What is a Customer Data Platform?
What is a Customer Data Platform?
Customer Data Platforms (CDPs) are quickly becoming one of the key martech software solutions in the B2B sphere. Coupled with a powerful Digital Experience Platform (DXP), they can transform your B2B marketing strategy by facilitating more accurate segmentation, improved personalization, and a fully omnichannel approach.
Here we explore what CDPs are, how they differ from other B2B technologies, and how they can benefit your organization.
What is a CDP?
A Customer Data Platform is a business system that unites all the customer data a company harvests in a single, comprehensive database. Typically, the marketing team controls and manages a CDP, but that's not always the case. CDPs impact every aspect of business operations so that responsibility can be shared between teams.
Essentially, a CDP extracts customer data from all available sources, enabling simpler, more effective management and use of that information. By creating a more comprehensive picture of the customer, a CDP enhances your marketing abilities and ensures you better understand your customers’ needs.
What is the difference between a CDP, CRM, and DMP?
CDPs differ from both Customer Relationship Management (CRM) platforms and Data Management Platforms (DMPs).
A CRM is designed to enable the creation of basic customer profiles that allow marketing and customer service teams to manage their interactions with that customer. Unlike CDPs, they draw on limited data sources. Typically, this means they’re focused on identifiable personal data. CDPs go beyond this and include every piece of data associated with a customer, including data points relating to mobile devices and cookies.
We often view DMPs as complementary to CRMs, as they focus on targeting ads based on user cookies. However, this is usually done somewhat anonymously, so DMPs don’t build long-term customer profiles.
CDPs in the B2B sector
In B2B, CDPs are becoming increasingly popular for a range of reasons. They enable more effective customer segmentation, connect with both first-party and third-party data sources and allow for easy integration with other business systems. These are fantastic qualities in a B2B environment where personalization and seamless digital experiences are prime concerns.
But how do B2B CDPs differ from their B2C equivalents? While retaining most of the features in B2C CDPs, B2B CDPs add that extra depth required in complex B2B journeys. That means unified profiles at several levels - most notably the person, company, and buying center. It also includes territory planning features, lead personalization, and sales territory assignment.
Looking at customer data in depth
When we discuss customer data, it’s tempting to talk in general terms. However, data comes in many shapes and forms, and understanding how distinct types of data are collected, analyzed, and used is key to realizing the value of CDPs.
- Transaction Data - this is all the data you collect concerning customer purchasing. It’s typically generated by your e-Commerce solution, though you may also acquire it through a B2B marketplace. It covers historical purchases, renewal dates, order values, abandoned purchases, and product returns.
- Profile Data - this is the data you use to create customer profiles. It includes a lot of personal information, such as location, income, professional status, and personal preferences. It is key to understanding your customers and tailoring marketing materials.
- Behavioral and Device Data - this category refers to data that offers insights into the way customers interact with their digital devices and their online behavior. It includes the pages they view, how long they spend on certain sites, what they are interested in on your site, and when and where they engage with your digital channels.
Exploring how CDPs interact with Digital Experience Platforms
For B2B companies, DXPs and CDPs are a match made in heaven. DXPs thrive when you provide them with plenty of data. Data drives their ability to design, develop and implement world-class digital experiences. In turn, these experiences make for more loyal and valuable customers.
It may be easier to conceive of it this way - a CDP enables you to understand what makes your customers tick, what they need, and what they respond to. A DXP enables you to build customer relationships across multiple channels based on the insights you gained from your CDP. For instance, you can use segmentation that occurs in the CDP to deliver targeted content across multiple channels in the DXP.
What are the benefits of a CDP?
Now we’ve answered the question ‘what is a Customer Data Platform’, we’ll now look at some of the core platform features. CDP benefits are wide-ranging. To demonstrate this, we’ve compiled a list of the ten biggest benefits of a Customer Data Platform to B2B businesses.
1) A centralized source of customer view
As a CDP is a centralized hub for all of your data collection, it offers a comprehensive, 360 view of the customer. Rather than having data spread across the organization, it brings together all the information at your disposal. Whether it’s from social media, sales portals, or email marketing, your business collects data from a wide range of sources. A Customer Data Platform acts as a single repository for all of that information.
