What is a Customer Data Platform (CDP) and how does it enhance your marketing strategy?

If you don’t have a CDP yet but your company already has customers, please keep reading.

A CDP or Customer Data Platform is a set of tools that facilitate the task of generating a customer segment for a specific campaign that marketing or the business area wants to carry out. 

Whether it is a specific niche (a group of prospective buyers who meet certain characteristics or a loyalty campaign), your company’s CDP should provide you with a list of emails (or phone numbers), which will have a high probability of clicking on the offer or specific campaign you are offering them.

If you were a customer, you might say: “I expect to receive a PERSONALIZED offer for ME, according to my purchase profile, my personal characteristics (gender, age, type of job, where I live, etc.) that naturally leads me to ACCEPT IT and eventually purchase a product or service.” 

An example. I am a 40-year-old adult who uses my credit card every Thursday to pay for a dinner for two; the offer I expect from my bank / card issuer is something along these lines, for a THURSDAY, whether a new restaurant, special menu, or similar plan.

What I do not expect is an offer for another day of the week or for a restaurant 200 km from my home, and even less that it is for lunch.

What is a CDP?

The CDP is the set of customer segments.

Technically, a Customer Data Platform (CDP for its acronym in English) is a standalone software package that enables a unified persistent customer database, and accessible by other systems.

The CDP is a pre-built software package customized to the needs and characteristics of each client’s business.

Although technical resources are required to enable and maintain the CDP, it should be simple, take data from different sources, and focus on its main role: delivering segments for campaigns. Its complexity should be low and not at the level of a corporate data warehouse.

It is a persistent database that unifies customer data, individualized.  

It allows you to have a clear view of each one of them, taking information from different sources, persisting and cross-referencing data to understand the behavior of that particular customer over time. From transactions or opened emails to abandoned carts in e-commerce. This unified information allows you to improve customer targeting.

Its data is accessible by multiple systems

The different systems used by the company must be able to access the CDP data.  Thus, you can perform analysis, create segments, and manage campaigns easily by business users, without the need to involve the IT area to generate the segments.

What is not a CDP?

The CDP is not the Data Warehouse.
It is much simpler and more specific, focused on knowing the customers and being able to generate segments quickly and easily by business and marketing people. 

The CDP is not the CRM (Customer Relationship Management). 

Although there are data that may be in both, the CRM tracks business opportunities from conception to completion (hopefully successful!). For the Sales team, the focus is managing the Business Opportunity.

The CDP is not a series of integrations only known by the IT area.

The CDP is capable of supporting every time you need to create a segment for a campaign. Although common, this approach is far from optimal and can be dangerous. The (little) knowledge of customers is NOT where it should be: in Marketing and Business.

Types of Data for a CDP

What is Customer Data? 

Customer Data is all and any information that customers leave when using the internet and interacting with companies both online and in person.

Website visits, clicks on emails, readings and comments on a blog, tweets and comments on social media. There are 4 main categories of Customer Data:

#1. Personal - Customer identity.

Name, age, gender, ID, tax number, address, municipality, country, phone contact, email, social media accounts, professional title and company, checking account, and other unique customer data.

#2. Details - Additional personal information that allows us to better characterize customers. 

Professional history, industry, job level, lifestyle, type of home, car driven, socioeconomic group, family information, hobbies, and others.

#3. Behavior - Relationship data with this customer.

Completed transactions, purchases, monetary value, returns, dates, abandoned carts. Clicks on emails, online visits, filled forms, recency, frequency, visits to technical service, product changes, usage problems, calls to contact center, and many others you can take from internal systems.

Some companies take data from parking and WiFi systems to enrich customer behavior information.

#4. Qualitative - Additional information to the customer profile

Motivations observed in surveys and evaluations, how the customer came to your company, how satisfied they are with the product or service, general sentiment towards the company.

Data varies according to the type of business of the company.  In general terms, all data that allows you to better know the customer should be in the CDP.

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How to build a CDP?

The CDP can be as simple as creating a repository in a cloud environment (AWS S3, Google Cloud Storage, or Azure Blob Storage) where we define the CDP data model.

