According to the CDP Institute, a vendor-neutral organization dedicated to helping marketers manage customer data, a CDP is defined as “a packaged software that creates a persistent, unified customer database that is accessible to other systems.”
Customer Data Platforms build customer profiles by integrating data from a variety of first-, second-, and third-party sources. This includes your CRM and DMP, transactional systems, web forms, email and social media activity, website and e-commerce behavioral data, and more.
CDPs inform people-based marketing, which is what we’re all about here at HubSpot — putting the customer at the center of our flywheel. CDPs can help your organization do the same.
What is customer data?
CDPs exist because customer data has become crucial to both business and marketing operations. So, what is customer data exactly?
Customer data is information consumers leave behind as they use the internet and interact with companies online and offline: through websites, blogs, e-commerce portals, and in-store interactions. (We dive into some examples below.) It’s highly valuable to businesses, although recent legal dialogue (such as the GDPR) has changed how organizations collect and manage this data.
There are four main kinds of customer data that CDPs collect and organize.
1. Identity Data
Identity data builds the foundation of each customer profile in a CDP. This type of data allows businesses to uniquely identify each customer and prevent costly replications. Identity data includes:
- Name information, such as first and last name
- Demographic information, such as age and gender
- Location information, such as address, city, and zip code
- Contact information, such as phone number and email address
- Social information, such as Twitter handle and LinkedIn address
- Professional information, such as job title and company
- Account information, such as company-specific user IDs and account numbers
2. Descriptive Data
Descriptive data expands on identity data and gives you a fuller picture of your customer. The categories of descriptive data will vary based on the type of company.
For example, a car dealership may collect lifestyle details about their customers’ cars, whereas a diaper company would collect details about the number of children in customers’ families. Descriptive data includes:
- Career information, such as previous employers, industry, income, and job level
- Lifestyle information, such as the type of home, vehicle, and pet
- Family information, such as the number of children and marital status
- Hobby information, such as magazine subscriptions and gym memberships
3. Quantitative or Behavioral Data
Quantitative data allows businesses to understand how each customer has engaged with their organization, whether through certain actions, reactions, or transactions. Quantitative data includes:
- Transaction information, such as the number and type of purchased or returned products, the number of abandoned carts, and order dates
- This information also includes RFM analysis — recency (How recent did this customer make a purchase?), frequency (How often does this customer make a purchase?), and monetary value (How much does this customer spend on a purchase?)
- Email communication information, such as email opens, email click-throughs, email responses, and dates
- Online activity information, such as website visits, website click-throughs, product views, and social media engagement
- Customer service information, such as communication dates, query details, and service representative details
4. Qualitative Data
Qualitative data provides context for customer profiles; it gives customer data personality. This type of data collects any motivations, opinions, or attitudes expressed by a business’s customers — whether relevant to the company or not. Qualitative data includes:
- Motivation information, such as How did you hear about us?, Why did you purchase this?, or What made you choose this product over others?
- Opinion information, such as How would you rate this product?, How would you rate our customer service?, or How likely are you to recommend us?
- Attitude information, such as favorite color, animal, textile, or food
As you can see, CDPs collect and organize a wide variety of data. It’s important to note that much of the specific data and data categories will vary based on your business and industry.
Next, before we dive into more of what a CDP is, let’s clarify what a CDP is not.
CDP vs. CRM
CDP and Customer Relationship Management (CRM) tools both collect customer data and provide value to your organization. But the similarities stop there: where a CDP autonomously creates unified customer profiles with data gathered across a variety of online and offline channels, a CRM only tracks a customer’s intentional interactions with a company via manual entry.
Here are a few key differences between a CDP and a CRM.
- CDPs collect data on anonymous visitors, whereas CRMs only report on known customers or potential customers.
- CDPs analyze lifetime customer behavior and customer journeys, whereas CRMs primarily analyze the sales pipeline and forecasting.
- CDPs track both online and offline customer data, whereas CRMs cannot pick up on offline data unless manually entered.
- CDPs are built to handle multiple data points from a large number of sources, meaning the potential for replicated or lost data is slim. On the other hand, CRMs collect individually-entered data that can get lost or mislabeled if not handled correctly.
