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Your CX Quarterback: The Customer Data Platform (CDP)
Oct 28, 2021 • 7 Minute Read • Elizabeth Spranzani, Directrice de la technologie
If you are currently working with a Digital Experience Platform (DXP), then you probably have been getting an earful about Customer Data Platforms (CDP) for several months now. This type of MarTech platform is a hot topic and every day there is another blog post, webinar, and email marketing campaign. Even for Verndale, as an implementation partner, it's a lot of information to process. In the race for our DXP partners (such as Optimizely and Sitecore) to be the first to a complete integrated offering (yet still separate and composable), the roadmap has continued to evolve after acquiring their respective CDP platforms in the Spring of 2021. This means that even for those organizations, the stories and plans have changed a bit over time, and Verndale decided it was time to deep dive on the idea of CDP and what it means for our customers. Our aim is to cut through the noise and give you a simple and straightforward summary that will help you make the right decisions for your business as you develop your technology roadmap.
First, let's set the foundation for this discussion with what a CDP is and what it is not.
What a CDP Is
CDP is a collection of software that creates a persistent, unified customer database that is accessible to other systems. Data is pulled from multiple sources, cleaned and combined to create a single customer profile. This structured data is then made available to other marketing systems and marketers to create targeted and personalized marketing campaigns. It is purpose-built to enable marketers to activate on that data.
CDP must include the ability to ingest first party data (real-time and batch import), unify that data into a profile, allow for segmentation (generally in real-time), and then integrate with other systems. Digital sources include behavioral data, transactional data, and demographic data.
The ability to activate based on customer data is the key differentiator of a CDP. Marketing teams can create logic and trigger activities based on that logic all from one place. For example, trigger emails based on certain actions users take (or don’t take) on your website or send messages when they log into an app. You can use the context you have about your customers to act on it and create an omnichannel experience. Being able to use the segments from the CDP within other platforms such as marketing automation systems is invaluable.
Key features that are now baseline for a CDP go beyond just an aggregated customer database. They must include the following to compete for best-of-breed status:
- Data import/export: in and out to other systems
- Persistent 360 degree customer profile: first-party data on a single record, collected from siloes in other platforms, inclusive of historical information, leveraging automatic identity resolution and stitching
- Features for GDPR and privacy: ensure compliance with legal requirements
- Audience Segmentation: custom/manual and AI driven, sync to other systems for activation
- Data lake direct access to the raw data: use your data as you see fit
- One-click no-code connectors: to quickly establish new inputs and outputs
- Analytics: for insight to visualize behaviors, segments, transactions and campaign responses, enabling more complete reporting on the customer journey
What a CDP Is NOT
Defining guardrails around a CDP is really important. People hear 'customer' and 'data' and they jump to what they know. I've heard grizzled web and marketing veterans use CDP interchangeably with other types of platforms and tools, and clients have explained that they already have a CRM when we've started to discuss the topic of CDP. Listed here are a few of the areas that need clarification.
Not a CRM
A CDP should not be confused with a Customer Relationship Management system (CRM). A CRM is designed for sales and managing customer relationships (rather than for marketers and their targeted campaigns). A CRM does not typically aggregate or analyze data from multiple sources like a CDP does. Records in a CRM are always identified leads or contacts whereas records in a CDP often start as anonymous. CRM data often includes interactions with company reps, service requests, and business proposals… data which rarely would make sense in a marketing campaign use case. That said, there are definitely subsets of data that a CRM and CDP would want to share and that is why you will typically find connectors between the two platforms.
Not a DMP
A Digital Marketing Platform (DMP) is designed to serve ads and retarget using cookies to anonymous users with anonymous segments. It is not designed around single users and data often expires after 90 days. Currently these are the platforms being re-thought as third-party cookies become restricted.
Not a Data Lake
Although CDPs do require a data lake to store their data, CDP is much more than just a data lake. Unlike data warehouses and data lakes, CDPs process the raw data to make it more usable and apply identity resolution which will drive customer interactions and fulfill marketers' needs.
Not a User Authentication Store
CDP is not meant to store user credentials or e-commerce customer records. It is important to keep a separation of concerns and keep CDP focused on recording behaviors to analyze users by events they trigger, which will allow them to be bucketed into segments on which to perform additional activation activities.
Why do you need a CDP Now?
Now that you hopefully have a clearer picture of a CDP, a natural question should be, does MY organization actually need a CDP? Or perhaps: Why do I need a CDP right now? What is all the fuss about?
The truth is, CDP platforms are not new. Additionally, elements of CDP have existed for years in DXP platforms, including Sitecore and Optimizely. So why are we talking about CDP now? I'm going to make a prediction that could very well be true.
In 5-10 years, businesses will look back on the adoption of a full CDP platform much like they may look back on making the decision to go digital with a website and switch from static content to a Content Management System (CMS).
That's a bold statement, so why do we think this is a real possibility? The answer is simple.
CDP has become the centralization of intelligence, the brain of the experience stack, and is the “quarterback for CX”. The sooner you commit to a CDP and get it into your stack, the quicker you will ensure your relevancy in the current digital landscape.
In fact, we have 10 reasons why CDP has come into the spotlight recently, and why your business should invest now:
1. CDP has become one of the primary sources of data for activation in Experimentation, Decisioning, and Personalization.
2. There is more online activity now vs. in-store (sped up by Covid).
3. Your data is siloed in multiple channels: Most businesses either already are omnichannel, or are moving towards it. It is no longer a pie-in-the-sky concept.
- How many channels are YOU currently collecting customer information in? What are you doing with that data? The answer is likely very little.
- With siloed customer data, it's impossible to gain insights and act on it. Imagine real-time insights gathered and displayed as users interact with all your digital touchpoints: email, web app, etc.
4. Personalization is not trivial and is costly without a CDP, however, personalized experiences are the new CX standard, so it's risky to decide to just not do it.
5. CDP is not more work for the marketer. It should actually make a marketer's life easier in reaching that personalization requirement.
- CDP's key functionality for mapping data across systems, robust segmentation, and ability to share out those segments to other tools will ease the burden of creating personas to match marketing intent and filling the gaps on key data points.
- Machine learning for segmentation then powers machine learning in personalization.
- Deploying a CDP doesn’t mean you’re uprooting everything your marketing department has implemented; rather, the Customer Data Platform taps into what you’re already doing and leverages your existing tech stack. It unlocks the data you already have to empower the teams and tools you’re already working with to achieve a single view of each customer.
6. RIP third-party cookies; Companies must use first-party data now, which CDPs aggregate. First-party data is better quality data anyway.
7. Data privacy and PII rules are complicated and legally risky: CDP provides features to deal with that and can segment customers who may require stricter compliance.
8. ROI can now be proven via data-driven insights and analytics. The CDP platform can help prove its own worth.
9. Machine learning historically has been difficult to use. CDP brings simple, easy-to-use AI-decisioning models to marketers.
10. There are deals to be had.
Your DXP of choice likely is very keen to prove their investment in their CDP acquisition. They know this is an investment their customers may not have been considering previously. Now is the time to negotiate with them for current bundles and promotions they are putting in place to spread adoption.
Customer Data Platforms are here to stay. Big data has been a long time coming, and consumers have come to expect custom experiences. To compete, your business must be able to deliver on those experiences and the only way for your marketing team to keep up is to leverage a CDP's ability to be your force multiplier.
With deep training, certifications, and expertise in our partners' CDP products, as well as practices in Experimentation and Master Data Management, Verndale is uniquely equipped to start you on your CDP journey. Contact us to learn more about CDP.