A man staring at his shadow on the ground pondering a big question - Customer Data Platform Concept
PHOTO: Shutterstock

With so many disparate systems — and many shadow IT systems — used by today’s marketing teams, it’s becoming more challenging to get a holistic view of a customer’s interactions with a brand. In fact, 31% of marketers said access to data is a major obstacle to making personalization a greater priority in their organization. Each new channel or touchpoint added under an omnichannel strategy further magnifies the problem.

So we’ve turned to industry experts to learn what a customer data platform (CDP) is, the challenges these systems solve and how companies can choose a CDP that suits their needs.

What Is a Customer Data Platform?

A CDP is software that unifies customer data from fragmented systems into a single interface. This let’s marketing teams “create a single, deduplicated and cleansed record for every customer and a memory of their online and offline interactions with the brand,” explained Anthony Botibol, global head of marketing & CDP advisor at BlueVenn. This customer profile not only unifies data across systems and channels, but organizes the information, so it’s highly actionable by marketing teams.

Most alarmingly, Andy Zimmerman, CMO at Evergage, said many organizations believe their CRM system functions as their CDP. “However,” he added, “CRMs weren’t made to process the volume, depth and complexity of data today.” That’s because companies have more sources and stores of customer data than ever before, ranging from multichannel behavioral data to in-store transaction feeds, loyalty systems, call centers, chat tools, surveys and much more. It's critical that organizations get a handle on all this data now because it’s only going to continue growing.

Related Article: CDP vs. DMP: Which is Right for Your Business?

GDPR, CCPA and More: Why Companies Need a CDP Now More than Ever

“Businesses are looking to have a single, central source of truth when it comes to their customer data, down to the individual level,” explained Zimmerman. But their vast amounts of data is scattered among a multitude of systems, channels and teams.

With the demand for highly personalized digital experiences, access to real-time customer insights is becoming a necessity. “Marketers are traditionally reliant on IT or third-party agencies to prepare data extracts,” Botibol said, “which can take days or weeks instead of seconds or minutes with a CDP.” The CDP can simplify the process of creating a unified customer view and enable non-technical marketers to maintain it at a reduced cost.

In addition, storing fragmented customer information can pose risks related to data privacy laws like General Data Protection Regulation (GDPR) and the upcoming California Consumer Privacy Act (CCPA). CDP solutions, however, enable companies to put data processes in place. “This standardization and process control will help to automate compliance and QA, and ensure that you stay on the right side of both legislations and meet customer expectations for how you manage and use their data,” explained Paul Tedesco, managing director at Tribal Worldwide.

When forming a highly personalized marketing strategy, it can be challenging to form a single, real-time picture of the behaviors, intents and preferences of each customer and prospect. “CDPs have emerged as the key technology to address this challenge as they sit between a company’s data sources and its engagement channels,” said Zimmerman.

Beyond the data, however, these systems can bring a cultural shift towards a more customer-centric organization. Dr. Sam Miller, data & insights lead at Cognifide, explained, “a CDP encourages the organization to prioritize a much broader customer profile across teams, one that recognizes customers don’t interact with your brand in just one channel or on one device.” That means the new system can facilitate collaboration and enable organizations to deliver seamless customer interactions, from marketing to sales and customer service.

Related Article: What's the Difference Between a CRM and a CDP? And Why You Should Care

How to Choose a Customer Data Platform

“In addition to the confusion about what a CDP is there are also dramatic differences between the functionality of different CDPs,” said Zimmerman. Some simply store customer information — much like a CRM — but others go well beyond this by leveraging the customer data with artificial intelligence (AI) or machine learning.

The first thing to look for is a system that can seamlessly store individual customer information for analysis. “That said, if you’re collecting and analyzing customer data, in most cases, you’ll also want to do something with it,” added Zimmerman. Companies, therefore, should look beyond a system of record for things like advanced personalization and analytics features.

That’s why Botibol recommends you establish strict criteria to determine whether a particular CDP vendor offers the functionality your organization requires beforehand. He said these capabilities could include “data consolidation including on and offline, data loading, data processing, cleansing and identity resolution, through to analytics, modeling through to omnichannel execution.” You should also consider how much control you want over the system, and the ideal total cost of ownership that’s reasonable for your organization. “At the core of any good customer experience is good data — you can’t deliver a truly personalized experience if you don’t know a lot about the person,” said Zimmerman. That’s why today’s marketing teams should consider a CDP to fuel more compelling omnichannel experiences backed by data insights. But don’t just choose the first CDP vendor you come across because functionality and quality varies greatly within this emerging marketplace.