What is a customer data platform?

27 Aug 2021  |  by Kristina Kramer

A customer data platform (CDP) is a piece of packaged software that creates a unified customer database that can be accessed by other systems. To create this database, a customer data platform pulls behavioural data, transactional data, and demographic data from multiple sources and unifies it, ensuring all your customer information is in one convenient place. 

In doing this, the CDP generates a complete view of your customers on an individual level and allows you to recognise every unique customer through all their activity with your brand.

Once customer data has been collected from sources like your company’s website, Facebook page, and email database, customer profiles are stitched together by the CDP. These are then distributed to delivery platforms that need them for marketing purposes.

Now, let’s take a more detailed look at CDP platforms and their uses. We’ll start by providing a CDP definition before assessing the benefits of using such a platform and outlining how combining a CDP with a piece of data analysis software such as Apteco FastStats® can help your business.

CDP definition 

Before discussing the benefits of a CDP, we first need to answer the question ‘what is a CDP?’ Well, in 2013, respected analyst David Raab defined a CDP as ‘a marketer-managed system that creates a persistent, unified customer database that is accessible to other systems.’

Essentially, this means that a CDP is a pre-built system that centralises customer data from all sources and makes it available to other systems for purposes like marketing campaigns, customer service initiatives and customer experience surveys. 

What is a CDP used for?

The job of a CDP is to collect as much data as possible about your customers and create profiles based on this data. Once customer data has been harvested by the CDP, a huge database is created. This is then segmented into profiles that allow for effective and personalised communications. As a result, marketers find that CDPs are vital for collecting customer data, interpreting it, and leveraging it effectively.

You can fully understand how effective CDPs are and what they’re used for by thinking about how customers buy products in the modern era. Before making a purchase online, the vast majority of customers will research the product they’re looking to buy, read review sites, compare prices across retailers, and watch videos of the product in action.

As a result of this, before they buy from you, the average customer will interact with your business on a number of occasions. They’ll likely visit your website, click on or view ads, read emails, and take a look at your social media platforms.

To help convert website visitors into customers, the world’s best companies deliver increasingly personalised ads at each stage of the buying process. They provide relevant ads, tailor advertising copy, and offer crafted experiences. This makes the customer feel like they’ve received personalised attention from the business. To make this experience possible, a customer data platform is used to collect vast amounts of data and deliver it to teams who can then create more effective marketing campaigns.

If your business is currently unable to provide a truly connected customer experience across channels, or it cannot track customer behaviour and make recommendations to them based on their previous interactions with your company, then it’s likely that your business would benefit from a CDP.

Why are CDPs popular with businesses? 

CDPs are popular with businesses because they’re a ready-to-use and off-the-shelf solution. Although technical resources are often needed to set up the CDP and maintain it, the software is far easier to establish and maintain than a traditional data warehouse. In addition to this, a CDP will also provide your business with a number of benefits.

Firstly, because CDP platforms draw information from all channels and touchpoints, they have the potential to create a single customer view that is constantly updated. Collecting and unifying data is one of the most important aspects of the CDP platform. By eliminating silos, a complete picture of a customer is generated and effective analysis becomes possible. When you unify your data from a range of sources and channels, you can create a competitive advantage and gain a powerful understanding of each prospect and customer.

Secondly, because CDP platforms collect data directly from your audience (known as first-party data), you can be certain that the information you’ve gathered about your customers is accurate and GDPR compliant. As a marketer, gathering this sort of information is invaluable because you can use it to gain an insight into your customers. After all, if you’re working on a customer-centred marketing campaign, it’s essential that you know your customers.
On top of all this, CDPs are useful for unifying cross-channel marketing efforts. If you’re currently working in silos, then it’s likely that you’re working inefficiently. A CDP can unify your marketing efforts by supplying consolidated and accurate data to everyone in your organisation that needs it. Plus, as you work on your current marketing efforts, the CDP can collect and organise new data that will inspire ongoing marketing strategies and new campaigns.  

CDP solutions

As a marketer, one of the greatest decisions you face is choosing the right CDP for your business. Although a number of customer data platform vendors offer CDP solutions, each is different and will suit different purposes and industries.

