What is a Customer Data Platform and what’s in it for you?

by Marcel Nanning | Last Updated: September 25, 2023

Just got used to CRM, now I have to think about a CDP again? Well, you don’t have to but it might be very wise. Especially if you are dealing with many user profiles. In the increasingly competitive world of marketing and sales, it is essential to manage customer data in an organized and intelligent way. Here, a Customer Data Platform (CDP) can be the golden key to success.

In this article, we dive deeper into what a CDP is, how it differs from CRM, which leading CDP software systems there are, what to look out for when buying a CDP, key features, integrations and the steps to take when selecting and implementing a CDP.

1. What is a Customer Data Platform?

A Customer Data Platform (CDP) is an advanced software system that collects, consolidates and analyses customer data from various sources. It provides marketers and sales professionals with a holistic customer view, allowing them to better understand who their customers are, how they behave and what their needs are.

These systems mainly focus on collecting data from different systems to create well-rounded customer profiles based on that data. With this, organisations can create targeted marketing campaigns and customer campaigns that best match the recipient’s needs.

Responding to the needs of the target group

By deploying such systems, campaigns can take into account the:

• behaviors,
• desires,
• life events and
• information needs of target groups.

Information from customer data platforms can also be used to better match products and services to the market; thus, they are also a valuable resource for the development or R&D department.

Market developments Customer Data Platforms

The market for CDPs is growing. According to this report by Fortune Business Insights, we are currently talking about a market size of 1.75 billion with a forecast of 9.9 billion by 2030 😵‍💫. So a significant increase in this type of software.

2. Main differences between CRM and CDP

Although both CRM and CDP focus on customer data, there are some crucial differences between the two systems. CRM software is mainly focused on managing customer relationships, while CDP is more focused on collecting and centralising customer data from different sources to get a more comprehensive picture of the customer.

Here are the key differences between CRM and CDP:

1. Objectives and focus

The main difference between CRM and CDP lies in their purpose and focus. A CRM system is primarily focused on managing relationships and interactions with existing customers. It focuses on capturing customer data, managing contacts and tracking sales and service interactions. CRM software is often used by sales and customer service teams to improve customer relationships and boost sales. Of course, most CRM solutions are also used to support lead generation activities. But the main focus is still on relationship management.

A CDP, on the other hand, focuses on collecting and centralising customer data from various sources, both online and offline. The goal of a CDP is to create a comprehensive and integrated customer profile, a so-called 360-degree view of the customer. This enables marketers to develop more personalised marketing campaigns and better understand customers.

This is of course interesting for companies with a lot of data. But it can also be of interest to organisations with fewer customers/prospects. We increasingly see CDP popping up in b2b organisations.

2. Data collection and integration

Another key difference between CRM and CDP is how they collect and integrate data. A CRM system mainly collects data about existing customers and their interactions with your company. It focuses on capturing transaction data, contact details, and communication history. This data is often mainly entered manually by sales and customer service staff.

A CDP, on the other hand, automates the process of collecting and integrating data from various sources, such as websites, mobile apps, emails, social media, and more. It uses advanced technologies to collect, consolidate, and transform data, creating a more comprehensive customer profile without the need for manual input.

3. Marketing capabilities

While CRM is mainly used by sales and customer service teams, a CDP is mainly aimed at marketers. A CDP offers advanced marketing capabilities, such as customer data segmentation, marketing campaign personalization, customer journey analysis, and delivering relevant content at the right time to members of a DMU. This enables marketers to develop more effective and targeted marketing strategies.

CDP and CRM overlap

As you can see, the differences are not always obvious. There are plenty of examples of CRM systems that automatically populate data, just as customer data platforms do. On the other hand, there are also CDPs that provide features of CRM systems so that the customer can cover many activities of the process with one tool. crm and cdp make a perfect couple. Combining these two tools increases the quality of CRM data and enriches CDP data.

3. Best CDP software systems on the market

There are numerous CDP software systems on the market, each with its own unique features. We discuss some leading platforms and examine their functionalities and advantages.

• Twilio Segment
• BlueConic
• Emarsys
• Optimove

Twilio Segment

Benefits:

Twilio Segment is a Customer Data Platform (CDP) that helps companies collect, centralize and use customer data for personalized marketing.

Some of the key benefits include:

1. Data integration: Twilio Segment makes it easy to integrate data from different sources, creating a comprehensive customer view.
2. Real-time data: The platform provides real-time data collection and analysis, allowing companies to respond to customer behavior instantly.
3. Marketing automation: Twilio Segment offers powerful marketing automation capabilities, including segmentation, personalization and campaign management.
4. Flexibility: The platform is highly customizable and can be integrated with different marketing tools and systems.

Disadvantages:

1. Complexity: For smaller companies, the complexity of Twilio Segment can be challenging to implement and use.
2. Cost: The cost of Twilio Segment can add up quickly, especially for companies with large amounts of customer data.

BlueConic

Benefits:

BlueConic is also a CDP with a strong focus on understanding customers and providing personalized experiences.

