The world of data management in businesses has gone through waves of progress over the past decade. What was once seen as a ridiculous practice has now evolved into an integral part of every business, with data-driven metrics ruling the world of business in 2022. An extension of this is customer management, with many users turning to customer data platforms (CDP).
In fact, the integration of this technology is so common that Aberdeen predicts 91% of companies using a CDP by the end of 2022. This is an extraordinarily high figure, calling into question what exactly CDPs are doing that makes them such a necessary piece of software for businesses to have.
In this article, we’ll explore the world of customer data platforms, breaking down what they are, their benefits, and what sets them apart from other data technology that companies are using.
Let’s get right into it.
What is a Customer Data Platform?
A customer data platform is a piece of software that collects information from many sources and then distills them into coherent insights. Most of the time, as the title of the platform would suggest, CDPs focus on customer data. CDPs will pull behavioral data from a company website, mix it with purchase data from the sales platform, and then combine it with demographic data to create a comprehensive overview of a customer.
While this can be used to create a broad understanding of what sort of customers are buying from a company, they can also be used to create individual customer profiles. Especially for businesses that want to execute high-value customer incentives, getting this individualized view can be a powerful way of dealing with customers on a 1-1 basis.
From collecting data to managing it and suggesting actionable insights based on customer information, CDPs do it all. Due to the versatility of this tool, they’re rapidly becoming a go-to platform for businesses around the globe.
Is a CDP the same as a CRM?
In short, no. While customer data platforms and customer relationship management systems both deal with customer data, CRM typically focuses on transactional data. Transactional data, in terms of what customers are viewing or buying on a store, is certainly useful. But, this is hardly the full picture. CDPs are more expansive than CRMs, covering more points of data.
A CDP attempts to create a more integrated set of data. Alongside taking transactional data, CDPs also ensure data remains tracked to each singular customer. With this, marketing teams are able to conduct user segmentation on a much more specific level, pulling in data from more sources at once.
Equally, a CDP can use data to extrapolate, creating customer models and helping teams to get actionable insights based on their customer data. This aspect of changing and reorganizing data in order to make it useful to a business is vital, which is one of the leading drivers of this movement to CDPs.
For example, CDPs can pull in more customer data to make these insights. By connecting a company’s CDP with a company’s data warehouse, it can create a comprehensive overview of the customer base itself. A leading data warehouse has infrastructure to manage thousands of different sources at once. For example, Druid architecture can streamline data sources from many different places simultaneously, their infrastructure providing the perfect data source stream for CDP platforms.
What are the benefits of a Customer Data Platform?
Going far beyond the offerings of other software platforms that deal with data, customer data platforms bring a range of advantages to a company. From streamlining customer management to better data insights, they really can do it all.
Here are just a snapshot of all of the different benefits that a business can access when they start using a CDP:
- Defeat Data Silos – With the huge amount of data the average business must deal with, data siloing is now more common than ever before. If a business doesn’t have an effective way of dealing with their data, it will become locked away in different streams. A CDP negates this issue by pulling all the data, across every business stream, into one single location. With ease, this now creates a homogeneous platform with total visibility over customer data.
- Personalized Marketing – With more of an understanding of who a customer is, businesses are able to launch personalized marketing. Personalization has been a hot word over recent years, with the vast majority of customers preferring marketing materials that are tailored to them. By having access to customer data, businesses can then target specific groups and release hyper-personalized material. With this, they will increase their ROI across the board in terms of marketing, leading to much more successful campaign launches.
- Find New Segments – With the advanced pool of data analytics that CDPs offer, businesses are able to find more about their customers. Going beyond just segmenting their customer base on demographic data, they can also focus on behavioral data. Being able to create a marketing campaign that targets customers that are likely to be impulse buyers or ones that love a sale is an incredible way of boosting the success of these strategies. By knowing who you’re marketing to, and being able to pinpoint them into smaller user segments, you can radically increase how effective your marketing teams can become.
While these are not the full range of benefits, they give a snapshot of just how effective customer data platforms can be.
Across these benefits, businesses are set to revolutionize how they manage and deal with customers. With how much money is currently in data-driven insights, a platform that can take many different sources and turn them into one comprehensive data-driven system is vital for modern businesses.
Due to how efficient customer data platforms are, as well as how flexible they are in what you can do with them, it’s no surprise that they’ve become as popular as they currently are. Replacing many software tools with one singular solution, customer data platforms take the very best of what CRMs and other platforms offer and homogenize them.
With the upward trend that CDPs are currently seeing, we’ll likely see them become the number one customer management technology that companies use. As they introduce new features, the benefits of these platforms will increase even more, creating an extraordinary system for managing and visualizing a company’s customers.