It’s so easy to buy products online in this day and age that the internet became a huge shopping mall. People enter websites, look around, take one or two products to look closer, sometimes they even put something in the cart, but then they decide to go away without buying anything.
Whatever the reason is for people to abandon carts, every action taken by them is recorded and stored in a database the company can then use for multiple purposes.
Although data collection can be a controversial subject, it’s undeniable it is essential for digital marketing strategies. Ultimately, companies need to know what their customers are doing and how they behave to improve their approach. For that reason, many technologies have become available to try to help marketing teams.
However, none of them has gained attention like the newest software in the market: the Customer Data Platform. Everything you need to know about how a CDP works, what are the benefits, why it’s important to use one, and much more is presented next.
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What is Customer Data Platform?
Also known as CDP, the Customer Data Platform is a software that gives assistance in data collection, processing, and execution. These data can be used for multiple purposes in a company’s strategy — for example, to improve a marketing campaign or sales method. While there are other kinds of software that gather data, a CDP makes the process happen in a simpler way.
Basically, what it does is put together the most relevant and important information collected throughout all sources the company currently uses. Those include the company’s website, blog, social media, and so on.
Having a system that organizes data like that, your job can be focused on using the information provided to improve your company’s overall strategy. For starters, you can create extremely accurate buyer personas with those data. Even more than that, you can also focus your strength and team to create the perfect content for them.
How did CDP start?
CDP started because customer data has become huge nowadays. Every team inside a company can benefit from using data collected from both online and offline (in-store) situations. The need to gather all of this information in just one system was getting bigger by the day. For that reason, Customer Data Platform came to resolve this issue.
Instead of trying to guess and create the perfect image of your customer, you can essentially have the real deal in hands through CDP data. This doesn’t mean you’ll be mistake-free when designing your buyer personas. However, it does mean you’ll be the closest to reality as possible. But keep in mind, the CDP system is always being updated, so you should review and update your ideal customer profile with a certain recurrence.
How is information collected?
The Customer Data Platform can collect data from many different sources.
Data can be collected every time a customer interacts with your brand online. This means not only your website and blog, but also advertising channels you may use, landing pages, email, and payment channels. Given all the different ways and sources information can be collected from, CDP comes as a way to keep everything stored in solely one place.
It’s also important to take into consideration the type of information which is collected. The easiest and most common to get is identity data, which is: name, demographic, social and contact information. Descriptive information comes right after that, including career, lifestyle, family and hobby information.
Lastly, behavioral data is essential. It’s from this profile you’ll be able to make precise decisions for your strategy. Here, you’ll be able to look into how the customer acts online. For instance:
- what products were bought;
- what products were returned;
- number of abandoned carts;
- how many emails were opened or marked as spam;
- what pages were visited;
- how much time was spent on your page.
In addition, unknown prospect data is also collected and stored. So, if the prospect comes to a point where they decide to share their data, those details will be aggregated into the database of the CDP. Then, being a part of the perfect customer profile the whole integrated system creates for the company.
There’s also qualitative data, which covers information such as opinions and motivations of the consumer. This is the kind of data you’ll get from opinion polls and online surveys about your products and brand.
How can you access the data?
Once the information is collected, the software stores it in its database and filters what it considers most relevant. After that, a series of algorithms is applied. Therefore, creating a customer profile that matches the reality of your business — it’s basically a segmentation technique.
Moreover, the company will be able to choose which sectors and teams can have access and make use of determined information.
Why is it important to gather all this information in one place?
In order to actually take advantage of the act of gathering customer data, you need to understand what the reports are telling you. Ordinarily, that would mean checking and separating every single stat into what’s helpful and what’s not. In contrast, when you use a CDP, all that process will be automated for you. Most importantly, with everything you need to know about your customer being easily accessible. Within this one software, it will be possible to completely transform your customer experience for the better.
Since we have so much technology available nowadays, it’s only logical to make proper use of it. When marketers started to feel they needed help to learn more about their clients, the Customer Data Platform was the way they found to fulfil that need. Even though data collection can be a delicate subject, working with it is an approach that’s becoming more popular by the day. For that reason, it’s also important to understand why consumer data is required.
Why do you need to know your consumer?
To make it clear as possible, one thing we need to highlight is: the main reason for using a CDP is to really get to know your consumer. As marketing strategies evolved throughout time, one that came up and has shown itself quite effective is content marketing. Accordingly, to create content, you need to know who you are talking to.
And how can you comprehend who you need to talk to? The answer is: by data collecting. So, you can put together the dots and see how CDP is useful in this situation. When the company’s buyer persona is defined and accurate, the entire operation of content creation becomes more effective — which means, your conversion rate will have better results.
After all, talking like a young adult and using all sorts of slang while trying to sell your product to a senior business man makes no sense. That’s why customized content makes people relate better to what you are trying to tell them. Whether it’s a top of funnel or a bottom of funnel content. Because you care about the customer enough to learn what they like, what they want, and what’s the best way to address them, you’ll be rewarded with amazing outcomes.
When should a Customer Data Platform be used?
There are many cases where CDP can be used to bring benefits for the company. As an example, avoiding data silos (information that isn’t shared) is key to guarantee a corporation environment is friendly and collaborative.
Because CDP allows quick access for different teams throughout the entire company, data silos is no longer a problem. Of course, it’s still possible to limit who will have access and be able to use the data, in case that’s a requirement for the company. Yet, the groups that need it will have easy access and the information is never out of date. More than that, you should consider a Customer Data Platform when you want to:
- make users more engaged;
- update your data collection system;
- have real-time data collection;
- improve your ROI;
- automate data analysis work
- cover overall online interaction with your brand.
