In 2006, Clive Humby, a British mathematician, coined the phrase: "Data is the new oil." Like oil, we must refine data to use it. That's where choosing the best customer data platform or CDP steps in.
A CDP can help you better understand how customers interact with your brand. In this post, you'll learn what CDPs are, how they work, their benefits, steps for choosing a CDP, and more.
Table of Contents
Understanding Customer Data Platforms
Customer data platforms are software that provide a 360-degree view of how customers interact with the marketing, sales, and service channels of a brand. These channels can include your website, mobile app, and advertising platforms.
As customers use these channels, the CDP collects and organizes the data in real time. With this information, you can make informed product and marketing decisions, which improve customer experience.
Today, CDPs have become a necessity for many companies. In fact, the customer data platform industry has grown from $1.6 billion in 2021 to $2 billion in 2022. Absolute Reports forecasts that the global CDP market size will reach $5.11 billion by 2028.
With the ability to aggregate and organize lots of data from many touch points, it's no surprise that 37% of marketing professionals invest in a CDP.
How do customer data platforms work?
First, picture yourself as the director of marketing in a thriving ecommerce company. Your company creates a new website. You've uploaded several products, created product descriptions, and boom, your site is live.
A potential customer may start their journey with a Google search. Two days later, the customer could revisit your website and use your live chat button, but not buy. A week later, the customer opts into your email list.
In another week, the customer clicks your Facebook ad, views the product, and adds it to their cart. However, they haven't clicked "check out" and remain unconverted.
These are all individual data points capable of shaping your marketing campaigns. Often, storing these data in multiple locations, like your CRM, heat map tool, or Google Analytics, causes data silos. A CDP solves this problem.
A customer data platform brings interactions from multiple data sources into one system. With a CDP as your source of truth, you can segment users, create detailed customer profiles based on behaviors, and better target customers.
CDPs also enrich your data and feed it into your campaign destinations. This builds a more personalized experience, increases customer engagement, and increases conversion rates.
Benefits of Customer Data Platforms
A CDP is an asset for a company's tech stack. It complements your existing software and makes it more effective at improving customer relationships, personalizing campaigns, and driving better business outcomes.
Here are the benefits of using a customer data platform.
1. CDPs prevent data silos.
A data silo is a storehouse of information that's available to one department and isolated from the rest of an organization. For example, while marketers use analytics and attribution data to understand users, sales teams focus on CRM data to close deals. These silos do not allow both teams to collaborate and create accurate customer profiles. CDPs change that.
A CDP retrieves customer data from touch points like your CRM and analytics tools and stores them in one place.
2. CDPs ensure data protection and privacy.
Cybercrime is a gigantic business with an annual revenue of $1.5 trillion. Data silos can put your customers' information at risk.
Data silos make your systems more vulnerable to attack. When you store data in multiple locations, you may be unaware of a breach.
The good news: CDPs centralize your data. With this tool, you can conduct a data audit to identify and halt breaches. This keeps you and your customers safe from potential threats.
3. CDPs unify customer data.
Marketing teams that run multiple campaigns might not have time to communicate, share, and educate team members on the data they gain. This is where CDPs take center stage. These systems unify customer data, make data easier to manage, and set up your marketing campaigns for success.
4. CDPs collect first-party data.
First-party data is gold for any business. Today, 93% of marketers say using first-party data to understand their audience is essential, according to Acquia's Customer Experience Trends Report. Unlike third-party data, you get first-party data directly from your customers. Meaning, first-party data gives you a more accurate picture of your audience.
CDPs gather first-party data as customers interact with your website, social media profiles, emails, surveys, apps, products, and every other online property you own. With this information, you can make informed business decisions.
What to Look for in a CDP
You may be in the market to buy a CDP. Or perhaps your company can build the core functionalities of a CDP. That said, you'll want to weigh the pros and cons of buying versus building a CDP.
Whichever route you choose, you'll need to make sure your system has access to the following essential features.
AJ Liddell, Director of RevOps at Blue Frog, says, "My biggest recommendation to anyone selecting a CDP is to define business use cases, data needs, and process around them before evaluating any platforms. The biggest concern when implementing a new platform is that it will not strategically align to the business’s needs and will not be adopted by end users leading to a sunk technology cost."
Liddell adds, "Including stakeholders in the early planning stages and finding a system that best matches their needs ensures organizational buy-in when the platform has been rolled out. Include stakeholders, define processes, then determine which tool best aligns; don’t buy a tool and force it into a process that is not compatible."
See below for the five core elements of the best CDPs.
1. Identity Resolution
Identity resolution is the ability of a CDP to understand how customers interact across multiple channels, devices, and touchpoints. This integral function allows CDPs to use a customer's history to create a single profile of a user.
2. Data Integrations
The best customer data platforms unite information from your ad-tech and mar-tech stacks. Therefore, your chosen CDP should be able to ingest and activate data from your current tools in real time.
3. Custom Audience Segmentation
The best CDPs allow you to create custom audiences using any data point. With this, you can build personalized campaigns that target customers across social media, email, and search engines.
4. Advanced Analytics
Marketers usually have more data than they need. So when building or buying a CDP, you want one that's equipped with advanced data analytics features and AI-powered analysis. This helps marketers create dashboards containing relevant metrics. Make sure you can export this data to share with team members.
5. Security and Privacy Compliance
The biggest privacy sanctions have resulted in fines of over $1 billion. To ensure your company doesn't fall into hot water, make sure your CDP is secure. Confirm the security and privacy standards of a CDP by checking if they have certifications like ISO 27001, ISO 27017, ISO 27018, CSA Star, and GDPR Seal.
Now, let's examine the process of choosing a CDP.
