Customer data platform 101: What they are and why they matter
What is customer data?
Customer data refers to information about your customers and what they do with your products or services. This data can include anything from names and email addresses to details like favourite products and purchase frequency. Businesses can better understand their customers and the customer experience using this information.
Data security and privacy are becoming increasingly important to consumers and businesses alike. Under the Consumer Data Right, consumers can safely share the data that businesses hold about them with other platforms, helping them compare products from different sellers quickly and easily.
What is a Customer Data Platform?
Customer data platforms (CDPs) combine data from multiple sources into one place, creating a searchable, centralised hub for all customer information. CDPs can collect data from customer interactions across many platforms, including a company’s website, social media accounts, email marketing tools and more.
Using this information, the CDP paints a detailed picture of each customer. Having this data in one place makes it easy to segment your customers based on their behaviour, interests and interactions so you can deliver tailored content throughout their journey.
Here’s a snapshot of data your CDP can collect and consolidate:
Behavioural data includes things such as what someone does on your site or asks in your live chat.
Transactional data can include number of purchases, purchased products and frequency of purchases.
Demographic data includes details like the customer's name, address and age.
Understanding the specialised role of CDPs
A CDP often works alongside other customer tools, such as Customer Relationship Management (CRM) systems and Data Management Platforms (DMPs). To use these tools effectively, you must understand their distinct roles.
CRM systems help you manage customer relationships. You can use a CRM to increase revenue and improve the customer experience by sending personalised messages based on past buying behaviour and interactions with the business. The main goal of a CRM is to support customers through the sales process by providing useful information when needed.
DMPs manage data within and outside a business. These platforms group related data for easy personalisation and find your best customers to target new audiences. Marketing teams often use DMPs to improve targeted ads.
CDPs, on the other hand, collect data from many channels to create detailed customer profiles. They combine different insights to create a unified view of how customers interact with your brand across all touchpoints.
CDP vs. CRM vs. DMP differences
The main differences between these three systems are related to the type of data they collect, how they collect it and how they use it:
CDPs gather and unify data from marketing, sales and customer support channels to create a precise customer profile.
DMPs compile and store third-party data from external channels to produce tailored audience segments.
CRM software usually incorporates data recorded by the sales team.
CDP vs. CRM vs. DMP similarities
The main similarity among these three systems is the use of strategic data segmentation to improve customer experience. Despite having different applications, there are overlaps in functionality:
CDPs and DMPs are tools primarily used by the marketing team, while CRMs belong to the sales department
Both CDPs and CRMs accumulate and store first-party, second-party and third-party data, whereas DMPs strictly gather and store third-party data from external apps and platforms.
Each of these systems offers powerful segmentation capabilities to enhance customer experience.
CDP use cases
Data integration and management
The most common uses of a CDP are data integration and management. Collecting data from multiple channels can help brands create detailed customer profiles and serve targeted marketing messages.
The data you collect and how you use it is up to you. Social media data, for example, can identify customers' unique patterns or messages that resonate with them. This will allow you to optimise your current marketing campaigns and improve future campaigns.
A single data source isn’t enough to thoroughly analyse customer behaviour. To create the most accurate profile possible, a CDP compiles data from first, second and third-party sources.
For example, you can cross-reference data points collected through a live chatbot with customer support tickets and previous sales calls. Corroboration of the information reduces the risk of basing a whole messaging sequence on rogue, one-off behaviour.
Consumers don’t want to receive generic messages — they want to feel special and understood.
CDPs group like-minded customers based on their behaviour, interests and other vital differentiators so you can market to them accordingly. As a result, you can identify the most optimal moment to contact a customer and send the right messages using their preferred medium.
Data privacy and compliance with regulations
As consumer concerns about collecting and using data grow, companies must carefully manage and store customer data to maintain transparency.
The CDP's ability to find and link all customer data is crucial to meeting regulatory compliance requirements for collecting, sharing, updating or deleting personal information. A CDP also makes it easier to define and enforce rules that ensure data is used only for authorised purposes, whether shared among internal systems, external processors or third parties.
5 key benefits of customer data platforms
Break down data silos
Teams that store data separately can develop data silos — isolated insights accessible only to specific departments. This occurs when the sales team, for instance, holds contact details, the marketing team knows social media preferences and the support team records purchase history.
CDPs counter this problem by uniting all this scattered information into a complete customer profile, including contact details, social preferences and purchase history. With data centrally accessible, teams can utilise this information more efficiently, enhancing overall productivity.
Create single customer view (SCV) profiles
Customers are diverse, each with unique needs and interests. A CDP harnesses this diversity by combining customer data to form a holistic, 360-degree single customer view (SCV) profile. This SCV profile provides an immediate snapshot of each customer's behaviour, purchasing history and product preferences, and makes it accessible to all departments.
SCV profiles can inform targeted campaign strategies and identify consistent patterns amongst top customers, improving customer engagement and business performance.
Improve efficiency with automated processes
CDPs improve efficiency by breaking down data silos, centralising information and removing redundant data. Additionally, real-time data updates ensure everyone has the most current and accurate customer information.
Many CDPs also offer automation, which can reduce manual tasks and improve customer response times. You can automate tasks such as populating campaign information and segmenting customers, which allows you to focus on more impactful activities and save money. CDPs ensure timely contact with clients by efficiently processing customer information and automating replies.
Enhance understanding of customer lifecycles
Comprehending customer details is vital for effective marketing and sales. By understanding your customers and their behaviours, you can discern trends and refine your marketing messages for your target audience.
For instance, data on visited web pages and the content customers engage with most can reveal their information needs. This enables you to produce more of the content they find valuable.
CDPs enhance efficiency, saving you time and money by streamlining tasks and refining your marketing to target the right audience. Forming customer profiles, tailoring messages and catering to customers' needs can help lead to higher conversions and revenue growth.
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