What Is a CDP? Why It Matters for Businesses

Every marketer in the digital age uses real metrics and customer data to make decisions. So it is no surprise that the CDP, or Customer Data Platform, keeps growing and getting more advanced. In this article, Mona Media will give you useful knowledge about what a CDP isand how to build an effective Customer Data Platform for your business.

What is a CDP?

What is a CDP? CDP (Customer Data Platform) is marketing technology software that creates a unified, persistent record of the attributes and data of all customers. A good CDP integrates easily with a business's existing data and lets authorized users easily retrieve the stored data.

A CDP builds a complete picture of each of the business's customers at an individual level. The software collects first-party data (transactions, demographics, behavior and so on) from many sources and systems, and links that information to the customer who generated it.

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How is a CDP different from DMP and CRM solutions?

What is a CDP? How is a CDP different from DMP and CRM? A CDP is a tool for collecting and analyzing business data. Customer Data Platform software is often compared with other solutions such as the Data Management Platform (DMP) and Customer Relationship Management (CRM) software.

The most basic difference between these data-driven solutions is that each is designed for a specific department:

• A CDP is designed for the Marketing department and tracks data related to marketing activity.
• A DMP is designed for the advertising department and tracks data related to advertising activity
• A CRM is designed for the sales department and tracks data related to sales activity.

What data does a Customer Data Platform use?

What types of data does a CDP hold? A Customer Data Platform handles 4 types of customer data:

• Personal information: data about a specific customer such as name, age, hometown, occupation, workplace, phone number, email and so on. This data is used to analyze and define the target customer profile.
• Qualitative information is data on buying motives, opinions, attitudes and customer feedback. With this data, a business can understand its target customers better and plan suitable ways to encourage purchases.
• Quantitative information, or behavioral data, relates to specific actions such as making a transaction, contacting the business through channels (website, fanpage, email, phone and so on), and actions on a website or app. Quantitative data shows how customers have interacted with the brand.
• Descriptive data digs deeper into personal characteristics, such as direct chats, chat length, chat frequency and data collected by the CRM, so the business understands customer needs better. Descriptive data differs by company and field of activity.

Characteristics of a CDP

What are the important characteristics of a CDP? Here are the characteristics a CDP should have, which you should consider before choosing one:

• Ready to use: all customer data must be organized and available for immediate use. The software may need some technical solutions to set up and maintain, but using it should not require professional expertise.
• Single customer view. The data a CDP collects and organizes must be shown visually as a detailed profile for each person.
• Unified customer data. Data collected by a CDP comes from many online and offline sources. It must be combined into one consistent, orderly view.
• Access for third parties. A good CDP lets business users, and related business applications or technologies, access the data store for real-time use.

Implementing a CDP in your business

What you need before implementing a CDP

What is a CDP and what do you need to implement one? Before implementing a CDP, a business needs to prepare internal factors such as:

• A clear understanding of the use cases for a Customer Data Platform and of the customer buying journey.
• A need to find more useful solutions for the business's marketing strategy.
• An understanding of the impact of collecting data and building target customer profiles.
• Solid expertise prepared across departments: Marketing, IT, customer service and so on.

When should a business implement a CDP

What is a CDP and when should a business implement one? A business implements a CDP in cases such as:

• The business wants to optimize ads for people who have not yet bought, rather than all target customers, including those who bought before.
• The business needs a deeper understanding of customers' unspoken thoughts, or Insight of its customers. A CDP connects and links customer data closely so the business can analyze and research buyer psychology more objectively and realistically.

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Benefits of using a CDP

Personalize for each customer

• A CDP connects online and offline data to create an accurate customer profile. Data from when customers buy at a traditional store: demographic, behavior, direct interactions and so on is stored in the system for later plans.
• Improve user reviews. The business receives better and more frequent online reviews from each customer through multichannel communication or analysis of survey questionnaires.
• Segment customers by behavior to deliver a suitable multichannel experience.

Easily coordinate marketing campaigns

• Improve email open rates in campaigns Email Marketing. With data on the ideal time to open emails, a business can pick the right time to send and reach users more effectively.
• Optimize conversion rate and A/B testing in ads. CDP data helps a business create different A/B testing designs and identify which variant performs better.
• Behavioral retargeting and remarketing ads. Integration with tools such as Facebook Ads, Google Ads, Google Analyticsand others lets you use user data to run effective conversion or retention campaigns.

Collect customer data directly

• A CDP collects data from many sources quickly. The data in the platform is organized so it is ready for many different uses.
• Enrich the business's customer profiles. From there, the business can predict future behavior such as likelihood of repeat purchase, unsubscribing from a service, returning to the site and email open rate, and take suitable action.

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How to build a Customer Data Platform

Step 1: Define goals and requirements

The first stage in building a Customer Data Platform is to define goals and requirements for the data platform. These include business goals, data needs and the features the platform must have.

Step 2: Choose a suitable platform

There are many CDP providers on the market. So when building a customer data platform, a business needs to research and choose a service that fits its goals, needs and resources. It should also weigh the key factors of features, usability, availability to third parties, security, and the cost to own, maintain and scale.

Step 3: Collect and integrate data

The next step in building a Customer Data Platform is to bring all customer data into a single central database. The data can come from many sources, online and offline. The fields or data variables depend on the business, and may include name, email address, phone number, income level and so on.

Step 4: Process the data

In the data processing step, the business needs to clean and organize all of it. Cleaning and organizing aims to make sure the information for each customer is as complete and accurate as possible.

The work includes identifying and fixing any missing or incomplete fields, removing duplicate fields and checking the accuracy of the data. The business then organizes the data by customer segment, location or any other important variable.

Step 5: Build customer profiles

At this stage, the business merges data from many sources and links it to individual customer profiles. This step lets the business resolve identities, understand customer characteristics and enrich basic information to provide deeper insight.

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CDP use cases

What are CDP use cases? Here are some practical applications of the platform:

• Data integration and management: This is the main use case for many companies considering and adopting a CDP. The ability to collect data from different channels and systems for later use is a feature many businesses value highly.
• Identify and classify customer audiences: Businesses use a CDP to improve the accuracy of retargeting. A CDP does this by linking customer data with advertising data and creating audience segments to optimize.
• Personalize the customer experience: Once customers are segmented, marketing, sales and customer service teams can tailor messages to the target audience and deliver products and services through the right channel at the right time.
• Understand actions or forecast customer needs: Many CDP platforms come with advanced analytics features, often backed by AI. These help marketers picture and predict customer behavior in the near future.
• Marketing automation: Some CDPs provide advanced artificial intelligence (AI) and machine learning (ML) tools to support marketing automation. Supported activities can include recommending the best next action, launching campaigns in real time, orchestrating the customer's buying journey and so on.

The Customer Data Platform is an important tool used by many modern businesses. The platform has a very wide range of applications and is used in many ways depending on business needs. Mona Media has given you detailed information about what a CDP isand how to build a CDP for your business. If you have questions about CDP, please contact Mona Media for answers.

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