Customer Data Platform (CDP): Benefits, Types, Requirements
A customer data platform (CDP) is a centralized system that collects, unifies and organizes customer data from multiple sources and touchpoints to create a single, comprehensive view of each customer. It enables marketers to segment audiences based on real-time behaviors and attributes, and activate those segments across channels to deliver personalized, data-driven marketing experiences.
- Overview
- Traditional CDPs vs. Composable CDPs
- What Are the Benefits of a CDP?
- 4 Types of Customer Data
- CDP Requirements
- Resources
Overview
A customer data platform (CDP) gathers and organizes customer data pulled from multiple sources and across various touch points, optimizing marketing effectiveness. CDPs gather and organize real-time data from various sources, including customer relationship management (CRM) systems, transactional systems, digital channels and data management platforms, to create unified customer profiles.
The primary purpose of CDPs is to activate known and anonymous audiences in different marketing channels. CDPs integrate with marketing systems like email, ecommerce and digital advertising to leverage first-, second- and third-party data for personalized customer experiences.
Traditional CDPs vs. Composable CDPs
Traditional CDPs emerged as all-in-one solutions designed to unify customer data from various sources into a single platform. These systems typically handle data ingestion, identity resolution, storage, segmentation and activation within their own proprietary infrastructure. They often come with prebuilt connectors to common marketing tools and offer a user-friendly interface for marketers to build audiences and orchestrate campaigns. While offering a comprehensive suite of features, traditional CDPs can sometimes lead to vendor lock-in, as businesses become reliant on the platform's specific functionalities and data models. Furthermore, the "one size fits all" approach might include features that an organization doesn't need, potentially increasing costs and complexity.
In contrast, composable CDPs represent a more modular and flexible approach to customer data management. Instead of a single, bundled platform, a composable CDP allows businesses to select and integrate best-in-class tools for each layer of the customer data stack. This often involves leveraging existing data warehouse infrastructure for storage and identity resolution, and then connecting specialized tools for data ingestion, transformation and activation. The key differentiator is the emphasis on interoperability and the ability to tailor the CDP architecture to specific business needs and existing technology investments.
The benefits of a composable CDP include greater control over data, reduced vendor lock-in and the ability to choose tools that precisely fit the organization's requirements. This approach also can lead to cost efficiencies by avoiding paying for unnecessary features. Ultimately, the choice between a traditional and a composable CDP depends on an organization's specific needs, technical capabilities and long-term data strategy.
What Are the Benefits of a CDP?
CDPs improve marketing ROI by consolidating individual customer profiles, linking attributes to identities, and enabling profile sharing for personalized email campaigns, digital ads and other channels. More specifically, CDPs provide:
- First-party data: CDPs gather data directly from customers, website visitors, social media followers and email recipients. As the data collected comes in via tracking systems, you can be confident the information is more accurate and applicable to customer profiles.
- Customer profiles: CDPs build customer profiles to help you understand individual customers, providing specific information as well as overall trends derived from analysis.
- Coordinated marketing: CDPs unify your marketing efforts with reliable and consolidated data. They also collect and organize new data for new and improved campaigns.
4 Types of Customer Data
Customers engage with your company online and offline through your websites, marketing emails, ecommerce portals and physical store. Collecting information about these interactions is the first step in understanding and improving the customer experience. Some of the data types CDPs work with include:
1. Identity data: Identity data is the foundation of your customers’ profile in a CDP. This data type allows you to identify each customer and includes name, demographics (age and gender), location, contact information, social profile, professional information and account information.
2. Descriptive data: Descriptive data expands on identity data from a customer profile to give you a fuller picture. The categories of descriptive data vary based on your business and may include career information (such as income), lifestyle information (such as whether they own a vehicle or have pets), family information and hobbies and interests.
3. Digital customer experience data: Data tracked during the digital customer experience, like behavioral data, allows you to understand how your customer engaged with your brand, whether through certain actions, reactions or transactions. This includes:
Transactional data to help you understand your customers’ purchase history
Site traffic to give you an understanding of how your customer interacts with your website
Marketing email engagement such as email opens, link clicks and unsubscribes
Social media activity including information about how customers engage with your social channels such as Facebook and X
Customer support interactions for information about what customers think and feel about your products and services
4. Qualitative data: Qualitative data provides context for customer profiles and includes your customers’ motivations, opinions and attitudes about your brand. It could consist of answers to questions such as, “How did you hear about us?” and “How likely are you to recommend us to a friend or colleague?”
CDP Requirements
Here are some key requirements for a CDP, encompassing both functional and technical aspects:
Core capabilities
Data ingestion from diverse sources: The CDP must be able to collect data from a wide array of online and offline sources. This includes CRM systems, marketing automation platforms, email service providers, website analytics, mobile apps, social media, point-of-sale (POS) systems, customer service platforms, data warehouses and more. It should handle various data formats (structured, semi-structured and unstructured).
Data unification and identity resolution: A fundamental requirement is the ability to unify customer data from these disparate sources to create a single, comprehensive view of each customer. This involves resolving identities across different touchpoints and devices, linking various identifiers (email addresses, phone numbers, device IDs, etc.) to a single customer profile.
Data storage and processing: The CDP needs a robust and scalable infrastructure to store large volumes of customer data securely and efficiently. It should be capable of processing data in batch and ideally in real time or near real time to enable timely actions.
Data governance and privacy compliance: Strong data governance capabilities are crucial, including data quality management, data lineage tracking and enabling compliance with relevant data privacy regulations such as GDPR and CCPA. This includes consent management and the ability to manage data access and usage.
- Data transformation and modeling: The CDP should allow for data cleansing, standardization, transformation and the creation of flexible data models that can adapt to evolving business needs.
Segmentation and audience management
Advanced segmentation capabilities: Marketers should be able to create granular audience segments based on a wide range of attributes, including demographic, behavioral, transactional and psychographic data. The segmentation tools should be user-friendly and allow for dynamic segmentation that updates as new data becomes available.
- Audience building and management: The platform should provide tools to easily build, save and manage these audience segments for activation across different marketing channels.
Activation and integration
- Seamless integration with marketing ecosystem: A key requirement is the ability to integrate with various marketing and advertising platforms for audience activation. This includes CRM, email marketing, advertising platforms (e.g., Google Ads, social media ads), personalization engines and analytics tools.
Real-time data activation (ideally): The ability to activate audiences and trigger personalized experiences based on real-time customer behavior is increasingly important.
- API and connectors: Robust APIs and prebuilt connectors are essential for seamless data flow between the CDP and other systems.
Intelligence and insights
Analytics and reporting: The CDP should offer built-in analytics and reporting capabilities to understand audience characteristics, campaign performance and customer behavior.
- Machine learning and AI capabilities (desired): Increasingly, CDPs are incorporating AI and machine learning to provide advanced insights, predictive analytics (e.g., churn prediction, propensity to purchase) and personalized recommendations.
Usability and administration
- User-friendly interface: The platform should have an intuitive and user-friendly interface that allows marketers and other business users to easily access and utilize the data without requiring extensive technical expertise.
- Role-based access control: Robust security features should include role-based access control to ensure that users can only access the data and functionalities relevant to their roles.
- Scalability and performance: The CDP should be able to scale to handle growing data volumes and user demands without performance degradation.
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