What Is (And Who Needs) a Customer Data Platform?

If you’ve recently heard a lot of talk about a customer data platforms (CDPs) and they can help companies better understand and act on data, you’re not alone. Google Searches for "customer data platform" have spiked in the past several years, and interest in the topic has steadily increased (and shows no signs of slowing down!).

customer data platform google trends

But what really is a CDP? Why does it exist, who is it for and how might you use it? Here’s what you need to know.


Table of Contents

  1. What is a customer data platform?
  2. Why do customer data platforms exist?
  3. What are the main benefits?
  4. What kinds of data do they aggregate?
  5. What are the key features of a CDP?
  6. Who can benefit from a customer data platform?
  7. Is a customer data platform right for your company?

What is a customer data platform?

According to the CDP Institute, “a Customer Data Platform is packaged software that creates a persistent, unified customer database that is accessible to other systems.” This definition has three critical elements:

  • Packaged software: A CDP is a prebuilt system that is configured to meet the needs of each organization. While setting up and maintaining a CDP does require some technical resources, it does not require the level of technical skill associated with a typical data warehouse project. This difference reduces the time, cost and risk associated with introducing a CDP and gives business users more control over the system, even though they may still need some technical assistance.
  • Creates a persistent, unified customer database: A CDP creates a comprehensive view of each customer by capturing data from multiple systems, linking information from those systems related to the same customer and storing the information to track behavior over time. In doing so, a CDP houses personal identifiers used to target marketing messages and track individual-level marketing results.
  • Accessible to other systems: Other systems can use data stored in a CDP for analysis and to manage customer interactions.

Now that we’ve defined what a CDP is, it’s equally as important to understand what a CDP is not. While CDPs share functionality with similar types of data tools, the nuances and differences between them are important to know. CDPs are often confused with:

For a deeper analysis on the differences, you can read our blog "CDPs, DMPs and CRM… Oh My! Which Data Solution is Right for Your Business?"

Why do customer data platforms exist?

The proliferation of data in everything we do has created a need for companies to rethink their customer data management strategy. Going deeper, CDPs exist for two key reasons.

  1. CDPs break down data silos. Organizations now have more technology than ever, and while these solutions deliver many benefits, they also create volumes of data housed in disparate data silos. Furthermore, because teams own tools and tools own data, this setup can hurt organizational alignment. Removing these silos and creating a single customer view improves alignment and makes it easier for teams that interact with customer data (including marketing, sales, support, customer success, product and operations) to navigate the growing landscape of technology.
  2. CDPs help go-to-market teams create better, more personalized customer experiences. The data silos that often exist can also lead to disjointed customer experiences because different teams work with different data. CDPs remedy this situation by creating a unified customer profile that each team can view, access, and work off of. CDPs serve as a central point to manage data and interactions across the entire lifecycle of an account, from acquisition through retention and growth.

What are the main benefits?

The possibilities are limitless for how organizations can deploy a CDP to meet their objectives. We see CDPs helping in a few core areas:

Operational Efficiency

Centralizing data in a CDP eliminates manual tasks associated with integrating data sources. When the data resides in one central location, teams can streamline data operations, work more efficiently, and reduce internal team friction due to misaligned data.

Related: Lengow Fixes a 50% Demo Drop-off Rate With Automation.

Personalization & Customer Experience

By combining multiple data sources, CDPs reveal a holistic, 360 degree view of the customer. Marketing campaigns and sales efforts can begin to utilize vital information that may have previously been inaccessible.

Related:Privateaser Increases Revenue Through Smarter Segmentation.

Reporting & Attribution

Because a CDP offers a complete, chronologic view of a customer, marketing teams can start introducing more accurate attribution and reporting due to this visibility.

Related: Gorgias Improves Account Insight and ROI Attribution.

