What is Customer Data Platform (CDP): Meaning, Features, and Benefits

What Is Customer Data Platform (Cdp): Meaning, Features, And Benefits

  • Sep 17, 2020
  • 1356 words
  • 5 minutes read

Photo by Heidi Fin on Unsplash

Business is all about getting customers. Without them, we would not have one. Customers belong at the center of everything that we do, especially in our marketing efforts.

To place them at the center of our focus, we need real, raw customer data. But how do we get accurate, useful, timely customer data? That's where the Customer Data Platform comes into play.

Let's look at what a customer data platform exactly is and how it is beneficial to every business.

Customer Data Platform Definition

Customer Data Platform (CDP) is a software that collects and organizes all types of customer information across various channels, marketing platforms, and databases. It is a marketing tool used by businesses to unify a customer's data into a single system accessible to other systems.

With CDP, business owners and marketers can view detailed analytics reports, create new user profiles or update existing ones, build segments and audiences, make single customer views, and improve advertising and marketing efforts by exporting the data to other systems.

Customer Data Platform  vs. CRM

CDP and CRM both collect and store customer information. However, these two are not entirely alike, and it's essential to know their differences to determine which type of software you should use for your business.

CDP is a type of software that independently creates unified customer profiles with data gathered across various online and offline channels. It handles multiple data points from a large number of sources, which could lessen the potential of replicated or lost data.

Furthermore, CDP can collect data on anonymous visitors and can analyze lifetime customer behavior and customer journeys.

Customer Relationship Management (CRM) software, on the other hand, stores customer's information via manual entry. It only collects individually entered customer information that can get lost if not labeled or handled correctly. It can only provide information on known or potential customers. CRMs cannot pick up on offline data unless entered manually. CDP and CRM differ in the way they store customer data.

Customer Data Platform vs. DMP

CDP and DMP are both useful systems that collect and manage data, like CRM. However, there are key differences that separate them and determine their usefulness.

As mentioned above, CDP works with both anonymous and known individuals storing personally identifiable data such as names, addresses, and phone numbers. But more features make CDP different from the other data management software.

CDP not only collects customer data but also retains them over a long period to build in-depth, accurate customer profiles and nurture relationships.

Moreover, CDP influences all marketing types and collects mostly first-party data, which means it gathers data directly from the source.

On the one hand, Data Management Platform (DMP) works almost exclusively with anonymous entities such as cookies, devices, and IP addresses. 

DMP mainly influences advertising to better target ads and reach audiences. It also collects mostly third-party data through data providers, managers, and services.

DMP, however, only retains data for a short time to target ads and build lookalike audiences.

Essentially, CDP and DMP differ on where they collect data and how long they store data into the system.

How Customer Data Platform Works

The role of CDP is to collect plenty of information about customers who interact with a business, create a detailed image of the customer, and deliver personalized communication across all channels.

CDP builds customer profiles by combining data from various sources - first, second, and third-party.

The sources can include your CRM, DMP, website activity, social media, transactional systems, web forms, email, e-commerce data, and others.

The information gathered from various sources will then be unified into a single system and labeled according to customer information. The data stored and collected can then be accessed to other systems, making it one of the most effective marketing tools for any business.

Different Types of Customer Data



As the term implies, CDP focuses on customer information. It exists because customer data is crucial to every business and marketing effort. So what types of customer data that CDPs collect and organize?

Consumers leave customer data behind as they interact with brands through websites, blogs, e-commerce portals, and in-store. 

Here are the four main types of customer data.

1. Identity Data

Identity data builds the foundation of each customer profile in a customer data platform. This data allows businesses to identify each customer and prevent costly replications uniquely.

Identity data includes the customer's name, contact information, location, demographic such as age and gender, social information such as Twitter and Instagram accounts, and professional information.

2. Descriptive Data

Descriptive data expands the identity data and gives you a fuller picture of your customer.

For example, an insurance company may collect the lifestyle and salary details of their customers, whereas a toy company may collect information on the number of children in customers' families. 

Descriptive data includes further details about the customer's career,  lifestyle, hobby, and family size and status. It may record the customer's industry, previous employers, and job level.

Moreover, it can store information about the customer's vehicles, pets, and type of home.

3. Quantitative Data

Quantitative data allows businesses to understand how each customer has engaged with their brand, whether through individual actions, reactions, or transactions.

Quantitative data may include:

  • Transaction information consists of the number and type of purchased or returned products, the number of abandoned carts, and order dates.
  • Email communication information - such as email opens, click-throughs, responses, and dates.
  • Online activity information - such as website visits and click-throughs, product views, and social media engagement.
  • Customer service information - such as communication dates, query details, and service representative details.

4. Qualitative Data

Qualitative data gives customer data personality. It includes the customers' motivations, opinions, and attitudes to a business, whether relevant to the company or not.

  • Motivation information - includes information about how the customer hears the business, how the purchase is made, and what made the customer choose the product.
  • Opinion information - is about the rating of the products, the customer service rate, and the recommendation status from the customers.
  • Attitude information - can be the customer's favorite color, animal, or food.

As you see, CDPs collect and organize a wide range of data. 

Customer Data Platform Benefits


CDP is undoubtedly beneficial to your business just by simply understanding its definition. It improves your organization's marketing efforts, better your customer relationships, and complements your current software.

Let's look in more detail at the benefits of employing or purchasing CDP for your organization.

Prevent Data Silos

Data silos refer to data available to a particular department but not accessible to the rest of the organization. Data Silos lead to wasted time and efforts; slowing your company's pace and productivity, and threatening your customer profile data's accuracy.

With CDP, your organization can avoid data silos by unifying your customer data and your employees. You can be confident that your data is accurate and accessible by all.

Collect Information Directly from Your Audience

CDP gathers first-party data directly from your customers, site visitors, social media followers, and subscribers, making it reliable. You can certainly be confident that the information you get is accurate.

Helps To Know Your Customers Better

Every business and marketing effort centers on customers. Thus, it is essential to know your customers.

Since CDP builds customer profiles accordingly, you can manage your customer relationships better and market with your audience accurately and effectively.

With CDP, you are informed of your customer behavioral attributes and can construct identity graphs.

Unify Cross-Channel Marketing Endeavors

It can take precious time and energy to communicate, share, and educate each other on the data you need to achieve your company's goals. With CDP, you unify cross-channel marketing efforts by supplying consolidated, updated, and accurate data.

Bottomline

CDP provides the key to comprehensive data-driven marketing - a very attractive marketing concept where all your customer data is combined for marketing purposes and other uses.

Without the comprehensive management of the data, the employed marketing strategies are not as effective as having your audiences' accurate data. So bringing together the customer data is very important.


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