps Strategic Decision Making
Making strategic decisions can result from a CDP. Strategic decision-making can be hampered by the abundance of siloed data that businesses now have access to from various marketing campaigns, channels, business divisions, locations, and customer management systems. CDPs centralize fragmented, segregated data to create centralized, helpful information for making decisions. Business leaders can more clearly see the big picture and the entire patterns underlying trends when everything is in one place.
Moreover, organized data improves consumer comprehension, enhances business collaboration, and removes obstacles to expansion in a growing organization. Teams can have more productive talks and create cross-organizational projects more quickly when they can exchange the appropriate data across the entire organization.
4. Increases marketing efficiency
As a centralized database with rich customer insights, a customer data platform (CDP) facilitates marketing efficiency. It enables customer journey tracking using unified customer personas and their behaviour from several sources. Ultimately, a comprehensive view of each customer is prepared to create marketing campaigns that specifically target these customers.
CDP vs. Other Tools
A Customer Relationship Management (CRM) tool is typically utilized by sales teams and is not designed to integrate significant amounts of data from many sources. Moreover, it cannot fully extract and apply the intelligence derived from your customer data.
On the other hand, in the case of Data Management Platforms (DMP), anonymity serves as a means of information transmission and is heavily dependent on probabilistic identities. DMPs are, therefore, unable to carry out sophisticated identity matching. Moreover, ad-blockers and cookie rejectors are common these days. Since DMPs rely on cookies to collect data, their typical 90-day shelf life makes them unsuitable for planning long-term marketing strategies.
"The main challenge is really getting meaningful insights from feedback and behavior from customers. The amount of data, text, etc. requires additional tools and technology to make sure insights are extracted. It's still a challenge to standardize tools and apply them efficiently," says Susanna Baque, Senior Director, Global Customer Experience, SCIEX, in the Clootrack report.
When it comes to studying goods and services and deciding exactly what customers want before purchasing, they are all over the place. Even brand-loyal customers usually communicate with their favorite brands in a variety of methods. Using email, chat, Facebook, in-person transactions, online purchases, and phone calls by customers to contact the same company is not unusual.
Even when customers approach that entity through various means, they still interact with the same entity in their minds. On the other hand, based on data from multiple touch points, each with its unique data-collecting technique, the brand is attempting to determine the best way to provide a fantastic customer experience. A CDP gathers consumer data from each of these channels to generate a single customer profile that you can use to understand better and target your customer base.
What is the Use Case of a CDP?
CDPs are now more valuable than ever for the marketing stack thanks to the pandemic's impact on digital transformation, and their use cases and capabilities are constantly evolving. Moreover, businesses leverage data across all aspects of their operations as part of the digital transformation process to become more data-driven, effective, and lucrative.
So, leading companies use CDPs to launch new projects and narrowly focus on the data that matters most to maximize the benefits of their digital transformation.
But what is generating the present demand for CDPs, given the variety of martech options on the market? Why do companies seek to centralize customer information now?
1. Agility
Organizations were already under increasing competitive pressure to provide unified, multichannel experiences. Now that market conditions are changing, they must be ready to modify those experiences immediately. To accomplish that agility, businesses make use of their CDPs.
Particularly, CDPs with AI and ML capabilities can aid firms in acting on major trends more quickly by improving marketing effectiveness. To conserve time and resources for more valuable consumers, businesses can, for instance, utilize AI and ML to identify customers who are unlikely to convert and eliminate them from campaigns. To expedite their unique marketing goals and get the ability to react quickly and effectively to change, companies look for a CDP with AI/ML capabilities.
2. Better Marketing
Organizations are moving toward first-party data strategies, primarily relying on consumer data they acquire directly with customers' consent. Consumers might give brands access to their personal information for perks and privacy.
Consequently, relevancy can ultimately increase when brands better understand their consumers' wants and needs. The greatest CDPs include real-time capabilities, enabling businesses to connect with customers when it matters most and delivering personalized experiences on their terms.
3. Adaptability
CX, IT, and other departments need to understand consumers' behavior and preferences just as much as marketing does. Increased CDP usage could result in more openness within the company.
To accommodate the needs of these many populations, CDPs should be very adaptable. A great CDP interfaces quickly with the external products that a business employs. This assists in optimizing the value of the existing data across departments and makes it simpler to integrate with legacy systems.
Why is Customer Data Platform Important for Your Organization?
Customer Data Platforms (CDPs) are gaining traction in marketing technology. Unified, transparent consumer data is beginning to be recognized as a competitive advantage by many businesses.
1. Omnichannel Experience
"Getting brands to gain a share of mind is a challenge. People want to feel connected to brands. Customer data is key to understanding who you are and what they need," Norie Verwijst, Associate Category Manager - Frozen, Topco Associates LLC.
