The rise of online shopping, interactive brand profiles, and social media means that today’s customers require more than just exceptional customer service to move along your funnel.
Personalization marketing is quickly becoming one of the best methods for companies of any size to interact on a personal level with current and prospective clients. While it’s an effective strategy, it takes time and effort to generate the tailor-made experience customers crave.
The amount of data available on a single person is immense. Collecting, tracking, and interpreting the data can quickly overwhelm your marketing team. Customer data platforms (CDP) offer a cutting edge solution.
What are CDPs?
Customer data platforms are a type of database software that develop persistent, centralized reports of every one of your customers. By gathering first-party customer data (such as activities, behaviors, and demographics) from a variety of networks and sources, it creates a comprehensive representation of individual clients.
Ideally, the right CDP will consolidate your current information and be easily integrated into your current system. The information that CDPs collect can make a complete customer profile. Third parties and built-in marketing automation tools can analyze this information and create marketing strategies tailored to individual profiles.
First vs. Third-Party Data
First-party data is the information gathered straight from consumers. This type of data includes behavioral data, such as which e-mails they open or which ads they click.
It also includes data customers give you by filling out forms, surveys, and even communications with members of your team.
Companies reap many benefits from gathering first-party data. It allows for a more transparent, and complete, picture of individual consumers. Additionally, it promotes GDPR and privacy regulation compliance, something that will grow increasingly more important in the coming years. It also gives you certainty about where the data originated, its accuracy, and how it was obtained.
Third-party data, on the other hand, is information gathered by third parties. This data is anonymous, focused on consumer interests, and almost only used for creating ads for potential customers.
The problem with third-party data is that it lacks the trustworthiness first-party information enjoys. It is often impossible to tell if ad clicks are intentional or accidental. Which can makes accurate segmentation difficult.
What Data Do CDPs Collect?
Conventional database software simply can’t keep up with the quantity, rate, and range of digital data customers produce on a daily basis. Customer data platforms, on the other hand, are designed to handle the massive amount of fast-moving information.
The most secure method for CDPs to gather this data is using their SDK. But, most can take in this information from other systems by way of JSON or batch ETL transfers.
The types of data CDPs collect include:
- Events: Behavioral information that stems from a customer’s activities on a website, app, or their phone’s browser.
- Customer Characteristics: Attributes include names, addresses, contact information, date of birth, and more. More developed CDPs can save AI-powered forecasts, including the probability of buying something.
- Purchase data: Transactions, returns, exchanges, and other data from online stores and POS networks.
- Campaign metrics: Engagement, outreach, impressions, and measurements from other strategies.
- Customer service information: Data from live chats, amount and time of engagements, regularity, NPS scores, and other information from CRMs.
Types of CDPs
As customers’ needs have matured, so have CDPs. There are many providers of customer data platform software, and they vary according to their target market and proposed use cases.
However, knowing the distinction between CDP providers will help you narrow your selection. The main difference is knowing if the vendor only offers CDP or additional capabilities, as well.
There are two types of vendors to choose between; standalone CDP, or customer data and experience platform (CDXP). Knowing what the vendor is offering is essential because the product in question can create substantial variations in how your company uses the software.
A standalone customer data platform is simply the software without the add-ons. It takes in your business’s first-party data and utilizes it to create a 360 profile of every client. Generally, standalone CDPs provide analytics abilities, enabling you to get a rough analysis of your audience.
Other systems can obtain this data, but the standalone CDP can’t carry out campaigns. That requires additional dedicated tools that can utilize the extensive information it gathers.
Standalone CDPs are best for companies that already have campaign execution tools.
A customer data and experience platform is the evolution of standalone CDP software. In addition to the advantages of traditional CDPs, it also generates a customer experience cloud, which produces an individual, practical, customer-focused marketing platform.
By combining AI-powered marketing automation, real-time data, and UX optimization with a superior CDP system, CDXPs offer marketers everything they need to build the best customer experiences possible.
By gathering the tools you regularly use into a single unified network, CDXPs streamline workflows and boosts productivity. Additionally, CDXPs are also adaptable and can fit into current tech stacks. It uses your pre-existing software and tools, designing the best solution for your company.
