What is a customer data platform, and how do you build one?
A Customer Data Platform (CDP) is a type of database software. Its primary purpose is to create a permanent and complete picture of your customers. This platform combines primary data collected from various sources and provides fast and easy search and retrieval of detailed customer information.
According to Statista, in 2022, the customer data platform (CDP) industry generated nearly $2 billion in revenue, up 25% from a year earlier. These figures indicate that CDPs are in high demand in digital marketing and will only grow, and development costs are much lower, according to statistics DesignRush.
If you want to build modern digital marketing, you need a CDP. To create such a platform, it is necessary to collect and integrate critical data, clean and organize it, combine it into a single database, and enrich it in various ways.
Let's learn more about this platform and how to build it from scratch.
What is a customer data platform?
In simple terms, a customer data platform is a database software that allows marketers to learn more and better understand their customers. It allows you to segment customers by various factors to conduct highly targeted marketing campaigns.
- Collects, normalizes, and integrates data from various internal and external sources
- Stores data indefinitely for future use
- Shares data with other systems and channels
- Provides reliable reporting and analysis of collected data
It turns out that it is possible to divide clients into groups: By behavior, location, device, demographics, and many other parameters. It serves a variety of data management needs.
Thus, after an adequately configured CDP, you will receive all incoming data from all your company's marketing, sales, and customer service tools and bind them to a single permanent identifier.
It immediately becomes possible to set up customer profiles and not play guessing the target audience and its preferences.
Didn't marketers have a similar tool before? Of course, there were many. We have been using DMP and CRM solutions for a long time. Then why should we look for something else? Well, it's worth taking a closer look.
How is CDP different from DMP and CRM solutions?
CDP is one of the tools for collecting and analyzing business data. In reality, many marketers don't see the difference between data management platform (DMP) and customer relationship management (CRM) software solutions
But there is a difference. And this is what:
CDP is designed for marketing departments and tracks marketing-related data. The data management platform is designed for advertising departments and keeps track of advertising-related data. CRM is designed for sales departments and keeps track of data related to sales. This tool can blow the marketers' view of customer data. Implement CDP compliance, and your business can experience exponential improvement.
Benefits of CDP
CDPs allow you to store all your data in one place and share it with all your tools. It means you can move the data back upstream to the tools that process the previous steps in the cycle. This setup gives you feedback on every action and allows data from one instrument to inform efforts throughout the stack.
Automate this process, and you'll get real-time updated customer data.
Let's take an example: a potential customer visits several pages of your site on the same day. According to marketing classics, no matter who the visitor is, you will direct this person to a highly effective marketing flow. As a result of which, the visitor becomes a client.
There are many problems with this approach:
- Dependence on data collection tools
- Depending on whose tools these are
- Vague understanding of whether the lead is ready to become a client based on incomplete data in the system
- Inconsistency of actions with the base within the sales team
It is how mess happens, and you can lose both a hot client and your reputation. But what if, instead of forcing individual departments to act solely on behavioral triggers, we combined everything — behavioral, geographic, demographic, and techno graphic data — associated with a real person? This approach significantly changes the results of marketing companies.
CDP is not just another tool in the stack, it's an opportunity to finally unlock the potential of data-driven marketing automation and bring data from all your tools together.
What data does the customer data platform use?
In social networks, we leave a massive amount of data about ourselves. It's a marketer's paradise, but without the right data collection tool, it's all for nothing. A vast amount of data is challenging to collect and analyze. And that's what a customer data platform is for.
CDPs are concerned with obtaining primary data, that is, data received directly from the client. Most CDPs collect the following customer data:
Personal attributes: names, street addresses, email addresses, birthdays, educational levels, etc.
They study behavior: the actions of users on a website or in a mobile application. View transactions: purchases, returns, and other information from POS and e-commerce systems.
Customer Service Interactions: Live chat session data, session duration, number of sessions, NPS metrics, and other data collected by CRM systems.
Most CDPs also use marketing campaign metrics, including impressions, engagement, reach, and more.
How to create a customer data platform?
CDP is a relatively new solution, and only a few companies use this platform. However, it is already obvious that this decision is worth paying attention to. There are four steps to go through to create a CDP:
1. Combine data
This stage includes the collection and integration of all data about clients in the first person into a single database. You can link this data using standard variables such as customer name, email address, or phone number.
2. Ordering data
At this stage, it is essential to determine that the data is valid and consistent with the client. It is important here to identify and correct any inaccuracies and duplicate fields. After cleaning the data from unnecessary, they are sorted by any filter (segment, location, age).
3. Identity resolution
This stage involves linking customer data from several sources into one. Identity resolution allows you to expand on the basic information collected for each client to gain a better understanding.
4. Filling voids
To make the data as complete and convenient as possible for all of you. Now, you want to transform the data to make it more user-friendly for everyone involved. It usually includes filling in missing details, standardizing data formats, etc., to ensure higher data quality. After going through all these steps, you can say that your client data platform is ready for use.
According to Forbes, CDP is about helping brands better understand customers and engage them more effectively with the tools they have. CDP is primarily a point solution today, but it will be at the heart of how top brands differ in the coming years.
We are sure that business in the future will be reduced to data management. It is exponentially more efficient, but requires a new look at business processes and payment (and customization) for the tool itself.
Take this step, and you can build your entire business around your customers, meeting them wherever they are with messages you know will resonate.