Data and Insights

Why Customer Data Platforms Are More Than Just a Trend

Customer Data Platforms (CDPs) are an interesting new marketing trend, but what are they and how can they be used to manage data?  The CDP Institute defines a CDP as ''a marketer-managed system that creates a persistent, unified customer database that is accessible to other systems''. In short, it is a platform created for the use and control of customer data. There are many tools and platforms that purport to do just that, so what does a CDP do and how is it different to a DMP or a Data Management Platform?

Let’s start by looking at what data a CDP can capture. In simple terms, it is a tool for collecting and storing all sort of customer data from both the offline and online worlds (examples include CRM, Analytics, Email, Call Centre, Third-Party providers, and APIs ). Unlike a CRM system, which tends to focus on manually-inputted personal information about “known customers”, the CDP can collect both PII (such as email addresses, name, device IDs) and data about ‘unknown customers’ (e.g. data that’s been collected via a cookie placed on your website). In the instance where someone has visited your site and you don’t know them by personal details, then they remain an ‘unknown customer’ until you collect more information.

What a CDP does best is to combine information that you have on both known and unknown customers. It allows you to create a sweet spot where you have both online and offline information and are able to create a persistent identity for individual users. Since a CDP allows you to store both of these interactions, you can ultimately create a fuller profile that can potentially be used to reach the customer in a more personalised way.

So, a CDP has several key advantages:

1. Provides a single customer viewpoint, working with both cookies and traditionally collected customer data.

2. Combines Known and Unknown customer data creating a sweet spot of information 

3. Works well with big data technologies  and provides detailed real-time customer analytics and insight.

4. Reduces reliance on the IT department by giving marketers greater control of data and allowing them to make timely informed decisions.

5. Creates a persistent profile for ‘Known customers’.

If you’re still thinking this doesn’t sound a million miles away from a DMP, then you’re not too far off but there are some subtle differences. Firstly, a DMP is inherently advertising focused, where cookies are often the mainstay of data that’s collected. A CDP also has more traditional customer information and can be used to provide detailed customer insight in a bid to help you increase conversion and retention.

As we’ve said, CDPs focus on combining data, whatever the source, to build a persistent customer profile. This is like a chronological history of your known customers. CDPs tend to focus on known customers analysing behavioural information about their customer journey to discover indicators that can lead to further personalisation. On the other hand, a DMP focuses on creating anonymous profiles of both known and unknown customers, which are largely cookie based and therefore, generally less persistent. However, with DMPs, you benefit from hundreds of third-party data providers who offer a plethora of targeting opportunities to help you reach ‘Unknown Customers’. 

In summary, both types of tools are, to some extent, able to push data into paid media channels. Although DMPs clearly have the upper hand in the advertising space because of their pedigree and a greater number of connections to media buying tools.

CDPs are an excellent tool for data storing. Whilst the two platforms are tackling some of the same challenges, it’s clear that they do so from very different standpoints in terms of the kind of customers you mean to reach (either known or unknown). It really boils down to whether you are more interested in your customer details in order to better know your customer tastes or in large scale unknown audiences.

If you would like to know more about how to choose the right marketing technology for your business, get in touch with our Consult experts to understand how this technology can transform your business and deliver lasting and sustainable change in the digital era.

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