Introduction
In order to understand Customer Data Platform (CDP) and its core usability as an eCommerce business, let’s start with a very relatable example.
Suppose you are planning a vacation to Dubai.
Your search history might have looked something like this:
“Trip to Dubai” or “Itinerary for Dubai trip”
According to the search results, you must have navigated through their official website, “visitdubai.com”, and a number of other travel websites. You might have checked some Instagram pages and reels too.
Once you made up your mind to book the tickets, you probably checked different websites to compare itineraries and prices.
It is likely that you had multiple touch points with the company you finally purchased from — through their website, email, live chat, or retargeting ads. It all contributed to imparting a personalized experience to you throughout the journey. Whether it was Facebook ads, emails, or any other communication, all those messages felt like they were created exclusively for you.
All this is possible through a Customer Data Platform (CDP).
What exactly is a Customer Data Platform (CDP)?
A CDP is a piece of software used to collect and combine data from different sources or touchpoints (Both online and off) and build one centralized customer repository with data on all interactions with your brand.
You can segment this database in numerous permutations and combinations for different segmentations and craft personalized marketing campaigns. Before we jump on to the usability and importance of CDPs, let’s first wrap our minds around different terminologies that also work in and around ‘customer data’.
Understanding Different Terminologies - CDP, DMP, and CRM
While CDPs also handle customer data, they differ from Data Management Platforms (DMPs) in that DMPs are helpful exclusively for advertising. They cannot be used for personalizing campaigns. CDPs use 1st party data while DMPs use 2nd and 3rd party data. The latter uses anonymous data and retains it only for a transient phase.
CRM (Customer Relationship Management) tools enable businesses to organize and manage customer-facing interactions. However, they don’t collect information about the customer interaction with your product or service. You need a CDP for the same.
CRM data includes the client’s name, their past interactions with the sales team, and support tickets they have raised.
CDP data share detailed insights into specific steps the customer has taken right from their first interaction to the last.
CRM is most suitable for customer-facing roles, while CDP works well for non-customer-facing roles.
Advantages of a CDP
As mentioned earlier, a CDP gives you extensive information about the customer. Here’s an elaborate account of its advantages.
1. It helps organize customer data management more effectively
In simple words, customer data management means acquiring, organizing, and using customer data. And CDPs make these tasks more efficient by making the customer data more usable.
When you are starting off, you will need to invest some time in setting it up. But then, it hardly needs any maintenance.
2. You get access to actionable customer insights
Customer analytics entails understanding customer behavior throughout their journey. Subsequently, it will allow you to make business decisions around sales, marketing, product development, etc.
Customer analytics involves four components:
- Data collection
- Data sorting
- Data storage
- Data analysis
If you consider these components independently, they would not be too valuable. However, when you have a CDP to unify these components, you will get an effective customer analytics platform that will enhance customer loyalty, retention, and customer lifetime value.
3. CDPs give you enhanced data protection and privacy
GDPR, CCPA, and other data privacy laws have warranted that you respect your customer’s data privacy. As CDPs use first party data, you can be assured that your customer’s data is in safe hands.
How Does a CDP Work?
A CDP helps in understanding the target audience better. It is used to collect data from different touch points like the company’s website, email, Facebook, and any other channel that enables customer interaction. The CDP will gather all these data points and create a single customer profile.
With the help of this process, companies can segment their customers and create personalized marketing campaigns. They can easily build an advertising audience to cater to website visitors or users who have stopped by their live chat. In addition, they will also be able to segment and access information about cart abandoners.
Data Used by CDPs
CDPs use first-party data which means that the company collects the data and uses it only for the company’s marketing. On the other hand, third-party data helps in targeting potential users for advertising, personalizing websites for new visitors, and monetizing apps without any additional revenue stream. The problem with this data is that you cannot figure out whether they used consent while collecting it.
First-party data has the upper hand as you have the exact idea about when, where, how, and why the data was collected. CDPs process your first-party data and make it accessible through customer data integration. You can combine information from different databases and package it into a usable form. The key to using CDPs to the maximum potential is understanding customer data integration.
Customer Data Integration
Customer data integration helps in combining and organizing customer data from diverse databases into a single, more usable, and accessible form to improve analytical capabilities.
Suppose a company wants to execute an ad campaign to target the most loyal customers. You would need to integrate data from several sources, like CRM tools or CDP platforms, in different formats. Moreover, you would also have to integrate data from tools storing website data, email data, and purchase data.
Therefore, you will get a chance to make informed decisions and improve business intelligence. It will give you detailed insights into the customer’s journey and enhance customer experience. With poor data integration, your business gets messed up with slow business processes.
Choosing the Right CDP for Your eCommerce Business
There are plenty of CDPs available in the digital marketplace. It can be tough to make the right choice. You cannot randomly choose any CDP. You must pick a CDP that aligns with your business needs.
Here are the six steps to choosing the best customer data platform that suits all your business objectives.
- Involve stakeholders in the process
When you want to decide the right CDP, involve the internal stakeholders. Ask for their input at different stages of the buying process. Ask them what they are looking for in a CDP and what they wish to achieve from it.
- Determine the use cases
Why are you looking to buy a CDP? Consolidating your data into one customer database is not the only thing that CDP helps with. Take a look at the bigger picture and identify some ideal use cases.
Here are a few examples:
- Combining online and offline data
- Creating personalized multichannel advertising campaigns
- Understanding the customer journey
After defining the use cases, study your potential CDPs by researching their products and checking out their website.
- Define the tools you need
The next step is to list down the tools for interacting with your customers in some way. Include everything starting from website tools, CRM systems, live chat, email service providers, payment processors, and help desk platforms.
For example: Analytics tools like Google Analytics, advertising tools like Facebook, live chat tools like Intercom, BI tools like Looker, and Data warehouses like Redshift.
- Collect the business requirements
Consider requirements as features you would have to look for, instead of outcomes. Suppose you want to understand every piece of customer data. In that case, you will need a CDP that can help you build a data-tracking plan.
A good source to collect requirements from is the pricing pages of every CDP. Go through the features mentioned on those pages and note down all the functionalities that will be important for your business goals.
- Compare different vendors
By now, you will have a list of some CDPs that will align with your use cases and have all the required integrations. So, you can go ahead with comparing them. As the first step, compare the features and see which CDPs are the most suitable for your business needs. Also, go through the clientele and check whether they have good customer service. Besides, they should also be compliant with anti-spam and data guidelines like GDPR and CCPA.
- Consider business ROI
The last factor to consider is the business ROI. No, this doesn’t imply that you must go with the affordable solution. Instead, it means that you must choose the platform that is the most cost-effective for you. A powerful CDP cuts down the time your developers put into integrating different tools. So, if a CDP is not making things easier for you, choose another one that does.
Wrapping Up
CDPs are complex platforms and it is even more complex to choose the right one. However, once you make the decision, it should iron out all the intricate business operations. So, choose wisely and get ready to streamline all your operations.
If you are looking to dive deep into your customer data and let the insights work in your favor, our Analytics & Insights and eCommerce Digital Marketing specialists can help you thrive. Get in touch!
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Minal Joshi is a content marketer at Krish with a flair for eCommerce and Digital Commerce aspects. She is a MarTech fanatic with a knack of writing with which, she helps brands to curate, create, & commence digital brand positioning. Sharing insights via articles, case studies, eBooks, Infographics, and other forms of content creation is what she lives for. Being an ardent traveler, when not writing, you'll find her sipping coffee into the mountains or petting a stray.
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