Does my business need a Customer Data Platform?

The early days of marketing involved taking out an ad in the newspaper, putting up a billboard, or posting a direct mail campaign. Marketers obsessed over the copy and creative before the advertisements went live, but as soon as the project shipped, marketing directors were in the dark. There was no definitive way to tell how well a campaign did, outside of mailing coupons or having leads call a specific phone number.

The digital era has changed all that. Advertising platforms can now measure impressions, clicks, and conversions. Web page trackers can tell marketers about user behaviour on-site. You’d be hard pressed to find a company that isn’t keeping a record of personal information and order history on all their past customers and future leads. In the midst of all this new marketing data, MarTech platforms have arisen to fill the need for data management and analysis. However, these platforms are disparate and specialised. Some offer integrations with other products, but the marketing industry was still missing a technology that could create a single, unified customer view–a single source of truth for collecting and cross-referencing all customer data.

The customer data platform (CDP) is a fairly recent innovation in MarTech. It gathers information in a single data pool, coordinates various data streams, and allows marketers to create user profiles and customer journeys in real time. Over the past few years, CDPs have gained steam as an emerging trend for all types of companies as they try to better understand and personalise their services for their customers. If you do business in today’s economy, your company needs a strategy for managing and accessing customer data in a secure, timely way. Customer data platforms do just that.

What is a Customer Data Platform?

For people who are new to customer data platforms, it’s tempting to think CDPs are just a new form of customer relationship management (CRM) system, or perhaps they’re a glorified analytics platform. However, this impression is misguided. CDPs have a broader reach than a CRM. They incorporate data from many channels and allow multiple outbound marketing and analytics tools to access that data pool simultaneously, in real time.

The goal of a CDP is to create a unified database where all the information a company possesses on its customers and leads can reside. According to the CDP Institute, a customer data platform is a “marketer-managed system that builds a unified, persistent customer database that is accessible to other systems.” As such, a CDP is really the base data layer of any marketing effort, and other tools operate atop the platform and feed data back into the database.

A key distinction in the definition of a Customer Data Platform, however, is that it’s “marketer managed.” While some IT expertise is required for setup and deployment, running a CDP is entirely the domain of marketers. A marketing professional shouldn’t need the help of an administrator to run a report, pull data, add a new data source, or integrate a new outbound marketing channel.

A result of creating an easy-to-use, single source of truth for customer data is improved usability, accessibility, and timeliness of data. Marketers have access to insights in real time. They can coordinate multiple channels to build diverse and highly customised opportunities for customer engagement. Thanks to unified data, customers receive a more consistent, personal, and relevant experience.

Inputs & Outputs: Automating the Marketing Funnel

The major advantage of a native customer data platform is the integration of many data sources and easy access to that data from third-party software. CDPs also do a fair amount of data administration to make the data cleaner and more usable as it enters the database. Generally, CDPs are platform-agnostic, and they play nicely with other types of marketing, outreach, and analytics software. A CDP is the hub of all customer data, connected to many spokes that gather and then use that data.

Any modern company collects large amounts and different types of data on their customers. For example, personal information, on-site behaviour, social media engagement, ad impressions, order history, mobile app usage, and customer service requests all feed into a single database in a CDP system. Taken together they create a 360 view of the customer.

The CDP then cross-references and integrates new data into the existing database. It does so instantly, meaning there’s low latency between the time a customer opens your email campaign and it shows up in your dashboard. As you gain more information about your customers, you can begin to group them based on shared characteristics. This type of customer segmentation is now common in most marketing departments, but a CDP allows for segmentation with greater complexity and nuance than ever before possible. Marketers can use the CDP to define user profiles and journeys, even predicting behaviour off past results.

From there, the CDP’s data is also available to power automated marketing efforts. Email, push notifications, SMS, social, direct mail, phone, web advertisement delivery, or A/B testing can all be automated based on data collected and use segmentation in the CDP. In turn, each of these marketing efforts returns its own data on open, click through, conversion, and engagement rates back into the CDP.

Single Customer View: Making MarTech Insights More Responsive

A CDP enables a unified customer view that’s instantly responsive to updates. Without a CDP it takes marketers far too long to draw conclusions from campaign data. This means the customer experience and personalization efforts are slow to change. In a Forbes survey, 47% of marketing professionals said it takes more than a week to update the customer journey based on campaign data. Another 47% said it takes three to five days. In a world dominated by e-commerce, instant transactions, and fast turnarounds, that’s too slow.

Additionally, the same survey found that 52% of marketers report using a variety of technologies to automate the marketing process and drive analytics. However, there’s little coordination between these tools. As a result, 78% of organisations either have or are developing a CDP to increase integration between tools. The CDP Institute estimates that investment in CDPs will rise to $1 billion by 2019.

Any company that has an ongoing relationship with its customer base has an incentive to use a CDP. B2C businesses like e-commerce, retail stores, and subscription services are obvious examples. However, B2B businesses with long-term client relationships can also benefit from collecting and using data to offer better services.

It’s worth noting, however, that customer data platforms are an emerging technology. As such, they still have their limitations. It can be costly to establish a new CDP, and the options for providers are few. The implementation also requires technical expertise, training for new users, and a culture shift within the organisation toward a data-centric approach.

Why a Customer Data Platform is Worth the Investment

Customer data platforms build the foundation for any high-tech marketing operation. Modern marketing requires knowledge of customers that are digitally-oriented and expect active engagement on their own terms. A customer data platform powers the unified customer view that so many business leaders are after. Those that embrace the data revolution will see greater returns, higher customer loyalty, and are likely to become disruptive leaders in their industries.

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