Key benefits include:

1. Real-time customer insights: BlueConic provides real-time insights into customer behavior and preferences, which helps marketers take immediate action.
2. Cross-channel personalization: The platform enables personalization of customer interactions across channels, such as email, website, and mobile apps.
3. Data privacy: BlueConic places a strong emphasis on data privacy and compliance, making it easier for companies to comply with regulations such as the GDPR.

Disadvantages:

1. Complexity: Like other CDPs, BlueConic can be complex to implement and use, especially for smaller teams.
2. Cost: The price of BlueConic can vary depending on the size of the implementation, which can be financially challenging for some companies.

Emarsys

Benefits:

Emarsys is a marketing automation platform that helps create personalised marketing campaigns.

Some of the key benefits include:

1. Powerful automation: Emarsys offers advanced automation capabilities for email marketing, social media and more.
2. Segmentation: The platform enables detailed segmentation to deliver targeted marketing messages.
3. Cross-channel marketing: Emarsys supports marketing across multiple channels, including email, SMS and social media.

Disadvantages:

1. Cost: Emarsys can be pricey, especially for smaller companies.
2. Learning curve: The platform may require some time to fully understand and use, which can be challenging for newcomers.

Optimove

Benefits:

Optimove is a marketing automation platform that focuses on customer retention and loyalty. Key benefits include:

1. Customer segmentation: Optimove provides powerful segmentation capabilities to analyse customer behaviour and optimise campaigns.
2. Predictive analytics: The platform uses predictive analytics to predict churn and improve customer retention.
3. Cross-channel engagement: Optimove supports engagement across channels, including email, mobile and social media.

Disadvantages:

1. Price: The cost of Optimove can be high, especially for companies with extensive customer data.
2. Complexity: The platform can be complex to implement and manage, which may require additional training and resources.

When looking for a CDP for your organization, it is advisable to also look at these solutions:

• Tealium
• TreasureData
• FirstHive
• Datatrics
• Relay42
• Nominow.

4. What should you look out for when buying a CDP?

Before buying a CDP, there are some important factors to consider. We discuss the various criteria, such as data security, scalability, flexibility and cost, that can influence your choice of the right CDP platform.

a). Objectives and needs

Before you start evaluating different CDP options, it is crucial to clearly define your objectives and needs. What exactly do you want to achieve with the CDP? Do you want to create personalised marketing campaigns, improve customer segmentation or increase customer loyalty? Identify the specific features and capabilities you are looking for in a CDP, so you can focus your search for a platform that fulfils these needs.

b). Data security and privacy

Managing customer data comes with great responsibility in terms of data security and privacy. Make sure the CDP platform meets the required security standards and complies with data protection laws and regulations. Such as GDPR (General Data Protection Regulation) or other relevant legislation in your region.

A reliable CDP should provide robust security measures to ensure the confidentiality and integrity of customer data.

c). Integration possibilities

A CDP can maximise its potential when it integrates seamlessly with other systems and tools you already use. Think CRM, email marketing platforms, analytics tools and advertising platforms. This is one of the most important features to view a CDP critically. After all, the whole idea is to allow data from other sources to come together and be used conveniently. Check whether the CDP can be easily integrated with existing systems to get a complete picture of customer interactions and streamline marketing and sales activities.

d). Scalability and flexibility

It is important to choose a CDP that can grow with your business. Check whether the platform is scalable enough to meet the growing needs of your organisation. So look critically at how flexible the solution is so that a changing business environment and technological developments are not a problem.

e). User-friendliness

A user-friendly interface and intuitive navigation are essential when selecting a CDP. The platform should be easy to use, even for non-technical users, so that your marketing and sales teams can work with it effortlessly and get the most out of it. In practice, this is far from obvious.

f). Customer support and training

Implementation partner support is invaluable when using a complex tool such as a CDP. Check the availability of customer support and quality of service. In addition, access to training and educational resources can help your team make the most of the CDP and get up and running quickly.

So also look at how the software is offered. Do you buy it directly from the source (and are you therefore also dependent on this company) or are there resellers who can also help you make the best use of the tool?

g). Pricing model

Finally, compare the pricing models of different CDP vendors. Pay attention not only to the initial cost, but also to any additional costs, such as licences, data volume or additional functionalities. Make sure the chosen price model fits within your organisation’s budget and does not produce any unexpected surprises.

5. What are the benefits of a Customer Data Platform?

We list the benefits of a Customer Data Platform so you can determine for your organization whether it can be a game-changer for you.

#1. Central storage and management of customer data

One of the biggest advantages of a Customer Data Platform is the ability to collect and manage all customer data in one central location. Traditionally, customer data is spread across different systems and channels, such as CRM, e-commerce, email marketing, social media, and more. This makes it difficult to get a holistic view of the customer.

With a CDP, however, companies can integrate all data in one place and create a 360-degree customer view. This enables marketers and others to gain better insight into customer behavior and understand their needs.

