Customer Data Platform is a software capable of unifying data from various sources, gathering quantitative and qualitative information.
Customer Data Platform
June 10, 2020
From personalized advertising campaigns to attribution modeling, CDPs can help you extract the best out of your organization’s data
“Data is the new oil”, says the business cliché. No matter the sector your company operates, it certainly collects data from a number of sources – from unstructured qualitative data (from social media and call centers) to quantitative insights on paid campaign efforts and sales channels.
Marketing executives have increasingly more customer interactions to be aware of and are required to get a broad, deep picture of the audience’s needs and pain points.
A few years ago, it would have been enough just to have a DMP and CRM tool to manage customer data. They are still important today but hold limitations in capturing users’ journeys and profiles as standalone platforms.
A 2018 survey made by Forbes with 400 marketing leaders showed that most of them saw a gap in data management in their organizations, which is still true today. Only 19% reported having a robust set of analytics and technology tools to support customer-data-driven decisions. Besides, sometimes it can be challenging to make data accessible (and actionable) for marketing teams.
That is where customer data platforms come to play, with the purpose of connecting the dots between different data sources. Last year, the Gartner Institute pointed customer data platform as one of the four main emerging trends for marketers in 2020, along with blockchain, AI, and real-time marketing.
A Customer Data Platform is a software capable of unifying customer data from various sources, gathering quantitative and qualitative customer information across multiple touchpoints. It aggregates first, second and third-party data, as well as information collected from multiple channels, systems, and devices.
If you lead marketing at a large company, you know how difficult it can be to connect user’s data, once the customer’s journey has become more complex with so many devices and channels available.
With that in mind, we have prepared a list of 20 ways customer data platforms (CDPs) can improve your marketing strategy and results.
CDPs can basically spot who your customers are – almost literally. They are able to filter all collected data through algorithms to determine unified customer profiles. In a single platform, It compiles identity, descriptive and behavioral data that can give you context on current customers and prospects, making it easier for marketers to build accurate personas.
The type of data your team chooses to collect will vary according to your business and industry. If you work at a media company, for example, you’re probably more interested in customers’ preferred media channels than details about customer’s cars, information that would be crucial for car dealerships, on the other hand.
Marketers know that customers’ preferences evolve over time, but most data management tools can’t always spot those changes. In CDPs, the processing of data happens in real-time, which makes it possible to spot changes in customer behavior in both the short and long-term.
If a prospect stops using YouTube and migrates to Twitch, for instance, your team can quickly detect it and redirect campaigns.
The long-term approach is also possible because CDPs can hold data for long periods of time, unlike data management platforms (DMPs), which usually hold data up to only 90 days (a cookie lifetime).
Much of the data from an organization is generated and stored in different systems and departments, which makes it rarely accessible to other parts of the company. The result? A less collaborative corporate environment, less productivity, and less accurate customer profiles.
With CDPs, a great deal of a company’s data can be stored in a single, user-friendly interface.
For marketers, relying on other departments for reports and insights can be time-consuming and unproductive, since not everyone is on the same page about marketing needs. In that sense, CDPs also optimize the work of marketing professionals, because they can be managed by marketing teams instead of adjacent teams (like sales) or third-parties.
Yes, CDPs should be useful to a variety of departments within a company, but every team can adapt their use according to specific goals while having access to all kinds of company data. That way, teams can also quickly scale marketing efforts and get new processes started in days, not months.
These days, brands don’t want to know just how a customer relates to their brand and category, but also what are his or her life aspirations and beliefs. Beyond customer profiles, CDPs can provide personality and behavioral data about customers, helping you understand their inner motivations as people, not just as customers.
Almost like a social listening tool, you can find out the subjects they are discussing, topics they search for, preferences on content, politics, or products.
In a recent report, PWC found that the number of companies investing in omnichannel experiences has grown from 20% to more than 80% in recent years. While some marketers still struggle to be truly “omnichannel”, CDPs are able to track both online and offline customer data.
A good CDP can combine information from various online and offline tracking applications, to get a full picture of where customers go, what products they search for, what they watch, read, or buy. A regular CRM tool, as a counterpoint, cannot pick up on offline data unless it’s manually setup.
Connecting interactions across multiple devices is also crucial for marketers who wish to provide seamless experiences to the audience. The CDP can connect interactions from a single person across different interfaces.
The platform captures information such as time spent on the page, email and cookies used. If a customer accessed your page through different browsers at a desktop, and then accessed again through phone, a few days later, you’ll know it.
A CDP can automate the usually manual process of creating advertising audience clusters. From there, your team can use data to drive campaigns and promotions across multiple touchpoints, creating highly targeted, personalized advertising campaigns (CDPs can be integrated to Facebook pixels and Google Ads, for example).
Without a CDP, building these campaigns for complex audiences would take a lot more time and effort. The CDP lets you access clusters of customers and acknowledge what products they show interest in, as well as their purchase intent and how likely they are to churn.
