With every customer interaction and transaction being tracked, recorded and stored, businesses are inundated with high-quality first-party data. Whether this is all for nothing is determined by how well businesses collect, store and act on it.
Enter new services that optimize and modernize this ability: Customer Data Platforms (CDP).
What Is a CDP?
CDP stands for Customer Data Platform and is a prebuilt software that collects, stores, organizes and presents customer data.
CDPs are used to build comprehensive customer profiles in a centralized environment so that all key stakeholders can access the same accurate and consistent customer profiles. With these profiles, you can create hyper-personalized experiences for your users across different channels.
What’s Wrong With How We Collect Data Now?
Collecting, storing, presenting and acting on data has primarily been siloed in different departments of an organization – sales, IT, analytics, marketing and executives in the C-suite.
How accurate and consistent is the data between these stakeholders, and how accurate is it on a per-customer basis?
There are four major roadblocks with bad data:
1. Data Exists in Silos
When collecting data across different channels and unifying it for one customer, there’s still the issue of where that data exists and how those silos connect and talk to each other. As businesses add more channels in which customers engage with them, more silos appear.
2. Incomplete Customer Identities
Your customer engages with your business across all kinds of physical and digital platforms. If you can’t track their journey across those spaces, then you can’t get a complete picture of who they are in relation to your business. Without knowing the full scope of their relationship with your business, you will miss out on opportunities for personalization, segmentation and insight and lose out on quality customer service.
3. Insight Doesn’t Lead to Action
Data is collected, and analysts interpret it and provide insight, but how readily does this insight drive omnichannel campaigns? If we solve this issue, we can measure campaign success not by channel performance but by customer behavior.
4. The Speed of Data Processing and Action
How long do you spend collecting, organizing, customer-matching and analyzing your data? What will happen as you scale? Whether your insights are ready for you to act on in minutes or in days makes a big competitive difference.
How Does a CDP Benefit a Business?
Content Data Platforms are a way to address the above issues by pulling data from all available sources into one system, collating different sources of data. They establish insight that is accurate to individual customers, adding functionality to how the information is stored and used so that all departments can access, collaborate and use the data effectively.
This can help you develop a better digital UX personalized to user needs across brand touchpoints. And with an understanding of how users interact with your messaging, you can continue to improve it with great data personalization.
CDPs can also reduce churn in your business by providing a rich, complete history of a customer’s interaction with your brand, so when they reach out to customer service, you can provide a personalized experience that makes them truly feel seen and valued.
Marketers Build Better Campaigns
By building better segmentation and measuring results from customers, not just channels, marketers can grow the business by more efficiently targeting ads to appropriate audiences, retargeting high-value customers and reducing customer churn.
Analysts Build Better Dashboards
Instead of working with disorganized data sets, analysts can more easily build business intelligence dashboards that can help them to strategize, predict and measure performance across departments and channels.
IT Can Keep Up With Integrations and Compliance
CDPs offer a way for IT professionals to easily integrate data sources into a centralized system that all departments can access. It also makes it easier to add new data sources, protect customer privacy and maintain compliance with ever-changing regulations.
Executives Get Better Insight
With customer-based data that is accurate, consistent and provides a holistic view of how people interact with their brand, those in the C-suite can make better decisions on how they serve their most valuable customers and what direction they should steer their company.
How to Take Advantage of CDP Data
Nurture Loyal Customers
Good data can be used to predict which customers will have the highest lifetime value (LTV). By identifying those users early and using personalization to nurture their interactions with your brand, you can earn their loyalty. Improving the LTV of a customer is a sure way to improve business growth with lower costs. According to Amperity, “the top 5% of a brand’s customers typically make up as much as 50% of their revenue.”
Convert One-Time Buyers
Identify personas, and retarget with the right follow-up offers and messaging in your communications. What do you know about them from their one sale? What are they interested in that you offer?
Acquire High-Value Customers
Create ‘rich profiles’ of high-value customer types using demographics, geographics, product preferences, psychographics and historical and predictive data.
Too many companies offer consistent blanket promotional offers. Using your data, you can segment audiences into those that only buy when there are offers (and target them with promotions) and those who will buy without the need of a promotion (and only target them with promotions when necessary).
What to Look for in a CDP
How the CDP Values Data
- Trust that the data is accurate, consistent and complete and that it was collected legitimately and is being protected.
- That the data is accessible to all key stakeholders on one platform so that they immediately have access to the data and insight they need.
- That the data and insight can be acted on: segmenting customers, predicting growth, coordinating omnichannel campaigns and measuring success on a customer basis.
How the CDP Processes Customer Data
The CDP you use will integrate with the software your business uses to run, such as Shopify, Salesforce, AWS, Google Analytics or Facebook Ads. Then it aggregates and collates the data inside their software to provide value in unified data profiles of specific customers and customer types.
Amperity lists seven processes that make a Customer Data Platform efficient and invaluable. They must:
- Collect Data
- Unify Records
- Create Profiles
- Segment Audiences
- Provide Insights & Predictions
- Orchestrate Omnichannel Action
- Test & Measure Results
When Do I Need to Invest in a CDP?
The time to invest in a Customer Data Platform is now – before your competitors do. Using data personalization to improve content and business performance will give you a competitive advantage over companies that are not implementing these practices.
Enterprise-level businesses face further operational challenges, including how transparent they are about how they collect data; how they manage the volume of data they collect; the speed in which data arrives, updates, is processed and acted upon; how easily their data can withstand a change in the system; and how secure the data is (whether it can withstand attacks and audits and is compliant with GDPR and CCPA).
This makes the selection process for choosing the right CDP critical. Still, you maintain ownership of your data through the platforms from which it’s sourced. CDPs merely integrate with these platforms.
The sooner you start organizing and acting on data within a CDP, the quicker you can grow your business, and your CDP can scale with you.