There are also more complex enterprise solutions.

The data model is particular to each type of business; the main variants are Customer Experience CDPs, Lifetime Value, and Journey Mapping. 

Once the CDP is created and the model defined, the data is injected. 

The central idea is to ingest data from different systems: ERP, Transactional, CRM, Google Analytics, Databases, External Services, and any other structured or unstructured source. In this ingestion process, we have 3 fundamental steps:

#1 - Data Cleaning

Remove duplicates, discard defective, unreadable data, and ensure the quality of the data entering the CDP

#2 - Data Enrichment

If in any way you can enrich a data point with more information that allows better understanding of the customer and generating a better segment for a campaign, do it!  Starting with low cost/complexity opportunities. For example, from a vehicle’s license plate obtain owner information, from the identification number obtain the municipality/neighborhood where the customer lives. And many other ways to improve the data, simple or complex.

#3 - Process Orchestration

Finally, and where many CDP projects fail: consistency in feeding the CDP with clean and enriched data. 

We must ensure that the defined data update frequency is respected and operated consistently and automatically, as well as monitoring and alerts with recovery rules in case of failures.

How is the CDP used to generate segments?

Although it is not an integral part of the CDP, business and marketing users interact with the CDP through data management tools such as Microsoft Excel, Power-BI, Tableau, Qlik, AWS QuickSight, Google Data Studio or others they already currently use.

If the CDP has been well defined and is continuously receiving data from different sources, then the objective is met: generating a customer segment for a specific marketing campaign.

It is very important to respect the legislation on data protection and personal information of individuals. Please inform yourself about the current legislation in your country and corporate data security standards to ensure proper use of your customers’ data.

Benefits of having a CDP

Having a CDP opens new possibilities, but above all, it gives us the ability to learn about and from our customers: what they want (and what they don’t!), how they like to interact with the company, what they respond to, what inspires them and leads them to prefer your company.

#1. Segmentation

Generate appropriate, hyper-personalized offers with a higher probability of purchase or conversion. Even better if this analysis activity, so much part of business and marketing, does not require IT involvement in data generation.

#2. Understand customer behavior

By tracking customer interactions with the business (purchases, returns, clicks on emails) we acquire knowledge of their behavior, which will allow you to improve how you serve that customer. If several customers behave similarly, then you have a new segment.

#3. Adjust offers based on what performs best

With greater knowledge of customers, you have data to craft a better offer, whether products and services or via a communication channel preferred by the customer. If a customer buys the same product every month, you can offer that same product under better conditions, or propose trying another of higher value but without risk, or a discount if buying in larger quantity. 

The possibilities are endless.

#4. Test and develop new products and services with customer feedback

With customer data, we can quickly identify problems: why are so many shopping carts abandoned in a specific customer group? Is the process too complex? What characteristics does that group have that is having difficulties?

You can send a survey to that segment to learn what problems they are having. Once we have the corresponding results, we can develop a solution. For example, a simpler, fewer-click checkout, test this new checkout with that specific segment that had problems. If it works well, you use that checkout from then on for other segments.

It is key to iterate this process as many times as necessary to create and improve products and services, and also to simplify customers’ lives.

Where to start?

For an organization just starting, creating the CDP should be a quick and focused effort, originating in marketing and business areas, with IT participation.

You can start with something basic but functional. Keep improving and adding more data sources, enrichment processes, and more segmentation attributes. Step by step.

It is essential to have greater knowledge of your customers; in such a competitive market across all industries, you must avoid segmentation errors and know your customer as well as possible; if you don’t, someone else will do it for you.

At Kranio we help our clients create and improve their CDP.

From establishing initial data, orchestrating cleaning and enrichment processes until maturity is achieved in the use of the CDP by Marketing and Business to address more advanced topics, such as more complex data sources, integrations, and predictive analysis with machine learning.

Ready to transform your data into strategic decisions?

At Kranio, we help you implement Customer Data Platform solutions tailored to your business needs, allowing you to unify and make the most of your customer information. Contact us and discover how we can boost your strategy.