#2. Improved customer segmentation

Understanding customer segments is crucial for effective targeting of marketing campaigns. With a Customer Data Platform, companies can segment customer data based on demographics, behavior, preferences, and more. This enhanced customer segmentation enables marketers to send targeted and personalized messages to different groups of customers, significantly increasing the likelihood of engagement and conversion.

#3. Personalisation at scale

Personalization is a powerful tool to build customer loyalty and improve the overall customer experience. However, it is challenging to apply personalization on a large scale without the right tools. A Customer Data Platform provides the necessary tools to automate personalization based on data-driven insights. Companies can thus deliver individual recommendations, content, product offers, and messages to customers, increasing the relevance of communications and giving customers a sense of care and recognition.

#4. Improved customer retention and loyalty

Another benefit of a Customer Data Platform is its ability to improve customer retention and loyalty. By analyzing customer data and understanding how customers interact with the brand, companies can proactively respond to customers’ needs and pain points.

Through personalized communications and offers, they can keep customers engaged and make them feel valued. Satisfied customers are more likely to return and make repeat purchases, which in turn boosts a company’s revenue and profitability.

#5. Better decision-making based on data

A Customer Data Platform provides valuable insights and analytics that can lead to better data-based decision-making. By having access to accurate and up-to-date data on customer behavior and preferences, companies can optimize marketing strategies, identify new opportunities and improve their overall performance. Data-driven decisions also reduce the risk of mistakes based on assumptions or intuition and can help companies stay one step ahead of their competitors.

6. Key functions of a CDP

A CDP offers a wide range of features to manage and leverage customer data. Some key features include customer profile creation, segmentation, personalization, real-time data insights, and automated marketing campaigns. We explore these features and their impact on marketing and sales strategies.

Here are some of the key features of a Customer Data Platform:

#1. Data collection and centralisation

A CDP collects customer data from various sources, such as websites, mobile apps, emails, purchases and social media interactions. This data is then stored in one central location, creating a 360-degree customer profile. This allows marketers to get a complete picture of the customer journey and better understand their behaviour.

#2. Customer profile creation

With the data collected, the CDP can create comprehensive customer profiles. These profiles include information on demographics, behaviour, interests, preferences and interactions with the brand. Building detailed customer profiles helps marketers develop personalised marketing campaigns and relevant offers.

#3. Customer segmentation

A CDP makes it possible to divide customers into different segments based on specific characteristics and behaviours. This allows marketers to create more targeted campaigns and deliver the right message to the right audience at the right time, increasing the effectiveness of marketing activities.

#4. Personalisation of marketing campaigns

Rich customer profiles and advanced segmentation capabilities allow marketers to personalise marketing campaigns based on individual preferences and interests. This results in higher engagement and customer satisfaction as customers receive relevant content that matches their specific needs.

#5. Real-time data insights

A CDP provides real-time insights into customer behaviour and interactions with the brand. Marketers can respond instantly to customer actions, such as abandoning a shopping cart or opening an email, by triggering personalised messages that can persuade the customer to take action.

#6. Automated marketing campaigns

One of the most powerful features of a CDP is the ability to create automated marketing campaigns based on triggers and predefined rules. This allows marketers to send the right messages at the right time, without manual intervention, increasing efficiency and effectiveness.

#7. Data analytics and reporting

A CDP provides advanced data analysis and reporting features to understand marketing campaign performance and customer engagement. Marketers can evaluate the effectiveness of their strategies and gain valuable insights to inform future decisions.

#8. Customer journey tracking

The CDP tracks the entire customer journey, from the first point of contact to purchase and beyond. This enables marketers to understand the customer journey, identify bottlenecks and improve customer experience. For example, almost all CDPs offer capabilities to provide insights into customers who leave the ‘shopping basket’ prematurely. Of course, they also offer tools to respond to this. This is a screenshot of Blueconic and their funnel insights:

#9. Cross-channel marketing capabilities

A CDP enables cross-channel marketing, synchronising customer data and interactions across channels, such as email, social media, website and mobile apps. This allows marketers to provide seamless, consistent experiences, regardless of the channel used.

7. Key integrations with CDP systems

A CDP can maximise its potential by seamlessly integrating with other tools and systems that companies are already using. We look at some of the most valuable integrations, such as email marketing, CRM, analytics and advertising platforms, to get a complete picture of customer interactions and optimise marketing efforts.

Conclusion

A Customer Data Platform can play a transformative role in the way marketing and sales activities are conducted. By providing deep insight into customer behaviour, a CDP helps deliver personalised experiences and strengthen customer loyalty. It is important to do thorough research and choose the right CDP platform that fits your organisation’s unique needs. With the right implementation, a CDP can be a powerful tool to take your business to new heights in the world of marketing and sales.

This was our informative blog post on Customer Data Platforms. Thanks for reading and we hope you now have a better understanding of the importance and potential of CDPs in your marketing and sales strategies. Do you have any additions? If so, please let us know!