There are many reasons why you should choose a CDXP for your business’s personalization strategy:
- Renders a framework for a 360-degree customer profile
- Enables customer-loyalty driven decision making
- More accurate targeting as well as excellent customer interactions
- Provides meaningful interpretation of marketing initiatives across various channels
- Facilitates prompt replies to shifts in the market or customer choices
Enterprise-Grade CDPs vs. Small Business CDPs
In addition to the capabilities of your customer data platform, you also want to consider the extent you will implement in your company.
What do you need from your CDP software?
As you research platforms and providers, remember some of these principal aspects:
- Scalability: Large-scale companies manage vast quantities of data daily. The information they collect changes rapidly, and for a CDP to be beneficial, it must swiftly and precisely react to these shifts. So, the CDP must be made for scale from the start with a scalable structure.
- Flexibility: For large business owners, plug-and-play solutions won’t work, so a CDP must be flexible and adaptable. The software should take in information from every source, including smoothly interfacing with other platforms already in use.
- Integrity: Since CDPs store large quantities of sensitive data from both the company and the customers, the software must be secure. CDP vendors must value strict security measures and a commitment to privacy.
Why CDPs are Valuable Assets
Customers want more than good service and excellent products from companies today. In order to maintain a relationship with existing clients and attract new ones, companies must create personalized experiences, and that includes relevant recommendations and appropriate outreach.
However, many companies are unable to give customers those tailor-made interactions. That means risking losing customers to other brands who do provide the communication and consistency they’re looking for.
Most companies will find that persuading customers to come back is more complicated than capturing their interest from the beginning.
That is why businesses need to have up-to-date, organized, readily available, and discerning customer data. A customer data platform can make all the difference. After that, it comes down to collecting the right information.
How CDPs Support Personalization
If you want to bridge the gap between you and your customers, you need to do more than know who they are. The information you collect must be meaningful. The CDP you purchase needs to be digested by different social media platforms or web browsers like Google.
You need to recognize and segment your customers according to their behavior and activity.
Segmentation is merely grouping customers who share similarities to target them with content that’s relative to them directly. Segmentation helps you see if a customer has an abandoned shopping car, or how interested they are in your company, and more.
Quality CDP allows you to effectively market to them, or take them off your list of targeted consumers. These methods are the basis of powerful personalization because they let you spot the right audience for specific campaigns.
But if you have a standalone CDP, segmentation won’t be enough. To truly offer a tailor-made customer experience, you’ll likely need a CDXP.
How CDPs Promote Customer Loyalty
The best way to develop a loyal customer base is by giving them what they want. Each customer’s needs and wants will differ greatly – so you need to create space for an individualized interaction with each potential lead to find specific needs and wants. CDPs allow businesses of any size to comfortably achieve this while still offering tailor-made experiences.
CDPs promote loyalty by resolving the issues that arise from segmentation, siloed data, and making personalization feasible.
Information siloes prevent companies from giving a consistent customer experience. Without a centralized data center, companies won’t be able to provide a multi-channel, streamlined experience for their customers.
Choosing the Right CDP
Once you determine that a customer data platform is right for your company, you need to select a provider.
As stated above, there are a considerable number of vendors to choose from, which can make things feel overwhelming. But with a well-thought-out plan, the buying process is easier than you think.
Different providers have different terms and use cases, but the general process should work for most companies.
- Define Your Plan: The first step is establishing what you will do with a CDP. What capabilities do you want it to have? Do you need a standalone CDP or a CDXP? Once you formulate a plan that suits your needs, you’ll have a better understanding of your specifications.
- Match Your Specs to Possible Providers: The next step is looking at what different vendors can offer with their software. Make a list of companies that can manage the required use cases to narrow down the pool of potential matches.
- Assess the Vendors: Once you have a list, request each vendor for a presentation of their CDP carrying out a specific action. Don’t trust a ready-made demo that highlights the most benefits of the platform. It will help you decide if a particular vendor has what you are looking for.
You may need to include an RFP or pilot project to ensure that the CDP meets your needs. Once you do these, you can select a provider and a platform.
Customers want more than excellent service; they want businesses to engage with them on a personal level. As a result, personalized marketing is essential in today’s world.
There are several tools available to help companies create better interactions between current and existing customers. One of the best ones, however, is customer data platforms. There are several things to consider when choosing the right platform for your company, such as its capabilities, the vendor, and the scale it will be implemented.
CDPs collect first-party data and organize it so marketers can produce more effective strategies. Advanced, AI-powered platforms can generate even more targeted approaches to create the engagement consumers want.