Data Privacy Regulations

One of the core tenets of recent data privacy regulations like GDPR and CCPA is the ability to quicky recall and delete certain data if requested. Data teams can rest assured that not only is the data in question in a secure location, but also easily accessible if needed.

data integrations vs. customer data platform

What kinds of data do they aggregate?

To create a “persistent, unified customer database,” CDPs aggregate customer data from online and offline channels that span the entire prospect and customer lifecycle, including:

Identity & Attribute Data (Who they are)

  • Name
  • Company name
  • Job title
  • Phone number
  • Email address

Behavioral Data (What actions they took)

  • Website visits
  • Email opens, clicks, replies
  • Social media interactions
  • Mobile app engagement

unified customer profile

What are the key features of a CDP?

While CDP functionality may vary across different vendors, several core features include:

Data ingestion

CDPs ingest data from online and offline sources, like web tracking tools, marketing automation, CRMs, data warehouses, and more, typically through APIs.

Identity resolution

The ability to reconcile the many “versions” of a prospect or customer that live in different applications by merging them into one is an important CDP feature.

Data transformation & cleansing

CDPs serve as an organization's operational data layer. Common data transformation and cleansing tasks like standardizing attributes and eliminating duplicate data can be done with a CDP.

Real-time segmentation

CDPs allow you to create and save dynamic segments. Because CDPs connect to all of your tools and data sources, you can generate lists on nearly any attribute or event -- meaning, you can get extremely specific with your audiences.

Data syndication and synchronization

CDPs should have the ability to not only ingest, but also send data out to other applications.

Who can benefit from a customer data platform?

By breaking down data silos and helping create more personalized experiences, a CDP can benefit several types of organizations and their users.

At an organizational level, a CDP is most beneficial for mid-size and enterprise companies that have a complex technology landscape and want more insight into their prospects and customers by creating a true “360 degree view.” It also helps companies deliver a real-time, unified customer experience across channels.

Additionally, both B2C and B2B companies can benefit from implementing a CDP. A CDP can help B2C companies use real-time data to have more relevant interactions with customers, for example by sending personalized offers and content. On the B2B side, which is typically characterized by longer, relationship-driven sales cycles, a CDP can help track the entire customer journey from anonymous visitor to closed won opportunity. This tracking helps marketing and sales have more informed conversations with prospects and improves reporting throughout the customer journey.

At the user level, a CDP is most beneficial for:

  • Marketing managers and other team members who are responsible for growth, demand generation and/or operations. A CDP is especially beneficial when these users are not technical, since it allows non-technical users to manage customer data and activate it through various channels. As a result, marketers can be self sufficient instead of having to rely on engineering resources.
  • Sales teams that want to have better conversations with prospects and customers using insight that may live in other systems, such as marketing automation, chatbot and customer ticketing systems.
  • Data engineers that have been tasked with unifying different data sources but don’t have the resources or bandwidth to do so because they have higher priority projects in the pipeline.

Is a customer data platform right for your company?

For all the benefits that a CDP can deliver, how do you know if introducing one is the right move for your company? We find that organizations that fit certain criteria may be good candidates for CDP technology:

  1. Your organization has a complex, multi-tool technology stack. Furthermore, these tools do not have native integrations with one another.
  2. Your organization has a fairly advanced data strategy, perhaps investing in an analytics layer
  3. Your organization has gained executive team buy-in

However, that's not to say your organization won't see value if you don't quite look like the ideal candidate. Perhaps more important than what an organization looks like prior to purchasing a CDP is what processes and procedures have been put in place to ensure the investment is successful in the long-term. Two key actions come to mind:

  1. The organization has a designated team or individual owner to manage and maintain their CDP
  2. The organization has at least one use case in mind prior to implementation

With the onset of CDP technology, organizations are able to orient themselves entirely around the customer using their own data. By achieving the elusive "360 degree customer view", customer data platforms offer sales and marketing teams the operational agility to drive more effective campaigns and win more business.

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Angela Sun

Angela is the Director of Marketing at Hull.