Contributed by Amy Cross, Senior Content Marketing Manager at NGDATA.
When it comes to different tools and systems for managing customer data, there are countless options to choose from. It’s no wonder, then, if news about customer data platforms went over your head.
Customer data platforms have become an increasingly popular system for better managing and making use of customer data. Even if you’ve heard of customer data platforms, you may still be wondering: Are they really worth investing in?
If you need to catch up to speed on what customer data platforms are or why they’re beneficial, the following guide will provide you with an overview of these important questions.
What is a Customer Data Platform?
A customer data platform (CDP) is a database which consolidates useful customer data from a number of channels and data sources. CDPs provide companies with streamlined access to deep and specific insights about their customers that they would not otherwise have a unified overview of.
An easy way to comprehend the power of CDPs is to think of them as tools which successfully address the yearning of companies to have “a 360-degree view of the customer.” How do CDPs achieve this feat? By aggregating important customer data from relevant sources such as:
- Social media comments
- Purchase orders
- Email responses
- Customer service interactions
- Customer profiles
- Mobile apps
What a CDP is not
In order to understand what a new system is, it is often helpful to understand what it is not. Although they carry a similar sounding name, customer data platforms should not be confused as being the same as a customer relationship management (CRM) databases.
Marketer Angela Stringfellow explains that while CRMs “focus on aggregating data related to one particular channel,” CDPs “bring together the complete history of interactions and behaviors across all channels to provide a more robust, in-depth understanding of every individual prospect and customer.”
Why Is it Worth Investing in a CDP?
Now that you have a better understanding of what a CDP is, you’re probably wondering if a CDP is even worth the investment.
CDPs, unlike other customer management platforms, are designed specifically with the goals of marketers in mind. CDPs provide marketers with all of the information they need to thoroughly manage the customer lifecycle – without needing to rely on other parties or systems to gather data from multiple sources.
As highlighted in the article, “Why You’re in Desperate Need of a CDP,” in order to manage the customer lifecycle without a CDP, you would have to carry out similar steps to the following process:
- Run SQL queries to get relevant data from your data warehouse
- Pull CSVs from your customer service tools
- Bring this data together in a master CSV to identify overlaps
- Load this master CSV into your email service provider
- Trigger a one-time send targeting this segment
However, with a CDP all of this data is streamlined and collated in the one place, so you can handle all of your own marketing campaigns without relying on engineering resources. Moreover, more advanced CDPs “support both advanced customer segmentation and actual marketing execution, giving marketers a one-stop-shop for building and targeting audiences across channels.”
What are other benefits CDPs provide? Well, if you’ve ever wanted to garner deeper insight into your customers, the value of a CDP is unparalleled. A CDP offers all of the data necessary to better identify customers’ needs. CDPs identify each customer in a unique and personal way, so you will find it significantly easier to use a CDP to track each customer’s journey and behavior through various channels than other methods.
Take a moment to think about the enormous potential easily tracking customers’ journeys and behaviors would provide to your business.
With a better understanding of what your customers’ patterns of behavior are, as well as what their needs are, you’ll have the knowledge to more accurately predict their next moves. Once you can predict what their next moves are, you’ll be able to implement targeted campaigns relevant to customers’ particular needs. As you can imagine, this more strategic approach to using customer data could be the difference between a lost customer or a newly gained one.
How do I know if a CDP is worth using at my company?
Perhaps the best way to decide if investing in a CDP is right for your company is to reflect on your current practices, needs, and goals. After all, without a clear understanding of what you’re doing now, and how it could be improved, you won’t be able to fully appreciate the benefits CDPs can provide.
David Raab, principal of Raab Associates and CEO of the Customer Data Platform Institute, has identified a number of signs that you may need a CDP. Here are a selection of the indicators to work out if your company could benefit from the features of a CDP:
- Your existing customer-facing systems capture useful data about your customers, but you can’t collect it all in a single place.
- You can collect customer data from multiple systems but can’t enhance it with data from external sources.
- You can build a single customer view with detailed data but can’t analyze it, build predictive models, or run machine learning algorithms against it.
- You have a detailed, actionable single customer view, but it’s hard to connect it to new systems so they can use its data.
- You can build and analyze a detailed single customer view, but the data isn’t available to systems that create outbound marketing campaigns (e.g. email or advertising audiences) or real-time interactions (e.g. website personalization).
- You have a detailed, actionable single customer view but the data is days or weeks out of date.
- You have a detailed, actionable single customer view but it costs a fortune to operate.
As with all deliberations about implementing new technologies, it’s important to make an informed choice regarding the implementation of a customer data platform in your company. Whether you choose to implement a CDP or continue with your existing system is an individual choice. Just keep in mind that CDPs are not going anywhere anytime soon – so if you do want to reap the rewards early, there’s no time like the present to test out what benefits a CDP could have for your company.