Clear up the confusion about customer data platforms (CDPs) with:

  • The definition of a CDP, the benefits it provides, and the pain points it solves
  • Six myths and important truths about CDPs
  • Tips on making the best use of a CDP rather than waste your time and budget           

What is a customer data platform (CDP), and why it’s more than a marketing buzzword

You might have heard the term “customer data platform (CDP),” but do you really know what it is, what it does, and its value to marketers?

It could sound like just another buzzword, but it delivers real results when it comes to personalization and knowing just who your customer is and what they want.

So, what is a CDP? Let’s ask the CDP Institute because they should know better than anyone.

They define a CDP as “packaged software that creates a persistent, unified customer database that is accessible to other systems.”

Maybe that doesn’t clear things up much. Let’s break some of those terms down.

Packaged software

This means business users, usually marketers (the tech-savvy, future-thinking type), buy and control the software. In this way, a CDP differs from a data lake or data warehouse since an IT department typically custom builds them. However, packaged software is easier to deploy and change if needed.

Persistent, unified customer database

A CDP collects data from a number of your business’s other systems as well as some outside sources. In short, it tracks customer behavior, transactions, demographics, and personal identifiers to build comprehensive customer profiles for use in advertising, marketing , sales, and service.

With this profile, you know:

  • Who your customer is (their background, job, title, location, interests)
  • Their preferences in channels, content, offers, etc.
  • How their online and buying behavior has changed over time

Accessible to other systems

Not only can a CDP take in data from other systems, but other systems can also use the data stored in a CDP to manage customer interactions. What other systems? Think of a:

Score your customer data strategy and see how a CDP can help you make better use of your customer data for personalization and optimization.

What is CDP?

The types of data a CDP takes in and what it does with it

What kind of data does a CDP take in, organize, store, and share with other systems? I’m glad you asked. It can be either online or offline data. Look at these main types:

  • Behavioral – how a customer behaves or interacts with your brand, the number of times they do and at what frequency (visit your website, click through on an email, register for an event, etc.), the channels they use, and the content they download, share, and click on
  • Transactional – purchases, returns, how much was a purchase, how many times did they buy, and when
  • Demographic – Name, date of birth, location, and anything that tells you about a customer’s background and who they are

Therefore, a CDP takes in data from multiple data sources, identifies customers across a sea of online and offline behaviors to create unified customer profiles that help you with:

  • Personalization – show your customer you know what they want and can solve their problems
  • Segmentation and targeting – break your audience up to make your campaigns more manageable, personalized, and relevant
  • Attribution – See which touchpoints are working
  • Analytics – measure your results and learn from them

Essentially, a CDP helps you do better marketing and advertising with more accurate, reliable, and higher-quality data for email, content, social, the web, events, SMS and push marketing, and any other channel you can think of.

Find out best practices and tips for doing SMS marketing right and combining it with email.

Main benefits of a CDP

A CDP helps you anticipate customer needs and respond to them in real time at speed. With one, you have the customer insights to determine the next best action to take.

Get more details on how to anticipate customer needs with a CDP.

You can determine the right mix of channels for a campaign, the direction to steer your marketing strategy in, and know what type of content and copy gets results.

That, in turn, leads to:

  • Higher engagement with customers interacting more with your brand
  • Stronger customer loyalty by retaining more customers and creating an emotional bond with them so they continue doing business with you
  • More conversions, higher-quality leads, new customers, and ROI

Marketers go on and on about being relevant to their audiences. Well, you use a CDP to pinpoint what’s relevant to an audience, especially with shifts in customer behavior and frustrations with inflation.

Research from Ascend2 and Oracle found that more than a third of marketers they surveyed considered adapting to circumstances as they arise a top challenge. 82% said they wanted to update their martech to improve performance.

Find out for yourself the rest of the survey results about today’s top marketing technology trends.

A CDP certainly comes in handy to improve performance and keep up with customers.

A user survey by the CDP Institute said that:

  • A CDP’s top benefits were a unified customer view (88%) and analytics (54%)
  • Its top capabilities were loading data from all sources (75%) and identity matching (57%)
  • 58% of respondents said a CDP delivered significant value

That value goes beyond just those things.

