How to choose and implement the right CDP for your organization
Companies are swimming in customer data. The problem is that without the right tools, this information often goes untapped.
Customer data platforms (CDPs) bring together all of a customer’s interactions across multiple touchpoints to develop a comprehensive customer profile. Using these profiles, you can create better marketing campaigns, boost conversions and manage data securely.
In this article, we’ll provide a customer data platform definition and explain how they work. Then, we’ll explain how you can choose the right CDP for your company.
What is a customer data platform?
A customer data platform is software that helps you create holistic customer profiles. They merge customer data from several sources into a single database so you can track every detail and interaction with ease.
CDPs are so powerful because data collection isn’t limited to one or two channels. Instead, it’s possible to unify first-party customer data from all channels and touchpoints. These touchpoints include your website, email, advertising campaigns, POS system, social media, CRM and more.
They may also be able to collect second and third-party data collected through partnerships and external sources.
CDPs can collect various types of online and offline data, including:
Identity data – name, age, gender and more
Contact data – email addresses, phone numbers and physical addresses
Demographic data – income level, education and occupation
Behavioral data – browsing behavior and product usage patterns
Transactional data – previous purchases and returns
Interaction data – support inquiries, feedback and survey responses
Social data – social media activity, preferences and interactions
A customer data platform has three main functions: Collect, manage and activate customer data.
Collect and organize data. CDPs ingest data from various sources, including websites, integrated software, APIs and more and organize it in a unified customer database. They then act as a single source of truth for marketing, sales, product development and customer service teams to understand their customers.
Manage customer data. CDPs help users manage, clean and standardize customer records to ensure accuracy and consistency.
Leverage and activate customer data. CDPs combine all known customer data points and link them to each customer’s unique profile. Users can then use these insights to create audience segments and leverage them with other tools, like marketing platforms.
How customer data platforms work (with an example)
To understand how customer data platforms work, let’s look at an example.
Imagine a retail company that has an online presence, physical stores and a mobile app. To get more out of their customer engagement efforts, they invest in a CDP.
The CDP collects data from various touchpoints, including the company’s website, customer support interactions and so on. It captures a broad range of data like customer behavior, purchase history, website interactions and service preferences.
It also incorporates data from second-party sources like social media. The retail company has a Facebook page where they share ads and interact with customers. The CDP collects data relating to their customers’ online behavior, interests and interactions through this platform.
The CDP then processes and organizes these data points, removing duplicates and creating a comprehensive view of the customer. Using this data, the company can deliver personalized experiences.
For example, they might send targeted emails based on customer interests or provide tailored recommendations to website visitors based on their prior engagements.
The reason CDPs are so powerful is that it would be impossible for a single person to collect and analyze customer data in this way – especially for a business with thousands of customers.
CDP vs. DMP vs. CRM
Customer data platforms, data management platforms (DMPs) and CRMs have one thing in common – they all deal with customer data. However, what they do with this data is completely different.
Here’s how these platforms differ:
Customer data platforms. A CDP collects and integrates customer data to create detailed customer profiles. Its primary focus is to enable businesses to leverage customer data for more effective marketing campaigns.
Data management platforms. Companies use DMPs primarily for advertising campaigns. They collect and analyze second and third-party data to deliver more effective ads across various networks and platforms.
Customer relationship management software. CRMs like Pipedrive help track communications and nurture customer relations. The main function of a CRM is to improve the effectiveness of your marketing, customer-facing and sales teams, helping them to improve customer engagement and grow your customer base.
Note: CDPs also differ from data warehouses or data lakes. These platforms are simply large collections of data – they don’t process or enrich the raw data to make it more useful for sales and marketing teams. They simply store the data to make it available for analysis.
7 benefits of a customer data platform
The main benefits of a CDP hinge on its ability to create organized profiles for each of your customers. This organization enables companies to easily see and understand their key segments, leading to more effective marketing, customer service and sales processes.
