Customer Data Platform(CDP) – A Detailed Guide

Marketing technology is part of a vibrant and constantly evolving space. The transition from generalized advertisements to personalized ad campaigns speaks volumes about the dynamic ecosystem. With time, marketers and customers have transformed to prefer personalized advertisements. This has changed the way brands and customers interact with each other. A Customer Data Platform (CDP) is a highly lucrative marketing technology. It carries the potential to personalize at a high scale and build measurable customer loyalty. 

CDP marketing is semi-managed manually by a marketer. The data is automatically collected from the internet, and the marketer manually processes it based on requirements. The software collects customer data from all sources, identifies these sources, and creates a unique profile of every customer for decision-making processes. With the unified results delivered by a CDP, you can receive actionable insights for designing or modifying the marketing campaigns. 

In this 101 about CDP, you’ll learn in-depth about the architecture, use cases, implementation time, comparisons with other software, advantages, and disadvantages of a CDP. With this comprehensive information, you can zero down on the best CDP providers at a reasonable price with the support of tips written at the end of this article. 

Without further ado, let’s dive straight into the topic. 

What does a Customer Data Platform do? 

For accommodating the growing number of software for marketing, marketers create Digital Experience Platforms (DXPs). The consolidation of marketing tools that measure customer satisfaction, track their needs, and design personalized campaigns, helps in creating a comprehensive strategy for brand promotions. A CDP is the life of every DXP. 

If the world of marketing were a computer, a CDP would be its Central Processing Unit (CPU). It acts as a centralized customer database that leverages many tools for curating and normalizing data. A CDP makes use of Machine Learning and Analytics to generate insights from raw customer data that the system has collected from the internet. You can leverage these insights for creating a strategic and impactful campaign that helps you in meeting your professional goals. 

The source of the raw customer data that a CDP collects can be from online or offline modes. This data is cleansed, deduped, and processed in many manners before becoming visible to the marketer. On getting the final single view of the customer, you can power up your marketing campaigns across multiple channels to create personalized user experiences. Your customers will be getting exactly what they want, turning them into loyal customers who promote your brand at every level. 

In simple terms, with a CDP you can enjoy the edge of getting an automated single view of your customer. This view is collected for users across different channels like search engines, social media, paid advertising, and emails. The architecture of a customer data platform will clear your understanding of how this platform works. 

Customer Data Platform architecture

With the data collected from the customers, a CDP creates a unified single user profile to deliver customized communication through different channels. The following steps are involved in the processing of data using a CDP. 

1. Data Integration: The CDP collects different types of data as listed below:

• Personal and Demographic
• Onsite Behavioural Data
• Engagement Data
• Transactional Data
• Mobile and Device Data

This data is integrated on the platform before being further processed. 

2. Cross-device Tracking: The integrated data is checked for the devices that it has been sourced from. With this information, you can get an idea regarding the devices that your customers use the most. If your business is planning to create an application for the customers, this information will help you in creating cross-device operational applications.

3. Multichannel: Data collected from customers comes from different channels as listed in the following sections. At this step, the data is checked for the channel that it comes the most from. Based on this information, you can realign your marketing focus on one or more channels.

4. Segmentation: Here, the CDP decides several parameters. Based on these parameters, the platform groups similar data into a category. This process goes on until every data is divided into one type or the other.

5. Predictive: Once the data is segmented, the collection of data is checked for the presence of patterns. These patterns help the CDP in generating actionable insights that can be leveraged for making decisions.

6. Orchestration: In the final step, the CDP creates the single view of your customer and demands an input of communication. This communication will be sent to your customers across different channels. Listed below are some of the most used channels:
   • Email
   • Push Messaging
   • SMS
   • Social
   • Direct Mail
   • Web

After going through this chain of processes, the inserted (personalized) communication finally reaches the customer to make the desired impact. A CDP provider creates and regularly updates a CDP software for your business. 

CDP providers regularly examine the data you have stored on the platform. As and when needed, they make the required adjustments to ensure that you have control. With this capability, you can improve the performance of the key programs and increase the growth rate of your business. 

How long does it take to implement a CDP?

The implementation time of a CDP majorly depends on the efficiency of the CDP provider. Unfortunately, selecting and implementing a CDP requires time and understanding. You must know that the complete implementation of a CDP demands the involvement of people and the arrangement of processes. Even if you get the most informational insights from a CDP, it will be of no use for the company if the people involved in the project have no idea about it. 

Implementing a CDP is a project of transforming your operations (and approach to data) digitally. You can get a fully operational normal CDP (up and running) in three to nine months. Listed below are the three factors that influence the speed of your CDP implementation:

• Customers
• Goals
• Purpose

Many CDP providers facilitate agile implementations. In this, you get to work on some information that the CDP generates initially. This reduces the waiting time of three to nine months by a huge margin while keeping your business up and running. You can add new elements and features to the CDP once you get more information regarding data and possibilities. 