The CDP Institute’s CDP Use Case report found that:

  • 65% of respondents saw customer value as the main focus of a CDP
  • 61% said their main focus with a CDP was customer retention
  • 57% claimed their main CDP objective was customer acquisition

A unified customer view, analytics, identity resolution, and better data all contribute to delivering value to a customer at every touchpoint and stage of their journey, even if that journey isn’t linear and throws you more than a few curveballs.

Make the best use of a CDP

According to Forrester, CDP users felt they managed customer data better than non-CDP users by 21%.

Knowledge is power. And good marketing starts with good data.

You can use a CDP for B2B or B2C, by the way. CDP usage grows more and more every year, too, so you can’t fall behind the competition when they’re making great use of this tool.

Consider that:

  • 81% of businesspeople favor using AI for personalized recommendations (something a CDP can help with as)
  • The CDP market should grow to $3.2 billion by 2025 if expectations pan out.
  • At the end of 2021, the number of consumer businesses (B2C or B2B2C) using a CDP had risen by 14% in 4 years.

However, 81% of people also worry about data privacy with AI helping make personalized recommendations. CDPs offer a solution here too.

Pain points a CDP solves

Broadly speaking, a CDP helps you tackle these challenges:

  • Incomplete, siloed data

Linking your data helps you better organize, manage, and put it to productive use. You can make it more readily available across your organization and keep track of your customers.

For instance, a CDP plays a vital role in consent management. This means it tracks what customers have given consent for your brand to use what data, alleviating data privacy concerns and keeping you compliant with the law. So, you can use a CDP to save yourself from costly fines and damage to your brand reputation.

  • Incomplete view of customers

You’re probably with massive, almost overwhelming amounts of data from a multitude of sources. Unifying it and creating complete customer profiles lets you respond to customers in real time with relevant, personalized experiences more likely to win them over.

  • Difficulties in making data actionable and using it in your decision-making

Centralized, reliable, and high-quality data helps you predict the next best action to take and delve deeper into your customer profiles for insights that help drive engagement and conversions.

  • Challenges with real-time personalization

With real-time data ingestion and AI/ML-driven intelligence, CDP lets you personalize in real time using the right content and the right channel at the right timing.

In short, a CDP makes your data more actionable and useful.

Find out why IDC named Oracle Unity a Leader among CDPs for data and marketing ops users. 

The different types of CDPs

Did you know there’s more than one type of CDP? Our friends at the CDP Institute break it down into four categories:

  • Data – collect and link data from multiple sources, connect it to customer profiles, and store it in a database other systems can access. Data CDPs are mostly suitable for IT teams
  • Analytics – provide data assembly and analytical applications, such as segmentation and sometimes machine learning, predictive modeling, attribution, and customer journey mapping. Analytics CDPs are mostly suitable for business operation teams.
  • Campaigns – offer data assembly, analytics, and “customer treatments across channels” for campaigns, which differ from segmentation. A treatment might include personalized messaging, outbound campaigns, product or content recommendations, and even real-time interactions with customers. This type of CDPs is mostly suitable for marketers
  • Delivery – provide data assembly, analytics, customer treatments, and marketing messaging delivery via the web, email, mobile, ads, and so on. These types of CDP usually start as a delivery system (like an email marketing platform) and add CDP functionality later on. This type of CDPs are enterprise CDPs and serve needs of multiple departments within an organization.

What kind of CDP is right for you?

Of course, CDPs don’t always fit neatly into these categories. They cross over in function and uses, but this breakdown gives you a better idea of what a CDP does. Now, let’s see what a CDP isn’t and what it doesn’t do.

Which CDP is right for you? Find out from the experts at Oracle Marketing Consulting. Catch their on-demand webinar “How to transform your customer experience with a CDP” to know how to put your customer data to better use with your CX.

6 CDP myths debunked, and what a CDP IS NOT

As with any new marketing technology (and technology in general), confusion abounds as people need to get used to it.

I’ve given you an overview of what a CDP does and its benefits. Now let’s tackle some of the myths out there about CDPs creating confusion and clear it all up for you.

Myth #1: CDPs are only for marketers

The truth:

CDPs were designed for marketers. According to the CDP Institute, 82% of use cases involve martech.

What comes up second? People who work in data science and analytics.

So, there’s another group that enjoys a CDP’s benefits. And what about digital advertisers?

