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What are the essential components of a Customer Data Platform?

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What are the essential components of a Customer Data Platform?

The phrase ‘Customer Data Platform [1]’ (CDP) has been flying around the industry. People are talking about what it does and how it can help companies unify their data and acquire that single customer view that is so vital to marketing success.

In the previous installment of this series [2] we looked at the importance of personalization in data-driven marketing campaigns, and how a Customer Data Platform can aid with this, by integrating customer data and unifying customer profiles across systems.

But what features make up a CDP, and how is it different to something like a Data Management Platform (DMP)?

In this article, we’ll look at exactly how a Customer Data Platform differs from a Data Management Platform, and run through the essential functionality that a Customer Data Platform needs to nail.

Content produced in association with Fospha [3].

The difference between a Customer Data Platform and a Data Management Platform

Both a Customer Data Platform and a Data Management Platform do customer data management, help marketers do their jobs better and help provide richer insight about your customers.

The question of exactly how they differ – and why we need two different systems – is often asked, yet there seems to be no common answer. Here are some of my thoughts:

Platform base

A Data Management Platform is mainly ads oriented and cookie-based. It uses a cookie pool with pre-built audiences to enhance display ad targeting.

By contrast, a Customer Data Platform uses PII (personally identifiable information) and customer analytics based on conversion, retention, CRM based customer experience and communication.

Data source

A Data Management Platform primarily makes use of 3rd party data as a data source, incorporating little 1st party data. A Customer Data Platform, by contrast, uses primarily 1st party data while also incorporating 3rd party.

Customer view

Using your ad data, a Data Management Platform creates pre-built, anonymous audiences. It’s important to note that an ‘audience’ is a segment and therefore can’t be drilled down any further.

A Customer Data Platform, however, is able to integrate, cleanse, standardize and dedupe data to create a single customer view by centralizing all of your online and offline data.

Customer profiles

A DMP builds a temporary profile around an anonymous cookie ID. It is unable to work off known identifiers due to legal limitations.

A CDP builds a profile across a combination of known and unknown identifiers such as cookies, email address, social login etc.

How it optimizes

As previously mentioned, a Data Management Platform creates pre-built, anonymous audiences, which are designed to enhance targeted display ads.

By contrast, a Customer Data Platform uses predictive analytics to recognize patterns and reduce data complexity. It then runs off customer analytics and machine learning to provide marketers with intelligent information and LTV and actionable insights.

Personalization

A Data Management Platform does not build a persistent user profile, making it harder to personalize effectively. A Customer Data Platform, however, analyzes behaviors, content affinity, lifecycle and discovers predictive indicators to enhance personalization.

Onboarding data

A DMP is designed to onboard data to display and networks, while a CDP is designed to onboard data to every marketing channel.

CRM onboarding

A Data Management Platform onboards and matches CRM data to anonymous cookies for display ad targeting through other data services like LiveRamp.

By contrast, a Customer Data Platform onboards CRM data directly to Facebook, Google and Twitter for ad targeting, and can also use other data services like LiveRamp.

Data storage

A DMP stores user information for 90 days, whereas a CDP stores user data for longer periods of time to support retention, lifecycle optimization and re-engagement programs.

Charges

A Data Management Platform will charge for using its data for targeting ads, whereas a Customer Data Platform charges for collecting and managing user and customer data. It also creates a data asset that you company owns and can re-purpose.

Platform essentials

Anonymity is essential to the Data Management Platform role. This makes it harder for DMPs to match full CDP functionality, as a Customer Data Platform is designed for companies to manage disparate user data and deliver personalized experiences at scale across many channels.

The essential functionality of a CDP

The above has probably given you some sense of the different functions of a Customer Data Platform and how it differs from a Data Management Platform. But when you’re comparing CDP options or figuring out how to integrate one into your marketing stack, what is the essential functionality a CDP needs to nail?

In short, a Customer Data Platform needs to:

  1. Function for marketers
  2. Unify data
  3. Track individuals
  4. Connect with external systems
  5. Segment customers

Let’s look at how that works in a little more detail.

1. A CDP is marketer managed

This platform is owned and controlled by the marketing department, not the technology department. It simply does not require the level of technical skill a typical data warehouse would necessitate.

This means that marketers decide what goes into the system, what other systems it connects to, and are able to pull information and run reports with ease. Simply put, a Customer Data Platform puts marketers in the driving seat.

2. A CDP breaks down data silos, from any data source, and unifies it in a single database

This unified, persistent database stores all customer behavioral, profile and other data from any internal or external source. This platform takes in both structured – i.e. purchase transactions – and unstructured – i.e. social media posts or call center notes – data, and stores it all in a unified format. If there is a footprint, be it online or offline, the platform will capture it.

3. A CDP can track individuals, not just data sources

With this unified data, a Customer Data Platform can chain together the multiple identifiers that belong to one individual. It can tell you whether multiple website visits come from one consumer or many.

So, if a web system captures an email address and cookie ID, and the call center captures the same email and a phone number, the platform recognizes that all these identifiers belong to the same person.

4. A CDP is accessible with external systems

A true CDP works seamlessly with existing tools – such as marketing, BI or third party data integration tools – and are structured to draw input from these systems, as well as push output to them.

In this way, the Customer Data Platform fully supports a marketers’ needs for campaign management, marketing analyses and business intelligence.

5. A CDP can segment your customers

Once this data is unified, this powerful platform can be used to segment customers based on their behaviors and interests. These can be marketer defined, or formed through complex machine learning capabilities. For instance, a CDP can calculate an engagement score for consumers and then segment them based on buying intent.

Marketers can then use these segments to push personalized content to the relevant customers as a means to drive engagement and conversions, all directly from the platform itself.

This is Part 2 in a series of three articles on using a Customer Data Platform to personalize your marketing. Check back next week for Part 3, in which we’ll look at five ways that a Customer Data Platform can help CMOs.

Or read last week’s installment: How can a Customer Data Platform help with personalization? [4]

Content produced in association with Fospha [5]Click here [6] to read our collaborative content guidelines. Views and opinions expressed in this article do not necessarily reflect those of ClickZ.

Related reading

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References

  1. ^ Customer Data Platform (www.clickz.com)
  2. ^ previous installment of this series (www.clickz.com)
  3. ^ Fospha (fospha.com)
  4. ^ How can a Customer Data Platform help with personalization? (www.clickz.com)
  5. ^ Fospha (fospha.com)
  6. ^ Click here (www.clickz.com)
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