It’s incredible how many things you can accomplish using the exact same database. All the above, for example, are part of what you can do using a Customer Data Platform. To illustrate, the first on the list, making users more engaged, can be done by analyzing the ideal customer this software put together and talking in their language. Whether that is formal, informal, using images, videos, etc.
If you need a new system that will make your life easier as a marketer, you should definitely give CDP a chance. It’s not only the best known software to improve marketing and sales strategies, but also the best to keep data fresh. Leading to the next item: real-time data collection is pivotal nowadays.
Since there’s so much competition in the market, everyone wants to be one step ahead of their competitors. As a way to achieve that goal, real-time data can be extremely valuable. If you know what action the customer is taking at the right moment he is doing it, you can make much faster and more assertive decisions for your business’ success.
Furthermore, analyzing customer data from online behavior can help understand more about a customer lifestyle, what habits and preferences they have in both their online and “offline life”. This type of information makes it simple to personalize advertising materials for your audience. Consequently, an increase in return of investment will happen.
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How can a company benefit from CDP?
Regardless of the connection between CDP and marketing, that is not the only division in a company to take advantage of the software. Indeed, it was previously mentioned that many sectors in an organization can have access to the information provided by the CDP. Nonetheless, to make it even more apparent, some teams that will surely benefit from the database include:
- marketing team;
- sales team;
- executive team;
- product team;
- engineering team.
For a marketing team, comprehending the whole customer journey is vital. That way they can work on making the journey shorter by creating campaigns that will accelerate the process. Mainly by improving customer segmentation, which is also something you will be able to do through a Customer Data Platform.
You can also identify if there is a particular step in this journey where clients abandon the process. What went wrong there? With all the data in your hands, you’ll be able to figure it out and fix it.
Since a consumer’s observation is simplified by the customer data software, understanding their actions and decisions becomes easier as well. Some data that can be concluded from a CDP analysis are:
- which device was used to access the website;
- which pages and products were visited;
- which campaign took the consumer to complete a purchase;
- which email had effective results;
- how much time it took the person to complete the journey.
More than understanding leads, it’s possible to make more accurate qualifications for the sales team to take over if that’s the case. This group will also have full access to everything they need to know about the customer inside the platform, without the need of going through all the information in a reunion with the marketing team.
Then again, if the lead is still not ready to complete a purchase, the marketing team will know how to work on the matter though CDP data. Besides, predictions for the company’s future will also be more accurate since it will be established by real and reliable data that is constantly being updated.
An executive team, much like the marketing group, will benefit from CDP to understand customer journeys and make decisions based on solid data. All of which will guide to superior results. Meanwhile, a products team can find everything they need to measure key performance indicators (KPIs). Consequently, new processes and strategies can be implemented much faster, taking a few days — when normally, it would take months.
Time is what an engineering team gets from using a Customer Data Platform. Instead of needing to combine data from several tools, they can have all the necessary data integrated into one system.
What is the connection with CRM?
It’s essential to talk about Customer Relationship Management (CRM) when discussing CDP. One is commonly mistaken for the other. In fact, they have similar characteristics, but they are far from being the same thing. Even though CRM is in the market longer than CDP, it’s not as complete of a solution as the second software.
What is CRM?
One reason that makes people think CRM is the same thing as a Customer Data Platform is the fact it works with data collection. What this system does is focus on known customers that were previously qualified by the marketing team. This means the data from CRM is mainly for use of the sales team.
The main reason for the development of this software was to improve sales management and, as the name says so itself, the relationship of the company with the customer.
How does CRM work?
First, it registers the client and all the information available about them. Of course, the team can add information and make notes about each customer. Then, the system analyses the data gathered to better understand the company’s sales pipeline and forecasting. Overall, CRM is a software to connect with the customer and take action steps to complete a sale.
How’s it different from CDP?
While CRM works only with known customers, the Customer Data Platform works with both known and unknown. More than that, it analyses customers behavior and journey based on their online history. The main difference relies on the fact CDP is mainly used by the marketing team before any sales happen.
This is why the “trial and error” aspect of the CRM is eliminated. The CDP allows a company’s teams to make informed and consistent decisions to improve the sales pipeline strategy.
Why is CDP mistaken for DMP?
Another platform that is, in many instances, wrongly identified as CDP is the Data Management Platform (DMP). Much like the relationship between CRM and CDP, here we have some similar features. Still, DMP is not the same thing as CDP and you’ll understand why next.
What is DMP?
There’s no mystery to what’s a DMP: it’s a data management platform. What we can talk more about is what it’s used for. That is, its main goal is to improve advertising campaigns. Using a database system, a DMP will segment a target audience looking to ameliorate results for the company.
How does it work?
The data DMP works with are actually bought from an external source. They are, essentially, purchased cookies. Which means information such as names, age, and emails aren’t known by the platform. In addition, DMP can only store data up to 90 days — the lifetime of a cookie. This platform has one more thing that’s important to know: it does not keep a history of the data. So, all data that expires is gone forever.
How’s it different from CDP?
First, CDP does keep a history and retains data for a longer period. Plus, it collects mainly first-party data, meaning, the consumer gives most of the information to the company. In spite of that, a Customer Data Platform also has access to second- and third-party data. Important to add that none of this information is anonymous, each customer has a name and their own attributes.
In summary, having more control over data collecting, a user’s online performance as well as the contact they make with your company is a facilitating solution to make progress and enrich your outcomes. Whether they’re related to sales, customer relationship, or customer engagement.
Are you interested in a Customer Data Platform solution to improve your results? Talk to one of our consultants now and learn more about Arena’s CDP solution.