Companies must compete with better customer experiences now more than ever. Customers want to feel heard and appreciated when they contact your brand. You require complete visibility into each customer's interests and involvement across all marketing channels in order to provide targeted messaging and adaptable support.
- Are they brand-new or recurring customers?
- What did they most recently browse or buy?
- Have they ever encountered support issues?
- What marketing channels do they favor?
As CRMs or DMPs cannot, CDPs compile all of this data, enabling your business to provide tailored, consistent messaging for customers across all online and offline channels.
When a customer browses your website, perhaps even adds something to their shopping cart, but doesn't make a purchase, you want that information for when you get in touch with them later. Every communication you have with them through your mobile app, email, or social media should be tailored to their unique interests and preferences.
2. Personalization
Customer data platform helps you leverage the best out of market segmentation and personalization. It provides rich insights into the customer journey and behaviour through a single view. Along with that, you can obtain dedicated performance measurement analytics for various marketing and branding verticals. Personalization in particular carries a potential of creating $1.7 trillion to $3 trillion in new value.
3. Data Protection
Data security requirements have evolved how businesses can gather and utilize customer data. So, companies must understand where and how they safeguard their consumer data.
A company's data security strategy increasingly relies on CDPs, which enable companies to create secure lists by eliminating contacts based on criteria like location or preferences.
Moreover, you require tools for managing customer data and consent. For instance, it's crucial to have everything gathered and arranged in one place in case a customer permits you to collect data through cookies on your website but then wishes that you delete all of their data.
4. Better Marketing ROI
Due to attribution problems, segregated data, and a lack of analysts and data scientists on their teams to properly execute the reporting, marketers frequently struggle to show ROI on a significant portion of their expenditures. Marketing professionals must connect campaigns and costs to meaningful metrics, including increased engagement and leads, a more extensive customer base, and a higher share of wallets to show leadership in their return on investment.
But now, marketers can routinely evaluate ROI, which previously needed sporadic data collection and analytic activities to measure, thanks to more complete data across channels and a richer view of prospects and customers.
More comprehensive data also enables marketers to perform more marketing experiments swiftly and enables regular tracking and reporting on marketing's overall impact. It allows marketers to act quickly and get better outcomes by performing experiments and testing hypotheses before significantly adjusting their campaign tactics.
CDPs provide the data foundation for these analytics, dashboards, and tests, offering your business a better overall perspective of your investment and impact. You may get metrics across channels and campaigns, as well as a complete view of the client base, in place of having various teams working in isolated systems. Quantifying ideas like client lifetime value or campaign ROI is made simpler by centralized data.
5. Leverage AI/ML
Businesses are gathering and storing enormous volumes of data. For identifying patterns, making predictions, and offering recommendations helpful to marketers, AI and ML process and analyze data in an automated and predictive manner. Although collecting enough information to process it within a single marketing channel is feasible, it is much more efficient to feed your algorithm's data from a range of media.
A CDP gathers all customer data from many systems in one location to enable your algorithms to identify high-value customers, subsequent best actions, product recommendations, and customers likely to churn or buy. Wide-ranging data support more intelligent automation, better campaign execution, and improved decision-making.
How to choose a CDP?
Keep the following in mind when choosing which one to use for your marketing efforts.
Use Case
Once you have collected and organized all the customer data, consider what you want to do with it. This can help you narrow your search down to those vendors who specialize in whatever your end goal is.
Here are a few examples of use cases you may consider:
- Collecting online and offline data
- Thoroughly understanding the customer journey
- Creating more customer-centric marketing campaigns
- Delivering a better and more personalized website experience
Data Governance Management
Before investing in a CDP, clearly state what you plan to do with the data you obtain and how you'll ensure that consumer data is consistent everywhere.
Without adequate data governance, the following problems could occur:
- Inaccurate consumer data displayed across channels
- Unintended legal repercussions of data management mistakes
- If data is not correctly handled and safeguarded, security breaches may occur.
Tools for Integration
Make a list of all the methods your business employs to communicate with clients. To create this exhaustive list, you'll probably need to share it with the heads of each department. Finding a CDP that interacts with your existing technologies will be easier once you know them. You can significantly narrow down your search with the aid of this stage.
The following are some of the most popular tools used by businesses to communicate with customers:
- Advertising tools
- Analytics tools
- Business intelligence tools
- Data warehouses
- Email service providers
- Live chat support tools
- Push messaging tools
- Social media platforms
The Key Takeaways
A CDP is a powerful tool that can help you unlock the value of your customer data. With a CDP, you can offer a seamless experience for your customers by having total control over their data. Think about how you will utilize the data and what tools you already have that will need to be linked with the new platform before investing.
By integrating with your marketing and analytics tools, it can provide you with insights into how customers interact with your brand and help you optimize your marketing efforts. If you’re not currently using a CDP, consider adding one to your arsenal – it could make all the difference in understanding and driving customer behavior.
Read More: 6 Ways to Measure Brand Equity Using Consumer Insights