Advantages of Customer Data Platform

At this point, you should have received an overview of the features of a CDP. It enables you to: 

• collect customer data from multiple touchpoints;
• store integrated data for generating insights; and
• transform unformatted data into a single unified view of the customer.

This versatile platform presents the benefits listed below. 

• 360° Customer View: As evident by now, the biggest advantage of having a CDP is receiving a single unified customer profile. The platform takes a deep look at the customer journey to note the patterns in their purchasing habits. With this, you get an overview of the preferences and behaviour of your customers that could form the base of your next personalized campaign for them.

• Smooth Migration: By availing of the services of the best CDP provider, you can reduce the period of vendor lock-in significantly. A good CDP collects and stores your integrated data for further processing. For this, you will be connecting your CDP with many other applications. A good CDP loosely connects itself to the other applications. This makes it easy to migrate data from and to the CDP at any time.

• Quicker and Efficient Achievement of Objectives: If the implementation and use of a CDP are done in the right manner, it can significantly improve your company’s profit numbers. When you have every essential information about your customer, you can create personalized advertisements at a time they are most likely to purchase. As you see a spike in your customer engagement numbers by following this pattern, the revenue of your business will proportionally increase.

• Reaching a new audience: When you use the CDP in combination with advanced tools, it helps in segmenting your customers into smaller groups. Creating personalized advertisements for these smaller groups becomes easier, and the target audience enjoys customized ads before becoming your customers.

• Compliance: With a well-managed CDP, businesses can bring their data all in one place. This helps in complying with the GDPR and e-Privacy regulations of your country. With the help of CDP, marketers and businesses can anonymize the identification details of the customers.

Disadvantages

A CDP provides a strong base for creating customized advertisements for customers. However, just like a coin has two sides, a CDP has its own set of disadvantages. Let’s take a look at them: 

• Compatibility: Organizations must pay attention to the compatibility of their system before opting for a CDP solution. You must have the compatible operating system and other resources that the software requires.

• Point of failure: A CDP often becomes the single point of failure for an organization. You must ensure that the data integrated by the CDP is backed up. This can significantly help in the case of unfortunate circumstances by performing disaster recovery.

Customer Data Platform vs Data Management Platform

Sr. No.	CDP	DMP
1	A CDP collects customer data for sharing with the customers across different channels.	A DMP manages and accumulates large anonymous data from customers.
2	A CDP needs customer data for operation. Mostly, this data is first-party data, i.e. collected by the company that needs to use it for marketing.	A DMP either purchases its data from a data seller or collects data of the users of its platform by anonymizing their personal information.
3	The second party data for a CDP is taken from another application that is connected to the CDP.	The second party data for a DMP comes from data exchange markets where company data is bought and sold.

Customer Data Platform vs Customer Relationship Management

Sr. No.	CDP	CRM
1	A CDP collects data representing the interaction of the customer with your services.	A CRM system manages the interactions between the customers and your employees.
2	The data in a CDP is collected automatically with the help of code snippets and collaborations.	The data in a CRM is collected manually.
3	A CDP is used for understanding the nature and purchasing habits of your customer.	A CRM is used for improving your customer support services.

Customer Data Platform Use Cases

A highly lucrative CDP will only generate jaw-dropping results for your company if you use all of its features to the best of its capacity. Listed below are the must-have use cases of a customer data platform:

• Data Compliance: The collection of data at one point using CDP helps in achieving compliance. A data compliant company shields itself from unnecessary regulatory penalties. It gains trust in the eyes of the audience and increases its customer loyalty.

• Customization: The unified data in your CDP can be used by other applications to create a customized marketing campaign that strongly attracts your customers. This database can be accessed using queries or API for increasing customer loyalty and engagement.

• Single-view: The biggest blessing of having a CDP is the unification of different formats of data into a single view format. It collects types of data from various touch points as listed below:
  • First-party data (Behavioural)
  • Second-party data (Partner)
  • Third-party (Audience persona)
  • CRM data
  • NBO data

Examples of Top CDP Providers

Here are some of the best Customer Data Platform companies that adapt to the dynamic requirements of the marketing industry. 

• Segment
• CamliberMind
• Exponea
• Datorama
• Insider
• Tealium
• Optimove
• Blueshift

Pricing of Customer Data Platform

Purchasing a CDP is not a one-time task. You must purchase its subscription from a CDP provider. The cost of a CDP subscription ranges between $100,000 and $300,000 for a year. 

Conclusion

A CDP consolidates data from various sources and presents it in a skimmable format for reuse. Today, a CDP has become the most in-demand marketing tool for generating high-value insights. With this software, you can get an edge over your competitors to become the favourite brand of your customers.