Customer data platform in marketing: how it works and why business needs it

Marketers are constantly told today that modern marketing is no longer possible without a customer data platform. In fact, cdp in marketing is a tool that helps to collect disparate data about customers, combine them and use them for personal communications. To understand more deeply, it is first important to understand what a cdp platform is in theory and how it works in practice.

When specialists type the query «cdp platform what is it» in the search, they want to get a simple explanation. If we discard the technical details, this is a specialized solution that collects events from  different sources, connects them with a specific person and forms a single client profile.

In the classical definition, the cdp platform is a software product that accepts information from websites, mobile applications, call centers, offline points and advertising offices, and then brings it to a single format. As a result, the marketer sees not a set of individual actions, but a whole history of communication between the company and the person.

Another explanation of the cdp platform sounds like this: it is a layer between communication channels and analytics. Below are application forms, orders, page views, calls. From above — reports, segments and personalization scenarios. Between them there is a cdp system that connects all elements into a single logical chain.

The term customer data platform is used in foreign literature. It describes the same concept: a centralized customer data storage suitable for practical use in marketing, sales and support.

To understand what a cdp platform is in a real infrastructure, you need to look at the sources of information. A typical cdp system connects to dozens of channels and services:

• Websites and landing pages of the company
• Mobile applications and web versions
• Social networks and messengers
• Email newsletters, SMS and push notifications
• Offline cash desks and loyalty programs
• Call center, chatbots and feedback forms
• Advertising offices and traffic procurement systems

Through the integration and API, there is a constant collection of data. The solution records user behavior: page transitions, banner clicks, adding goods to the cart, purchases, returns, responses to newsletters.

Based on these events, the system builds a client profile. In it you can see data about customers: contacts, channels that a person uses more often, purchase history, average check, interest in individual categories. All this is stored in a structured form and available to marketing, analytics and support.

This approach provides a basis for personalization and analysis. The company no longer relies on separate tables and reports from different services, but works with a single picture of customer behavior.

From the point of view of business, cdp in marketing is the core around which all marketing processes are built. The tool combines data sources, communication channels and analytical showcases.

Inside the architecture, the cdp platform is the selected point of truth about the client. All other systems - CRM, mailing service, advertising accounts, analytics tools - contact this center for up-to-date information.

When a marketer needs to prepare a newsletter, he downloads several databases. It forms a segment with a solution that takes into account customer behavior, reaction to previous campaigns and technical limitations. Next, the finished list is transferred to the right channel, and the results are returned back for further analysis.

Having figured out what a cdp platform is in general, it is useful to compare it with other tools.

CRM stores information about  deals, tasks and stages of managers' work. Analytical services build traffic and conversion reports. DMP focuses on  impersonal segments for advertising systems.

Against this background, the cdp system performs other functions:

• Combines personal and behavioral information
• Collects data from different channels and systems
• Allows you to build a flexible system of segmentation and personalization
• Supports the transfer of audiences and events to working marketing tools

Thus, the cdp platform is not a replacement for CRM or web analytics, but a link between them. It is here that a single model of customer behavior is created, on which other services are based.

When the architecture is already built, it becomes clear how exactly cdp helps business. The main effects can be described in a few points:

• The company understands its audience and its needs more accurately
• Deep segmentation becomes possible, taking into account channels, interests and life cycle
• Personalization ceases to be a manual process and turns into automatic scenarios
• Communication with customers becomes consistent: messages in mail, messengers and advertising do not contradict each other
• Key indicators are growing - repeat purchases, average check, response to-offers

In many cases, it is emphasized that it was the customer data platform that made it possible to run complex scenarios without the constant participation of developers. Ready-made tools inside the solution allow the marketer to manage segments himself and launch campaigns with minimal dependence on the IT team.

The best way to understand what a cdp platform is is through practical examples. Similar scenarios are used in different industries.

1. Fight against outflow
The solution analyzes user actions, intervals between purchases and  decrease in activity. On the basis of these signals, customer segments with a high risk of leaving are built. Special offers and reminders are set up for them.

2. Revenue growth from the existing base
The system tracks what goods a person used to buy, how often he reacted to the shares. Based on this, personal recommendations and additional suggestions for the main product are formed.

3. Optimization of advertising attachments
The platform links impressions and clicks with follow-up actions. The marketer sees which advertising channels bring a quality audience, and which ones create only noise. This helps to redistribute budgets and improve campaign performance.

4. Customer service improvement
The support employee, receiving the appeal, can see the person’s path on the product: which sections he looked at, what letters he opened, what difficulties he had. This context saves time and improves the quality of assistance.

In all these scenarios, the key role is played by the fact that the cdp platform is a single storage, and not a set of disconnected reports.

The cdp  implementation project is not only the purchase of a license, but also a serious change in the processes. There are several steps:

• Audit of current infrastructure. The company describes which systems are already in use, where the customer base is stored and which channels are involved
• Building architecture. Priority integrations are determined, exchanges with CRM, website, mobile services and external sources are configured
• Setting up data models. Specialists are thinking about what the client’s profile will look like and what events are important to record
• Launch of pilot scenarios. Trigger chains, basic segmentation and reports are checked
• Expansion of use. New segments and automatic campaigns are added based on the first results

Some companies choose cloud solutions, others deploy the system on their servers. Here it is important to take into account the requirements for personal data, available resources and scaling plans.

The solution market is vast, and when studying reviews, the wording "cdp platform" is often found. Different products are focused on e-commerce, financial services, B2B or media.

When choosing, it is worth evaluating:

• How well the system works with existing data sources
• What scripts from the box supports
• How easy it is for a marketer to use the interface without constant IT help
• How the issue of security and storage of personal data is resolved
• What are the opportunities to connect new channels in the future

In fact, it is in this context that the question arises again: what does the cdp platform mean for a specific business — a ready-made product or designer that will have to be refined for a long time. The answer to it depends on the scale of the company, its processes and flexibility requirements.

When the organization has already taken the first steps and built working scenarios on the basis of the customer data platform, the approach to marketing as a whole changes.

Firstly, it is easier for management to make decisions: customer data and campaign results become more transparent, you can make forecasts and assess the impact of changes.

Secondly, the marketer gets more time for strategy and testing of new ideas, rather than for manual processing of downloads.

Thirdly, the product department sees real reactions of people to changes in the interface, tariffs or service packages and can adjust the rate faster.

In the long term, the cdp platform is also a tool of competitive advantage. Companies that have learned to work carefully with customer information build a more accurate dialogue with the audience and rarely waste the budget.

Summarizing what has been said, you can return to the key question: what is a cdp platform and why it is needed.

• For a marketer, the cdp platform is a convenient system where you can quickly assemble a segment, launch a campaign and see the result
• For the analyst, the cdp platform is a source of truthful data on customer behavior and reactions to initiatives
• For the cdp management, the platform is a support for decisions about budgets, products and channels

In this whole picture, the cdp system does not exist by itself. It is built into the company’s daily activities and helps to benefit more from already existing data, channels and resources.

That is why more and more businesses consider the customer data platform as a basic element of digital infrastructure, rather than an experimental project.