5 Steps for Choosing the Best Customer Data Platform
If your company wants to buy a CDP, the market has an abundance of options to offer. However, not every solution will be a perfect fit for your company.
The five steps below can help you identify the best CDP for your company. You'll also learn how to communicate the importance of a CDP to ensure the adoption of your new platform.
1. Get stakeholder buy-in.
CDPs ingest data from different departments of your organization. For this reason, getting buy-in from internal stakeholders is vital when choosing your CDP. Your allies should come from the sales, IT, customer success, marketing, and finance departments.
Including IT in the discussion seems obvious. This department knows if a CDP's SDKs or APIs fits your company's tech stack. However, discussing a CDP with your organization as a whole allows you to ensure multiple types of data are collected.
Sales teams use a CRM platform to manage their pipeline.
Customer success teams use onboarding tools to discuss with new clients.
Marketing teams use analytics and attribution tools to track metrics like MQLs.
Product teams use analytics data to improve the user experience of your web properties.
Getting input from these teams makes you know what they hope to get from a CDP. This will also improve companywide adoption of your CDP.
2. Outline your core challenges or use cases.
What your company expects from a CDP likely goes beyond the general function of consolidating data. Outlining use cases specific to your brand will help you find your ideal customer data platform.
While this is the responsibility of your stakeholders, you'll need to identify common themes. This allows you to find and evaluate CDP vendors that can solve the challenges you outlined.
Some common CDP use case cases are:
Customer data unification.
Having actionable analytics.
After outlining your use cases, reach out to your peers in companies that use a CDP. Your goal is to learn about the CDP they use for addressing similar challenges. This will help you build a shortlist of CDP solutions.
3. List the tools you need to connect to your CDP.
Knowing the tools you'll connect to your CDP will help when evaluating vendors and assessing their integrations.
For instance, if one of your goals is to have a cohesive multichannel messaging strategy, you may need Google Analytics, live chat tools, business intelligence tools, and advertising tools like Facebook.
The outlined use cases in the previous step are also useful here. They can help you drill down on the tools you need. Make sure your CDP integrates with pre-existing systems. If a CDP is incompatible, rule it out.
4. State the capabilities of your ideal CDP.
Beyond integrating with your existing tech stack, considering the core capabilities of a CDP is essential. For instance, if your company handles sensitive customer data, a CDP that's ISO 27001- or SOC 2-certified is ideal.
Other requirements to look out for are:
Level of quality enforcement.
GDPR and CCPA compliance.
Identity resolution features to get a 360-degree view of your customer journeys.
CDPs with control over different roles and permissions.
The volume of data you can store.
5. Compare CDP vendors.
Remember: All CDPs aren't created equal. Some may work best for small businesses and others for midmarket and enterprise companies. So narrow your search for a CDP accordingly.
After finding some excellent CDPs, ask your stakeholders to rate the CDP's ability to meet their team's requirements. They could even take the CDP for a test drive by using a free trial. From there you can find a solution that works best.
The Top 5 Customer Data Platforms
There are many customer data platforms available in the market. If you're on the hunt for your very own CDP, start your research with these five popular options.
Segment is a customer data platform that helps companies collect, clean, and activate real-time first-party data across 300+ tools. Used by over 25,000 companies, Segment provides a solid foundation for any data management strategy.
Segment also allows companies to use a single API to collect customer data from their business segments like sales, analytics, and customer service.
G2 Rating: 4.6/5
Pricing: Segment has three pricing plans. You can opt for a free plan, a $120 per-month team plan, or a business plan with custom pricing.
Emarsys is a customer engagement platform with robust CDP capabilities for streamlining customer data. The company serves over 1,500 businesses in the retail, ecommerce, travel, sports, consumer products, and media industries.
Emarsys includes predictive analysis, automated AI-based updates, reporting and analytics, and cross-channel automation and personalization. You can also explore industry-specific solutions available for the ecommerce, travel, and retail sectors.
G2 Rating: 4.6/5
Pricing: Emarsys provides custom quotes. So you'll have to contact the Emarsys team to find out the price.
Bloomreach is an end-to-end customer data platform with GDPR and ISO certifications. The platform allows companies to integrate with 90+ connectors, like Facebook ads, Google ads, Google Analytics, and more.
Exponea helps its customers in fashion, retail, consumer goods, travel, and other miscellaneous industries to build a single customer view of users. This unified view allows brands to track and interpret patterns in customer behavior.
G2 Rating: 4.7/5
Optimove is a relationship marketing hub with CDP functionality. Used by 500+ customers, the GDPR- and ISO-certified platform creates single customer views with first-party data, third-party data, and campaign response history. This allows the platform to segment data, enabling businesses to create personalized multichannel campaigns.
With Optimove, you have access to scalable data infrastructure, customizable dashboards, predictive customer analytics, and other features for boosting customer engagement.
G2 Rating: 4.6/5
Pricing: Optimove provides pricing upon request.
Tealium AudienceStream is a customer data platform that enables businesses to build detailed customer profiles. The platform guarantees the safety of customer data. This CDP has HIPAA, ISO 27001 and 27018, Privacy Shield, and SSAE18 SOC 2 Type I & II security certifications.
Notable Tealium features include identity resolution, predictive machine learning, and 1,300 integration options for getting your customer data.
G2 Rating: 4.4/5
Pricing: Tealium AudienceStream CDP provides custom quotes like many CDP providers.
Refined Data is Usable Data
Without refined data, poor customer engagement, and wasted marketing budgets become the norm. CDPs fix all these by making processed data central to your company's operations.
CDPs are a must-have for companies that want to harness first-party customer data, create accurate customer profiles, launch personalized marketing campaigns, and drive revenue.
If you haven't already, start exploring which CDP is the best fit for your business.