CDP vs. DMP
David Raab, founder of the CDP Institute, explains the distinction between CDPs and Data Management Platforms (DMPs) best: “CDPs work with both anonymous and known individuals, storing ‘personally identifiable information’ such as names, postal addresses, email addresses, and phone numbers, while DMPs work with almost exclusively with anonymous entities such as cookies, devices, and IP addresses.”
- CDPs influence all types of marketing, whereas DMPs mainly influence advertising to better target ads and reach audiences.
- CDPs collect mostly first-party data (direct from the source), whereas DMPs collect mostly third-party data (through data providers, managers, and services).
- CDPs reflect personalized, specific customer identifiers (like name, email address, and customer ID), whereas DMPs reflect anonymous customer identifiers (like cookies, etc.)
- CDPs retain data over a long period of time to build in-depth, accurate customer profiles and nurture relationships, whereas DMPs retain data for a short period of time to target ads and build lookalike audiences.
Whew … there are a lot of acronyms in the world of marketing, aren’t there? I hope we’ve helped you keep them all straight. Now, let’s dive deeper into why you might consider purchasing a CDP for your organization.
Key Benefits of a CDP
CDPs improve your organization, better your customer relationships, and complement your current software and marketing efforts. Here are a handful of key benefits of having a CDP.
CDPs Avoid Data Silos
Data silos refer to data that is available to one department but isolated from the rest of an organization. They occur when businesses scale too quickly to sufficiently share data or when technology can’t keep up. Silos aren’t good to have — they create a less collaborative environment, slow the pace and productivity of your organization, and threaten the accuracy of your customer profile data.
Good news: CDPs can help your organization avoid data silos. By unifying your customer data and your employees, you can be confident your data is accurate and accessible by all.
"Every single person in a company needs access to customer data in some form. The marketing team needs customer data for analytics and attribution. The sales team needs customer data in a CRM to close deals faster. Finance and operations teams need customer data to understand payment patterns and buying behavior. The customer data platform is the key piece of infrastructure that makes it possible to actually collect and use customer data consistently across all teams and tools" -- Peter Reinhardt, CEO, Segment
CDPs Collect Data Directly from Your Audience
There’s lots of data floating around out there. How can you be confident it’s accurate? By gathering first-party data — data directly from your customers, site visitors, social media followers, and subscribers. This is the very best type of data to collect and use to inspire marketing decisions because it comes straight from your audience.
CDPs are primarily focused on collecting first-party data through pixels and other tracking tools. In this way, you can always be confident your CDP reflects the most accurate audience information.
CDPs Help You Get to Know Your Customers
In order to enact customer-centered marketing, you must know your customers. Thankfully, CDPs build customer profiles in a way that help your organization get acquainted with each and every individual. The software can help inform customer behavioral analysis and construct identity graphs.
CDPs equip you to manage your customer relationships and market with your audience in mind, accurately and effectively.
CDPs Unify Cross-Channel Marketing Efforts
It’s likely your organization has multiple marketing efforts happening at once. It can take precious time and energy trying to communicate, share, and educate each other on the data you use for and collect from these efforts. That’s where CDPs come into play. CDPs unify multi- and cross-channel marketing efforts by supplying consolidated, accurate data. They also serve to collect and organize new data that may inspire other, ongoing marketing efforts.
CDP Service Providers
Think a CDP may help your organization? We agree! There are many benefits to using a CDP to learn about and market to your customers. Here are a few reliable sources from which to pull some CDP software options to consider for your team.
- CDP Service Provider Directory by CDP Institute. This list features “firms that provide CDP-related consulting, implementation, agency service, data, and technology.” Some of these companies are also CDP Institute Partners.
- The Best Customer Data Platform (CDP) Software Rankings by G2 Crowd. Like many of G2’s unbiased review pages, you can filter the results by the size of your organization and star rating. You can also sort the results by satisfaction, popularity, and G2 Score.
- The Best Customer Data Platform Software Rankings by Capterra. Capterra provides a variety of filter options to help you narrow down your CDP options, including pricing, popular features, users, and deployment.
Customer Data = Customer-Driven Marketing
Without customers, you wouldn’t have a business. They truly belong at the center of all that we do, especially our marketing … and in order to place them front and center, we need real, raw customer data.
Customer Data Platforms deliver the immediacy, accuracy, and unity that we need to keep aligning our organizations, inspiring our marketing, and engaging our customers. Check out the CDP software options above to take your marketing to the next level.
Originally published Mar 12, 2019 7:30:00 AM, updated November 14 2019