CDPs do more than just collect and store customer information. They process and enrich this data, creating unified profiles called single customer views (SCVs). The CDP builds these profiles from historical and real-time data, helping you understand your customers in more detail.
With this detailed view, you can see every time a customer has engaged with your brand and what the result of that interaction was. Based on this information, you can provide more relevant experiences and improve the customer journey on the whole.
2. Automate identity resolution
A key challenge in achieving a single source of truth is linking data from different sources to the same person. CDPs use unique identifiers to resolve customer identities and ensure that all relevant data points are associated with the correct profile.
Many CDPs use advanced techniques to match data to individual customers based on underlying patterns and behaviors. For example, they may be able to identify users who use multiple email addresses and various devices and combine this data into a single profile.
3. Eliminate data silos and improve team collaboration
Data silos are created when different departments don’t share the customer data they’ve collected. This can be a problem for many reasons, but most importantly, it prevents your teams from gaining a full understanding of their customers.
With a CDP, all of your customer data is in one place. Any team can access your customer profiles and make data-driven decisions on how to interact with them, improve processes and drive business growth.
Here’s a quick video on how Pipedrive makes it easy to organize and share information between teams:
4. Automatically update your customer profiles
CDPs continually collect and integrate new customer data from various sources. This eliminates the need for manual data entry and reduces the risk of human error. It also helps save time and resources, resulting in more efficient (and more accurate) customer data management.
Further, since customer data is updated automatically, it ensures that you always have access to the latest data. This means you can deliver streamlined customer experiences across multiple customer touchpoints based on their most recent actions.
5. Leverage more effective customer insights
A key problem that many businesses face is that they have access to tons of customer information but no way to leverage it. CDPs solve this problem by giving you more detailed insights into your customer base.
With granular customer insights, you can make data-driven decisions to improve your marketing strategies, products and services.
6. Increase engagement with omnichannel personalization
CDPs make it much easier to deliver personalized material based on each customer’s preferences, behaviors and interests. With unified customer profiles, it’s much easier to create consistent customer experiences across various channels.
For example, if a customer visits your website, you can provide personalized product recommendations based on their purchase history. If they abandon their cart, you can send an automatic reminder with the same messaging and recommendations.
7. Ensure customer data compliance
CDPs play a crucial role in data privacy and compliance. Generally, they provide tools to ensure compliance with data collection, retention and deletion rules.
Likewise, CDPs apply data security measures to protect customer data from misuse. They might use encryption, access controls and other security policies to safeguard this information and follow regulations.
How to choose and implement the right CDP for your organization
Choosing the right CDP for your organization is a critical decision that needs careful consideration. Many CDPs offer different features and come at different price points, meaning the best solution for someone else isn’t necessarily the best for you.
Here are some things to consider before choosing your CDP system:
1. Identify your organization’s needs and goals
The point of this first step is to try to understand whether you need a CDP and how one would help you achieve organizational goals more effectively.
Start by creating a list of specific goals you want to achieve with a new CDP. For example, you might want to generate more customer insights or enhance your marketing campaigns.
Ask yourself the following questions:
Why do you need a CDP? Consider your use cases. Most people use CDPs to understand the customer journey, create more personalized experiences or create multichannel campaigns.
What kind of data do you need to collect and manage? Are you going to primarily collect first-party data, or do you need to collect second and third-party data, too? Consider what data integration and cleansing features you need, as not all CDPs will offer the same capabilities.
Does your CDP need to integrate with existing tools, like marketing technology or a CRM? Consider your existing tech stack and what tools your CDP will need to integrate with. This includes marketing automation tools, email platforms, customer service management software and payment platforms.
Do you need to be compliant with specific data regulations like the GDPR or CCPA? If so, you’ll need a CDP with data suppression and deletion capabilities. Likewise, consider what security features you need.