This is essential in omnichannel systems (more on that later) and is central to modern digital marketing. Businesses cannot afford to allow data silos within the organization. Everything needs to feed into your analytics to inform future business decisions.
2) Offer a more personalized experience
Personalization is another core benefit of a Customer Data Platform. Effective personalization depends on comprehensive data collection and the availability of valuable insights into customer behavior. It requires a substantial amount of customer data and a solution capable of interpreting it. The biggest obstacles preventing personalization are gathering and integrating the necessary data into business systems. CDPs are the solution to both.
3) CDPs have a measurable impact
We can sing the praises of Customer Data Platforms all day long and provide you with a list of CDP benefits as long as your arm. However, what you're really interested in is the stats. We understand it's the numbers that get people excited! Fortunately, there is plenty of evidence to demonstrate just how much of an impact CDPs have on a business's bottom line.
For instance, a recent report by Aberdeen showed that adopting a CDP results in a 9.1x increase in customer satisfaction, 5.7x greater annual increase in average customer spend and 2.9x greater year-over-year growth in annual revenue. In other words, they have a tangible financial impact across the board.
4) Automation features are cost-saving
Often, CDPs are loaded with automation features. At the very least, a Customer Data Platform will facilitate easy integration with other marketing automation applications. These features reduce costs by automating large swathes of your marketing campaigns, enabling your marketing specialists to focus on the work that adds value to the business.
Rather than spending a lot of time on labor-intensive tasks, your marketers can put more time, energy, and resources into optimizing their campaigns and marketing resources. Ultimately, it empowers your marketing team to do more with less. You can run more campaigns with a higher degree of targeting and segmentation while reducing the time and cost it takes to do so.
5) Predictive functionality helps you identify trends
Industry-leading CDPs also make the most of advanced AI and Machine Learning to analyze customer data and predict future behavior. Consequently, CDPs shift the emphasis from a reactive approach to a proactive approach. Rather than looking solely at historical behaviors and how they influence current customer actions, you're now also predicting future behavior.
This can help you identify key marketing trends before or as they emerge, giving you a head start on the competition and ensuring you don't have to play catch-up. By offering a glimpse into the future, CDPs enable you to proactively plan for the coming days, months, and years while also helping you maximize your marketing campaigns' impact by keeping them fresh.
6) Guaranteeing data security
A CDP benefit that’s increasingly important in the modern age is online security. Data security has never been more critical for brands. A single security breach can make or break a reputation and has the potential to crush a company. There are also legal obligations and repercussions to consider. The introduction of data protection legislation, such as GDPR, highlights the issue of data security and ensures everyone is aware of the consequences of poor data management.
CDPs help you meet your data security obligations. As all your customer data is centralized in a single hub, it's much easier to conduct audits and respond to requests from industry watchdogs. It also makes complying with data security legislation far more straightforward. By simplifying data collection, you minimize the chance that rogue data streams remain obscured from view and eliminate concerns that you're not managing data correctly.
7) Facilitating an omnichannel approach
Omnichannel is no longer a new, groundbreaking theory that’s tearing up the rulebook and terrifying those resistant to change. It’s established, mainstream, and increasingly essential to commercial success. Omnichannel theory suggests that the only way to guarantee satisfactory digital experiences is to ensure data, customers, and employees can move freely and seamlessly between channels.
CDPs break down silos and facilitate a truly omnichannel approach by bringing together all the data collected in your diverse channels. Your various teams and departments can quickly and easily access data. You can use it to inform marketing in email, social media, and B2B sales portal channels. Implemented carefully, CDPs can be one of the most powerful omnichannel tools at your disposal.
8) Identify new customer segments
It is highly likely you already segment your customers to enable targeted marketing and customer outreach. However, how accurate and detailed are those segments? CDPs offer a more comprehensive view of customers. Equipped with a more comprehensive view, you can better understand what connects them.