They can use a CDP as a single source of truth to build customer profiles to place their online ads in online environments that the right people will see and won’t potentially damage their brand. This also helps them make the best use of their precious budget dollars.

A CDP can take in data from any CX touchpoint: marketing, advertising, sales, commerce, and service, and theoretically, any of those groups can make good use of that data. In fact, recently, Oracle integrated its Unity Customer Data Platform (CDP) with Oracle Service, so agents have the data to better and more quickly solve customer problems.

Find out more about delivering frictionless service across channels with Oracle Service.

Myth #2: A CDP replaces marketing automation software

The truth:

Not in the slightest.

With marketing automation, you set up your lead management (generation, scoring, and nurturing), segmentation and targeting, schedule and send out campaigns, and track the results.

However, it can’t consume vast amounts of online and offline data like a CDP does. It wasn’t designed for that.

On the other hand, a CDP doesn’t do lead management, segmentation, targeting, and campaign management. No, it provides you with the unified data needed to do a better job of those things.

So, really, a successful marketer uses automation and a CDP together.

See how Oracle Marketing brings together automation, AI, campaign management, analytics, customer loyalty, and a CDP to help you deliver personalized marketing at speed for B2B or B2C.

Myth #3. With a CDP, marketers don’t have to rely on IT at all

The truth:

Marketers should own and operate a CDP. A CDP helps marketers become less reliant on IT to help them manage and activate data. Still, IT needs to approve of a CDP, and issues could still crop up that they should handle, not your marketing team.

Both teams are a part of the same business. You should be working together.

Myth #4. A CDP is the same as a CRM or a DMP

The truth:

As stated earlier, a CDP was designed for marketers but has uses for advertisers, data scientists, service teams, and other CX functions as well.

However, a customer relationship management platform (CRM) was designed chiefly for sales. A data management platform (DMP) was designed for advertisers.

The three serve different functions.

In brief:

  • A CRM manages all a business’s relationships and interactions with both customers and prospects
  • A DMP focuses on web ads and gathers data from cookies with a larger emphasis on gaining new customers. Its data tends to be anonymous and only stored for about 90 days. In contrast, a CDP can store data for much longer, almost indefinitely. Plus, its unified data can acquire new customers and help with segmentation, targeting, and personalization on loyalty campaigns to retain existing customers.

Despite their different functions, CDPs, CRMs, and DMPs can work together. A CDP can collect data from the other two systems and link it with all its other data. Then it can share that unified data with a CRM and DMP.

Myth #5: A CDP is the same as a master data management (MDM) system, data lake, or data warehouse

The truth:

As with the previous myth, these are all different types of software with different, albeit similar, functions.

An MDM matches records to make data more usable and accurate. They go beyond just customer data and marketing, advertising, and CX into functions across the business. For instance, it can help supply align with demand.

Data lakes collect data, but it usually stays in the same form as from the source. Data warehouses support analysis, yes, but don’t process the raw data to make it more usable when driving customer interactions. Also, neither identifies customers across channels or devices, so they don’t provide a complete view of a customer.

Plus, they see less frequent updates (maybe less than weekly), whereas CDPs consume data in real time and might be able to make unified data available instantly.

Myth #6: A CDP replaces all your other databases

The truth:

As stated above, different databases serve different functions. A CDP might replace a few other databases, but you’ll still need a CRM and probably an MDM. You might also need a data lake and/or data warehouse.

Your needs dictate the number of databases you should have.

Make the best use of a customer data platform (CDP)

If you’re investing in a CDP, you want to use it to its full ability. You don’t want to waste your time, budget, and effort when you could be reaping many benefits. So, heed this advice.

  • Study up on CDPs and know what they can do and can’t, as to not waste your time
  • Decide how a CDP fits in with the rest of your martech stack and how the different platforms will work together
  • Plot a strategy for how you’ll use our customer data across your campaigns, content marketing, websites, and more
  • Make training available, so all users know what they’re doing with a CDP
  • Keep up with any necessary updates to your CDP
  • Continue to use your customer data to test, measure, and refine your marketing for the best results

Find out what investments ensure you make your customer data more effective with a CDP.

Make the best use of CDPs with tips to:

Also, find out why IDC named Oracle Unity a Leader among CDPs for data and marketing ops users