What is a CDP? And how do you choose the right one for your business?

Katrina Wong is VP of Product Marketing at Segment

As businesses across all industries struggle to keep up with the rapid proliferation of customer touchpoints and data, they’re increasingly turning to a particular tool to help them turn huge volumes of data into better, smarter decisions: the customer data platform (CDP)

Where the ability to harness customer data was once reserved for technical teams, CDPs promise to give seamless access to data, and with it improved insight and decision-making capabilities, to the entire organisation, including marketing teams. 

However, such is the popularity of the ‘CDP’ that it has transformed into something of a marketing technology buzzword. Many vendors have been keen to attach themselves to this fast-growing category; in fact, the CDP Resource found that more than a quarter of businesses claiming to be selling ‘CDPs’ are actually selling something else altogether.

What is a CDP, really?

At a basic level, a CDP is a tool that helps businesses unify their first-party customer data. CDPs empower all teams to access clean, reliable information. 

As far as marketers are concerned, customer data can be the path to delivering more personalised and more effective campaigns. However, managing large quantities of information is no easy task; fragmented data collection can easily end up clouding marketers’ views of their customers. It’s also absolutely vital that businesses respect the privacy of customers in their use of first-party data. 

The COVID-19 pandemic makes it doubly important for businesses to find a platform that can act as the central nervous system for their data. Consumers are depending on digital channels more than ever, and as a result, the number of digital touchpoints businesses have with customers is growing fast. 

Marketers will know they’re using a good CDP if it can do the following:

Collection: All CDPs should allow your business to gather customer data from wherever customers interact with your brand. This could be anything from your website and mobile app, to advertising channels like Facebook or Google Ads, to email or payment systems. 

Unification: A good CDP will allow marketers to consolidate all this data from different places to form joined up profiles of their customers or prospects, all while respecting their privacy.

Segmentation: Once marketers have built out unified profiles of customers and prospects, the CDP should allow them to group these together to create target audiences for their campaigns.

Activation: Finally, the platform will give marketers the ability to seamlessly funnel this consistent, usable data to the advertising or analytics tools of marketers’ choosing, where it can be used to deliver superior campaigns to target audiences.

How to make a CDP work best?

Getting started with a CDP is normally quite straightforward – however, some businesses will end up getting more out of them than others. Here are some steps your business can take to maximise the benefit you get from your CDP:

  1. Don’t settle

When choosing your CDP, it’s really important to do your research. There’s no shortage of CDP providers out there. According to research from the CDP Institute, in 2019 the number stood at nearly 100 (up from 23 in 2016). Luckily, most offer free trials, so shop around till you find the platform that’s right for your business. 

  1. Be mindful of customer touchpoints

Remember that the customer journey is about so much more than just clicks on your website or your mobile app. CDPs work best when collecting data from all the touchpoints your brand has with customers or prospects. Don’t forget all your advertising channels, your email systems, or customer conversations with chatbots or your customer care team. To gain the understanding of the customer needed to deliver strong campaigns, you can’t afford to turn a blind eye to any interaction. 

  1. Pick the right metrics

At the same time, it’s important not to overwhelm yourself by tracking too many metrics. Try to focus on those that will help you deliver value. Too often the focus is on so-called ‘vanity metrics’ such as page views or new signups; it’s exciting when these are growing, but you should also question how this initial interest is benefiting your business. You might learn more about buyer habits if you track events like ‘product added’, ‘checkout started’ and ‘order completed’. 

  1. Prioritise data governance

Data governance is vital if you’re to get the most out of a CDP, which needs accurate, usable data to work properly. Some platforms provide features that can help you preserve the quality and integrity of your data – I would recommend choosing one that does. 

The power of CDPs in the COVID age

As businesses look to survive the current economic turmoil, many marketers are facing reduced budgets. 

However, leadership teams should also realise that if they can deliver effective marketing in this time of uncertainty, they can win market share from competitors that are cutting back on spend. And, with so many consumers now using digital channels, smart use of customer data – backed up by the right CDP – can make all the difference. 

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