A CDP is where Marketing, Sales Customer Experience and Customer Success meet. By centralizing information from these areas in a single platform, companies can optimize their marketing resources and efforts. If marketers can find out exactly where are the friction points in customers’ journeys, it’s more likely they will come up with the right messages and campaigns for every stage in the conversion funnel.
Ultimately, CDPs can support marketers in attracting more qualified leads. A study by Forbes shows that 53% of marketing executives are using CDPs to engage with existing customers’ needs, increasing the likelihood that they will become recurring clients.
As customer data platforms can be considerably automated, they bolster efficiency and reduce operational costs. After all, if you know exactly who your customers are and can streamline the targeting process, it’s likely you’ll impact the right customers at the right moment with the right formats.
As a result, you can optimize Costs per Click (CPC), Costs per Impression (CPM), and Customer Acquisition Costs (CAC).
In the myriad of data collected by CDPs, there are also quantitative and transactional data that reveal how your customer relates to your company. From buying history to abandoned carts, email click rates and responses, website visits, product views and social media engagement, your team can get a better sense of how’s the relationship between your audience and your company – and then manage it effectively.
A Walker study discovered that, by the end of 2020, customer experience will overtake price and product as the main brand differentiator among customers. When we talk about big companies and huge data sets, the lack of a CDP can actually result in poor customer experience.
Not integrating data results in friction along the customer journey, no wonder customers often complain about emails suggesting a product they just bought, or say they were impacted by wrongful ads and recommendations. Nowadays, people simply expect your company to know about their journey across different channels, and CDPs can help you a lot with that.
Predicting customer behavior and preferences is what built companies like Amazon and Netflix. Predictive marketing is now becoming increasingly used by all sorts of businesses. This marketing technique, which determines the probability of success of different marketing strategies, is essentially fueled by data.
Armed with a CDP, data scientists and marketing analysts can gather data from several sources and apply predictive models with a great level of accuracy.
With so many touchpoints with the audience, It is often difficult for companies to build a proper attribution model. According to Google, almost 80% of all transaction value involves at least two marketing channel interactions.
The customer data platform can optimize the attribution framework since marketers can send attribution data to the CDP and have a more accurate view of campaign performance.
By having a more holistic approach towards data, marketing teams can use CDP to measure and adjust expectations about key performance indicators (KPIs). You could even find out that your team is not tracking the right indicators, and choose new ones according to your strategy.
However, when it comes to KPIs, CDPs must be used thoughtfully: more metrics possibilities don’t necessarily mean you’ll understand your customer better, so beware of the data that actually informs your strategy.
At the end of the day, marketers want more control over events in their channels, and so CDPs allow companies to deploy customers’ profiles to other marketing tools. Customer data platforms can be integrated to “delivery platforms” or “engagement platforms” to enable the planning of campaigns and messages.
CDPs can integrate your company’s email marketing or marketing automation software, website or social media platforms, and also live chat, CRM, analytics, and SMS tools. The amount of tools companies connect to their CDPs has to do, again, with the specifics of their business. Large businesses are likely to connect more tools than small companies.
One of the challenges marketers face is to balance personalization with data privacy, considering emerging privacy regulations worldwide. At first sight, it might look like a CDP could worsen privacy problems, since it tracks all sorts of data. From a practical standpoint though, a customer data platform can actually help companies comply with data privacy laws.
To start, it collects mostly first-party data, which is key to data privacy. Second, it offers privacy configurations that can enforce your privacy policies. And third, a CDP acts as a single access point for data, which is safer than having multiple access points.
CDPs are also a key engine for experimenting with emerging technologies and services. Imagine your marketing team wants to test an integrated campaign with a voice assistant for smart devices. While voice-activated marketing is still limited and won’t bring you scale, for now, it is seen as a prominent marketing channel for the future.
By knowing your customers’ profiles, you can spot promising channels and formats and test them out with a small cohort of consumers. While combining insights to A/B tests, you might also come up with new business solutions and even ideas for revenue streams.
In the age of Netflix and Spotify, customers expect personalized content that matches their particular moment in the customer journey. In that scenario, marketers have the challenge of being relevant and timely in their advertising efforts.
CDPs can help brands discover the formats of content and notifications that are more appealing to each customer, as well as when they tend to be more receptive to brands’ communication.
If you once needed full customer research in order to understand customers’ unique needs, CDPs can give you hints about their preferences and needs. Because CDP gathers loads of qualitative information, it can also guide your product strategy.
By checking users’ feedback regularly, you can prioritize your product and service offerings to more closely match with customers’ needs. Or, you can identify trends and come up with completely new products.
That is a lot of information about customer data platforms, right? It’s a lot to take in, so take a deep breath. Now, If you plan to purchase a CDP for your company, the next step is to check out the platforms available in the market and consider which one is the best fit for your business goals.
You might want to check out the specifics of Arena’s CDP, one of the most robust tools in the market. Register to this link to talk to one of our consultants and find out how our CDP can help your business.
