Customer Data Platform (CDP)

Definition

A Customer Data Platform (CDP) is software that collects and unifies first-party customer data—from multiple sources—to build a single, coherent, complete view of each customer [1].

A Customer Data Platform, or CDP, is your customer data system of record. One of the greatest values of good data is that it can provide an objective source of truth. With multiple databases, customer records, and methods of gathering data from different parts of the customer journey, how can an organization know what to rely on as that one source of accurate intelligence?

Because of the diverse amount of information that CDPs collect and how they can take both structured and unstructured data to form a unified view of a customer, you can think of a Customer Data Platform as your source of truth about an individual. CRMs can benefit from this data through integrations and pulling select pieces of information into a record. Still, the holistic view that a CDP creates puts it in a unique position in your data ecosystem. Likewise, CDPs benefit from integration with CRMs, other systems like Data Management Platforms (DMPs), and many more.

Components of a Customer Data Platform

There are 4 primary components of a CDP, as described below:

Acquiring Customers

The first category of requirements of a CDP includes things like enabling advertisement targeting or reaching anonymous customers by matching first-party cookies with email addresses where content is read, forms are submitted, or products and services are purchased. It also includes adding new audiences from second-party data sources to existing first-party data.

All of this adds up to acquiring new customers and better understanding previously unknown users across multiple touch points.

Engaging Customers

Next, we have the category of requirements related to customer and business growth. This includes the definition and refinement of customer segments based on a multitude of criteria: spending level, types of products purchased, estimated lifetime value, browsing and searching behavior, and many other types of data.

Using this information, we can then personalize content across any channel desired and drive customers towards the next best action that fits their needs and that of the brand.

Retaining Customers

Next, let’s talk about customer retention. As we all know, it’s much less expensive to keep existing customers than to acquire new ones. In fact, second only to “higher revenue” (58% of respondents), the second highest expectation of a CDP from respondents from Forrester’s April 2022 report said improved customer satisfaction (57%) was the expected business result from having a modern, effective CDP solution.

A Customer Data Platform allows us to retarget customers across channels, provide better customer service through data and content sharing, and perform many other functions related to a strong customer retention strategy.

Optimizing Customer Relationships

Finally, a Customer Data Platform should optimize your marketing and sales efforts, as well as your customer relationships and the experience you provide. This consists of tying marketing, sales, and customer analytics together to provide offers, incentives, and the next best actions by using a comprehensive set of data. This also supports ongoing optimization and continuous improvement over time.

Now that we’ve reviewed what a CDP should do for us, let’s explore the components of a Customer Data Platform. Remember, this may be a single SaaS service that you subscribe to, or it may be several components you integrate.

Related

• First-party Data Strategy

Platforms

• Customer Relationship Management (CRM)
• Data Management Platform (DMP)
• Consent Management Platform (CMP)
• Customer Journey Orchestration Platform (CJO)

Resources