Thanks to the growing popularity of CDPs, a number of different types of CDP are now available from vendors. According to the CDP Institute, the types of CDP solution available can be broken down into four categories: 

Data: These are the most basic form of CDP available. Data CDPs gather customer data from source systems, link the gathered data to customer identities, and store the results in a database that other systems can access. 

Analytics: In addition to the above features, analytics CDPs also offer analytical applications like customer segmentation, journey mapping, and revenue attribution. In addition, an analytics CDP will also often automate the distribution of segment lists to advanced analytics products.

Campaigns: As well as providing the functionality of an analytics CDP, a campaigns CDP can also specify different treatments for individuals within a segment. This can include things like product recommendations and personalised messages. 

Delivery: In addition to the above functionality, delivery CDPs provide data assembly, analytics, and message delivery. CDPs in this category offer the most well-rounded and complete offerings on the market. 

The right type of CDP for your business will depend on your objectives. As a result, it’s vital that you do your research on the features of a CDP you’ve found before you make a purchase, in order to ensure it adequately meets your needs. After all, in marketing, the timing of your activity is critical. If you choose the wrong customer data platform and it takes you a long time to segment your audience and select the appropriate channel for targeting purposes, then you miss an opportunity to be relevant and on-trend. If so, your marketing activity is likely to be ineffective.

Your CDP as a starting point for advanced analysis

Once all the data has been brought together in your CDP, you can conduct analyses of the data and turn your company’s data into insights.

If you have a piece of data analysis software like Apteco FastStats®, you’ll have the ability to move at speed, get data insights quickly, and beat your competition to the opportunity. With Apteco FastStats®, you can analyse millions of customer data records in seconds and unlock insights to power high-performing campaigns.

By combining your CDP with data analysis software like Apteco FastStats®, you can:

  • Create data selections and cross tabulations
  • Produce charts, Venn diagrams and word clouds
  • Transfer results into Excel, Word and PowerPoint
  • Export data into many formats
  • Schedule tasks and run reports automatically
  • Upload targeted data directly to your digital and offline marketing channels
  • Perform basket and transaction analysis
  • Use expressions and wizards to derive new variables
  • Track customers as they move between segments you’ve defined to trigger marketing communications at exactly the right moment
  • Create customer segments directly from visualisations
  • Analyse how customers move between segments
  • Create and save templates for quicker analysis

Benefits of combining a CDP with data analysis software

When you choose to use a data analysis solution together with your CDP, you’ll receive a number of benefits that will help you understand your customers better. Whether you’re looking to create segments, perform analysis or effectively map the journey of your customers, combining a CDP with a piece of data analysis software will help you achieve your goals. 

With a CDP, it’s easy to organise all of your customer data. Once organised, this data can provide you with key insights into the performance of your business and can be used to power high-performing campaigns.

Once you have this data, powerful data analysis software can help you give each and every customer the personalised experience they expect. By making segmentation simple, our data analysis software, Apteco FastStats®, gives you the power to recognise common traits and carefully segment your audience to improve engagement.

Plus, thanks to the platform’s analysis and visualisation tools, you can dig deeper than ever into your data and extract more value. You can identify patterns in transactional data, perform a profile analysis, or conduct predictive modelling. 

In addition, when you use a piece of data analysis software in conjunction with your CDP, you can easily identify new opportunities. Whether that’s geographical regions you can explore or a section of customers you’re failing to effectively reach, you can spot opportunities to grow the business and use a data-driven approach to make expansion possible. 

Similarly, by combining all of your data sources into a singular customer base, you’ll also find it much simpler to predict the next purchase of your customers. Built in machine learning and advanced modelling techniques combine behavioural and spend analysis to calculate the best next products to tempt customers.

On top of this, you’ll also have complete control over creating audiences for your campaigns. With the help of a piece of data analysis software, you can build the perfect target audience from transactions, engagement, and customer journey stages to improve your campaign performance. Then, when it comes time to report on your marketing activity, you can quickly generate charts, Venn diagrams, word clouds and profiles from your data.

By effectively utilising a CDP and then using advanced data analysis software to help you interpret and leverage the data, you can provide your marketing campaigns with the best possible chance of success. 

Kristina Kramer

Online Marketing Specialist

Kristina Kramer joined Apteco at the beginning of 2019. As online marketing specialist, her responsibilities include taking care of our website and various social media channels as well as the Apteco blog.

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