What is a CDP and do you need one?

Modern consumers expect the business to remember who they are, what they’ve done, and what they want at all times. Marketers and marketing technologists are well aware that obtaining and acting on unified consumer data is difficult. The Customer Data Platform (CDP) is a different approach that has had a lot of success and attention. In this blog, we want to answer some common questions and familiarise you with CDP to evaluate your situation.

The Customer Data Platform (CDP) is a different approach that has had much success and attention at early-stage enterprises. A CDP places marketing in charge of the data unification project, ensuring that it is completely based on marketing needs. CDP is designed to make sense of your customer data so you can engage with them on a more personal, effective (and valuable) level. According to the CDP Institute, this allows a faster, more efficient solution than general-purpose technologies that try to solve many problems at once.

Who needs a CDP? What is the future role of the CRM, then? Where is the customer data held? Who should own customer data, and how can it be utilised? Avaus has assessed a variety of commercial CDPs as well as tailored solutions built for enterprises in different industries. We aim to bring clarity in stitching all these pieces together finally.

Many companies have some customer data and data platforms in place due to the crucial importance of customer understanding and insight. Now, companies are wondering how the customer data they have can bring even better business results. The demand for real-time interaction data puts traditional data capabilities to the test, and many enterprises have already found that a focus on accessibility, usability and data activation makes all the difference in the quest to become data-driven.

The need for actionable customer insight

So, why are those customer 360 projects of a few years back no longer sufficient? Many of them were not hugely successful due to their complexity and also for the lack of a clear strategic vision. However, the expansion in the range and quality of the customer data that we have now means that the thinking of only some years back needs radical updating. Watch one of our Avaus Expert Talks, where Emma Storbacka gives more context to this topic.

• CRM systems, at least in theory, were capable of managing the majority of relevant customer data and were often used for sales and customer care purposes. Now, with the focus shifting to digital channels, behavioural data, unstructured data, and the necessary privacy frameworks, it is clear a CRM alone cannot provide the customer understanding needed by modern sales and marketing.
  
• Data warehouses and data lakes contain customer information, but it is often not structured nor understandable for real-time access. While it can support, for example, reporting functions, it is often the case that sales and marketing are not realising the value of real-time access to the data, and neither are the digital channels which require real-time customer understanding for relevant communications. In other words, the customer data is poorly actionable for business needs.
  
• Web analytics provides some understanding of customer behaviour, but it is often limited to a single/few channels only, and typically there is no way to connect the online and offline customer information for comprehensive customer understanding. In addition, using customer understanding to provide a personalised experience cannot be achieved by web analytics tools alone.

Does this raises the question of where in the modern data and marketing technology landscape should customer data reside? But first, we must answer the question ‘for what should you use customer understanding?’

CDP key business benefits

The benefits, to name a few, are:

• Actionable understanding of your customers: at its heart, a CDP system centralises customer data from all sources and then makes this data available to other systems for marketing campaigns, customer service, decision making and all customer experience initiatives. And most importantly, the customer data is based on business use cases and designed to be actionable.
• Understanding both identified and unidentified customers: while your CRM can understand identified customers, the online channels such as web shops, other own sites and social media require being personal to customers whom we cannot identify.
• Customer segmentation: companies often have a set of pre-defined and potentially manually managed segments. With a CDP it is possible to define segments for each individual customer based on their behaviour and reveal new segments dynamically.
• Personalisation: a word with many interpretations that is being used extensively in today’s customer-centric world. Having customer understanding in place and automatically and consistently driving content in your digital channels at scale is one of the fundamental capabilities of a CDP.
• Customer data-driven decisions: guide your business and operations based on actual customer understanding, and also on forward-looking analytics, in addition to rear-mirror reporting.
• Data privacy enabler: manage your customer consents, data privacy, and GDPR without significant manual operations. A CDP will not solve all your regulatory requirements, however, managing customer data centrally is the enabler of compliance.
• Operational Efficiency: CDPs centralise customer data, and turnkey integrations save hours of integration work. Also, audiences and business rules are set up centrally in one place and can be applied across various channels saving duplicated and non-coordinated efforts.

If some of these business benefits are on your to-do list, a CDP capability likely is what you need.

Understand differences in CDPs

CDPs as solutions have fundamental differences in how they solve business problems. While it may feel overwhelming to consider yet another dimension in solution options, understanding this can simplify your business problem definition and consequently your technical solution needs.

CDPs can be categorised into three types:

1. Campaign-oriented CDPs: For the needs that are mostly in managing customer audiences, segmentation, and delivering relevant messaging across digital channels
2. Data-oriented CDPs: If the needs are more in constructing a single view of the customer in a platform that can handle rapid integrations and sophisticated capabilities to merge various customer data sources
3. Cloud data platform-based CDPs: In cases where the need is to serve several functions and the business of an enterprise, and to large extent build custom analytics and machine learning models

Based on your prioritised list of business use cases and technical landscape considerations, you will be geared towards the option that is right for you. To add to the complexity, you might consider either buying a commercial option or building the needed data capabilities in your own cloud environment (typically Google Cloud, Azure or Amazon). In a future blog, we will explore when you might consider buying, or when building is the wisest option. Read more about “build” option on Ten building blogs for an actionable marketing data-asset – the Data Factory.

There are no one-size-fits-all solutions when it comes to making your customer data more actionable. Analysing and defining your use cases, and your plan for ramping up and rolling out the capability are the key to success. Read this customer case to discover how we helped Telia choose and implement a CDP. 

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