Also, consider the pain points and challenges you’re experiencing that a CDP can address. For example, if your customer data is too fragmented and your marketing team is struggling to make sense of it, a CDP can help centralize it.
Finally, think about the size and complexity of your organization, as well as the number of customers you interact with. The larger and more complex your organization is, the more likely a CDP solution will be able to streamline your operations.
Keep in mind that you might not need a CDP at all. Instead, a CRM or similar solution might fit your requirements better. Often, a CRM includes CDP capabilities, giving you the best of both worlds. For instance, Pipedrive’s customer management software helps track customer interactions, find opportunities and streamline the sales pipeline.
A great sales CRM is a business-critical tool that helps sales professionals keep track of daily tasks and strengthen relationships with customers. In the broadest sense, contact management isn’t only about storing data but allows businesses to analyze, understand and plan the next steps of their sales process.
Shaun ShirazianCPO, Pipedrive
2. Consider your internal resources and budget
There’s no point investing in a CDP if you don’t have the infrastructure and resources to make the most of it.
To assess your organization’s technical infrastructure, consider the following:
Do you have the IT resources to deploy an in-house CDP, or do you need help from an external vendor to set one up?
Does your team have the skills and knowledge to effectively use a CDP, or will you need extra training (or new employees)?
Based on the above answers, do you have the budget to make the most out of a CDP?
Look for CDP providers that have experience in your industry and with similar organizations. These will be more likely to have the features and capabilities you need, and the vendor will be able to help you get the most out of the software.
When comparing solutions, consider reputation, customer reviews and expert comparisons. These will help you determine whether a solution matches up with your organization. As you research, create a shortlist of potential vendors that might match your organization.
Another key consideration is how easy it is to install the CDP. Some are highly technical, while others are designed for non-technical users. Also, check what data sources each CDP can integrate with. Make sure they can gather data from the sources you need to utilize.
Once you’re happy with your shortlist, start reaching out to vendors to evaluate their products.
Ask for information about key features, the implementation process, technical support and pricing. Based on the information you get back, narrow down your shortlist.
Note: This is a good time to bring in stakeholders from the different departments, including marketing, IT and customer service. Involve them in the decision-making process and gather input to ensure the CDP will meet the needs of all relevant teams.
4. Participate in product demos (or free trials) and make a final decision
Once you have a final shortlist, it’s time to arrange product demonstrations so that you can get a better feel for the CDP platforms. You might be able to take a free trial and apply the CDP on a small scale to see how well it would fit your organization.
While participating in the sales demos, try to get a full hands-on experience. Be critical and test as many of the system’s features as possible to ensure they’ll meet your needs and goals.
After you’ve tried a range of CDPs, choose one that best aligns with your organization.
Depending on the size of your company, you may need to negotiate the terms and conditions. This might include pricing, contract length, service-level agreements and implementation timelines. Make sure that all key aspects are clearly documented to avoid any misunderstandings.
5. Implement, onboard and optimize your CDP solution
Once you’ve finalized your contract, you’ll begin the implementation process. During this process, you’ll work closely with the CDP vendor. They’ll help you install the software, integrate it with your existing systems and onboard your employees.
Remember that to get the most out of your CDP, you need to continuously track its performance. This way, you’ll be able to identify key areas where the CDP needs tweaking so that you can get the most out of your new software.
Review your organization’s goals regularly to assess whether the CDP is helping you achieve them. Seek feedback from the relevant stakeholders to make sure the CDP is working as expected. If not, make the necessary adjustments to your CDP strategy to ensure that it continues to stay aligned with your long-term needs and goals.
Customer data platforms have become essential tools for organizations that want to leverage their customer information. By unifying customer data into a single view, companies can gain valuable insights, personalize their marketing efforts and improve customer experiences across the board.
However, choosing and implementing a new CDP won’t happen overnight. Take your time to compare all of your choices against your specific requirements and choose the platform that offers the best all-around solution.
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