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

If you’ve recently heard a lot of talk about a Customer Data Platform (CDP) and how it can help companies better understand and act on data, you’re not alone. 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.

What is a CDP?

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. It is not a workflow tool. CDPs do not simply port data from one place to another. Rather, a key function of a CDP is to store and house data so that users have a record from which to recall and act on information. A CDP is also not a data warehouse, which is primarily owned by IT and serves as a repository for all different kinds of business-related information, but does not allow for data transformation, normalization, or activation by marketing and sales stakeholders.

Why Do CDPs Exist?

The proliferation of data in everything we do has created a need for CDPs. 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 data silos. Furthermore, because teams own tools and tools own data, this setup can hurt organizational alignment. Removing these silos 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 a better customer experience. 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 serving as a central point to manage data and interactions across the entire lifecycle of an account, from acquisition through retention and growth.

What Kinds of Data do CDPs Aggregate?

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

  • Website data
  • Email responses
  • Social media interactions
  • Mobile app data
  • Customer profile data
  • Purchase orders
  • Customer service interactions

Customer Data Hub - Square

Who Can Benefit from a CDP?

By breaking down data silos and helping create a better customer experience, 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 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.

What Can Marketing and Sales Teams Do with a CDP?

The possibilities are limitless for how marketing and sales teams can use a CDP to better understand prospects and customers and improve the customer experience as a result. Some of the top use cases include:

  • Reconciling the many “identities” of a prospect or customer that live in different applications by merging them into one identity
  • Building real-time, dynamic segmentations using data (or attributes) from multiple software applications and delivering personalized content to those segments
  • Visualizing the complete customer journey and introducing more accurate attribution and reporting due to this visibility
  • Enhancing lead qualification with various data points (e.g. demographic, technographic and behavioral data)
  • Cleaning and transforming data prior to pushing to/syncing with other systems
  • Enriching marketing and sales conversations with more contextual information

How Do You Know if a CDP is 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?

To start, you need to define a use case (or several) that clearly identifies how you will put a CDP to work and the returns you expect it to deliver. From there, you must decide which department will own and manage the CDP and gain buy-in from leadership to secure proper budget and support for the program.

Following each of these steps is essential to realizing the full benefits that a CDP can deliver.

Angela Sun

Angela is the Director of Marketing at Hull.