What is a Customer Data Platform (CDP)?

Customer Data Platforms Explained

A customer data platform (CDP) unifies your customer data in a centralized hub. Explore customer data platform benefits and find out how to choose a CDP.

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              What are the benefits of a CDP?

              Effectively utilizing a CDP can reap a range of benefits for both the business and its customers.

              Once you know how to build a customer data platform, you can create unified customer profiles that give a 360-view of all the data collected for each customer. This gives your business a comprehensive view of your customers’ unique behaviors, purchasing and engagement patterns, and broader interests.

              The customer data platform architecture can also help businesses avoid data silos by storing and analyzing the collated data in one streamlined platform.

              Eliminating data silos results in several other benefits too. Using one secure CDP to store customer information means the data is better-protected, helping businesses follow compliance regulations more easily. Having all the data stored in a single CDP also allows analysts to explore the data more quickly, increasing efficiencies across a team.

              A CDP can also improve the overall customer experience. With a unified view of each customer profile, marketers can create more personalized strategies that appeal to their needs and wants, which they are more likely to engage with. This can also increase revenue by an estimated 15% as customers receive more information on products and services they are more likely to be interested in.

              Customer data platform architecture and components

              The customer data platform architecture collects and combines customer data from several sources. The architecture typically has several layers that logically split the data analysis.

              The ingestion layer in the CDP architecture is where data from various touchpoints is integrated. Real-time data can be pulled in large batches employing the data connector component.

              It is standardized by the data transformation component and checked for accuracy by the data validation component. A data routing component then categorizes and redirects the data to the relevant databases of the logical storage layer.

              After data is entered into the storage later, governance control is implemented in the logical cataloging area. Several components work to ensure data access control and exploration of metadata, as well as tracking the schema.

              The next layer of the customer data platform architecture is logical processing, where data becomes consumable, and customer profiles and segmented groups are made. Potential errors, inconsistencies, and missing data are corrected at this point. Data mining and predictive modeling also provide strategy indicators for personalized campaigning.

              Scalable tools are introduced in the logical consumption layer to enable access to the data for different systems and stakeholders within a business. This is where the insights gathered from the CDP begin to support various business functions and strategies.

              The final logical security and governance layer provides several access control, encryption, and data privacy mechanisms to ensure customer data platform best practices. The CDP manages the data to be compliant with data regulations.

              Customer data platform best practices

              A business must adopt several data platform best practices to ensure the success of utilizing a CDP.

              Like every business strategy, there must be clear goals for using a CDP. Common goals include better customer engagement, increased revenue, and simplified data management. Having goals is necessary for understanding how best to use a CDP.

              It is also essential to create and implement a data retention policy. The policy should clearly explain the importance of secure data management and outline how long a business can retain customer data.

              Training must be given to employees who will work with the CDP. They should fully understand managing and securing data security and privacy regulations, such as CCPA.

              Integrating a customer data platform can be elevated when combined with data analysis tools. Machine learning platforms can assist with data mining, and statistical analysis software allows for more in-depth customer data analysis. It’s best practice to utilize various tools alongside a CDP to gather more detailed insights to apply to marketing strategies.

              CDP software is incredibly robust, so it should be used to its fullest potential. Ensure it collects data from all sources to produce a unified profile for each customer. It’s also imperative to regularly monitor the performance of a CDP to assess how well it continues to benefit processes and where improvements could be made.

              How to build a customer data platform

              There are four primary stages for building a customer data platform: integrate, clean and organize, identity resolution, and enrich.

              The integrating stage involves bringing all the relevant customer data from several sources together in a centralized database. Common variables, including the customer's name and contact details, should then link the data.

              The correctness and completeness of the data is then checked, which involves cleaning and organizing. Missing data is identified, and duplicates are removed to create accurate customer segments according to variables.

              Next, the data must be merged and connected to the appropriate customer profiles for identity resolution. This stage checks where two customer datasets may be the same person.

              The final step is to enrich the data by standardizing the formats and inputting missing information. Once the data is of high enough quality, a business can utilize its CDP as part of its marketing tactics.

              How to choose a CDP: top tips

              Choosing the right CDP platform for your business can make all the difference to your customer engagement and ROI. When browsing vendors, assessing their CDPs capabilities and additional features is imperative.

              The first thing you should do internally is consider who the CDP stakeholders will be. Typically, stakeholders will include marketing, sales, IT, customer service, and analyst professionals, as these employees can use the data to benefit the business. Depending on the industry, a business may also assign stakeholdership to those who work in legal to assess the legalities around data management.

              Outlining a roadmap of how you will use a CDP and what goals you hope to achieve can assist with the CDP vendor decision-making stage. Consider whether your main goal is to improve the organization and privacy of your data management or to identify ways to personalize engagement tactics with your customers. Most CDPs will help with both of these goals, but some may be more useful for one than the other.

              Communicate your CDP goals and objectives to potential vendors and request a demonstration of how their CDP could handle your specific needs. This will allow you and your internal team of stakeholders to rule out vendors. Ask other stakeholders for honest feedback on which CDPs they believe will work best for your business to make a well-rounded decision.

              Get started with a customer data platform today

              As businesses expand and elevate their marketing strategies, it’s important to utilize tools and tactics that keep you ahead of the competition.

              Customer data platforms serve as a centralized hub of powerful data that can secure your customer’s sensitive data and take your marketing campaigns to new heights.

              Empower your team with our versatile customer data platform and maximize the value of your customer day with our reference architecture guide.