In this way, CDPs help you identify new customer segments. By increasing the amount of data that goes into defining segments, you can create ever-more detailed and effective customer groups. This allows you to refine and hone your marketing targeting and deliver increasingly effective communications.
9) Ease of use
Developers design CDPs to be intuitive and easy to use. In most cases, relatively little technical know-how is required, and the onboarding process is streamlined and easy to follow. That said, it still pays to do your research and choose a CDP supplier that invests in ensuring their customers can get the most from the product.
CDPs are designed with UX in mind. They’re business tools that make things easier for you, not harder. As such, they offer significant value without too high a technical cost. They are also agile and can be integrated with various other business systems relatively simply. This makes them a versatile addition to your tech stack.
10) Align the entire organization through customer data
Customer data is a source of information around which the whole organization can and should align. It encourages evidence-based decision-making and benefits the entire business, from sales through to marketing and logistics.
Whereas these teams can often pull in opposite directions, CDPs give them a single source of truth to unite around. It ensures everyone is on the same page by providing data-driven justifications for crucial decisions and making it clear what the customer wants and needs.
Tips on implementing a CDP
Implementing a Customer Data Platform doesn’t have to be tricky, though it does require plenty of planning and an understanding of how you can maximize the software’s value. Though implementation will vary from platform to platform, here are our top five tips for getting it right.
1) Make sure all stakeholders are involved
A CDP will impact every aspect of business operations, so make sure all the stakeholders are involved in implementation. Establish expectations and discuss how each stakeholder believes the platform can and will benefit their team. This technology enables businesses to bring together diverse parts of the organization.
It's also a good idea to determine how each stakeholder intends to use the platform. Are they taking advantage of its full potential? How do these different uses fit together? Finally, try to link your CDP goals to broader organizational goals. How will the CDP contribute to the business achieving its wider aims?
2) Look at your data
When implementing a CDP, you need to map all your data streams. What data are you collecting? Where is it coming from? What do you currently do with it? This isn’t always easy, especially if you don’t currently have a good handle on your data and data sources.
Knowing your data allows you to better plan your strategy and understand how you can best use a CDP. Every B2B business collects and utilizes data differently, so ensuring you know how a CDP will affect you specifically is key to getting the most from the software.
3. Define your targets
Once you’ve looked at expectations and customer data, it’s time to turn to targets. What do you want to achieve with the Customer Data Platform? How will you define success? How will you measure performance? It’s all too easy to introduce new technology in an aimless and unfocused way. When you do so, you often find that your solutions don’t have the desired effect.
Make sure you prioritize objectives too. What is your primary goal? Which goals are you willing to sacrifice if it turns out you need to focus your efforts? Prioritizing ensures that you don’t spread yourself too thinly. If you’re falling short of your primary objectives, you can reduce the resources going into secondary goals and redirect them towards your main aims.
4) The technical solution design
Look at the CDP you’ve chosen. What are the technical requirements for implementation? How will those affect your other business systems? Usually, it’s a good idea to spend time discussing integration with the software supplier. They will provide advice and guidance on your best course of action.
Before kicking on with the project, create a comprehensive plan for integration. Think about timescales and be realistic – don’t risk a good start by rushing in. Too many projects are derailed by a timeline that’s simply not achievable.
5) Integrate, measure performance, and assess original aims
Finally, most software providers will provide support and onboarding assistance when it's time to implement your plans and integrate the solution. However, the hard work doesn't end once you're up and running.
You'll need to constantly measure performance, generate feedback, and fine-tune how you use the software. Keep your original goals in mind at all times. Are you on the path to meeting them? There may be unforeseen benefits. Do they change the way you intend to use the software going forward?
Ibexa CDP
We hope we’ve helped answer the question ‘What is a CDP?’ and have given an overview of the key features of this increasingly popular platform.CDPs have a significant role to play in the B2B sector. More and more B2B customers expect personalized digital experiences from their suppliers. For those suppliers, making the most of customer data is no longer optional but essential. Paired with powerful DXPs, CDPs can provide the insights you need to streamline the customer journey and deliver game-changing digital experiences.
