The Power of a Customer Data Platform
It wasn't very long ago that sales data analysis was exclusively for the big dogs — companies with thousands of employees who could afford to have a whole department that did nothing else. That's changed. Digital businesses, of all shapes and sizes, have more data than ever before and spread across multiple owned properties, services, and platforms. It's not only useful but imperative to understand and model against that data to truly understand the customer journey.
So let’s take a look at the rise of the CDP and how you can leverage their power to make smarter business decisions.
What is a Customer Data Platform (CDP)?
It's a question many have been asking us lately, as the term transformed into an industry buzzword seemingly overnight.
Is a CDP the same thing as a CRM, or a DMP? With the explosive growth of marketing technology software over the past five years, it's getting hard to keep track, let alone sort out what tech is the overhyped new thing and what is truly useful.
Modern CDPs are built for this diverse world and help simplify and centralize data management, plus they're too affordable to be merely the playground of enterprise businesses. But what does that mean for you?
Everyone has suffered from shiny light syndrome from time to time, tricked into believing the latest technology will automatically solve all your business woes. However ideas are nothing without execution and CDPs are nothing without implementation, amirite?
So let's talk about what a CDP is and what it isn't.
Rise of the CDP
CDP was a term coined in 2013 to refer to a platform that tracks and analyzes customer data in real time. Before then, businesses relied on Customer Relationship Managers (CRMs) to market to their audience. But the rising number of companies and DTC businesses that do all their business and communication online, across a wide range of owned and earned media, can use a CDP to turn the convoluted system of the web to their advantage.
Once businesses realized how beneficial it was to get a holistic look at the journey of their online shoppers, martech began to boom. Now, 78 percent of organizations either have a CDP or are developing one. That is, to put it mildly, not bad for an eight-year-old technology.
An interesting finding from Segment, one of the leaders in the space, was that CDP adoption isn't really correlated with the size of a company anymore. SMEs are getting in on the game, too — but the difference is large businesses tend to share CDP data with more departments, while smaller ones keep it siloed in marketing or sales, likely due to a lack of expertise in engineering, analytics, and data science.
What CDPs Can and Can't Do
A CDP requires little initial input, can be set up quickly, and processes a tremendous amount of data off the bat. Those that don't have large budgets for technology or engineering might think of it as just an upgrade to the CRMs and databases they replaced — a way of turning complex customer interactions into numbers. Those people aren't wrong, and the numbers these tools generate are important insights, but numbers alone can't help a business.
Using tools like CDPs or CRMs without analysis can make you data-rich and insight-poor.
With proper configuration and analysis, data the CDP collects can help more departments than just sales and marketing. For a unified corporate strategy, an executive team should leverage analysts and consultants who can turn that disparate data into specific, actionable, top-down strategies. An executive team with a full understanding of the data is one that can build specific, actionable strategies that work for its business across the board.
Extract, Transform, Load
One of the core features of a CDP is the ability to take data from a number of sources, process that data, and pipe the results to various destinations. This methodology is known as extract, transform, load (ETL) in the big data world. In the past, engineering teams had to write custom integrations for each system in sales and marketing department stacks, requiring a bunch of custom code for systems that handle things slightly differently — an engineer's nightmare!
With the increase in number of martech systems that companies are relying on today, this methodology is entirely inefficient. CDPs alleviate this pain by integrating with a large number of systems to extract data, transform it, and load it into other systems. You can end up with an elaborate web of destinations and sources, with your CDP playing the middleman and managing the data for you.
Traits & Cohorts
CDPs also provide a means to trigger events based on user behavior and build up a profile and history of users over time. This is extremely powerful. For example, User A visits a well known sports publisher website, they immediately click into football (that’s soccer for you Americans ), and follow a link through to news on Team X. Marketing teams and engineers can use CDPs to fire events for these actions and begin to build up a profile of User A — A football fan who follows Team X.
This can be taken further with the introduction of identification. Currently User A is anonymously browsing our website and content, all of which we’re tracking to their anonymous profile. However, our user has decided to download a piece of gated content, giving us first party data in exchange for valuable content. User A has now “identified” themselves and as they follow this process across other platforms, and even other devices, CDPs will track their behavior tied to a single customer profile. Spooky powerful, isn’t it?
This can be taken yet another step further with audience segmentation. That’s right, you can group users together based on specific traits and perform certain actions on those groups. For example building look-a-like audiences by piping data to Facebook Ad Manager or creating email campaigns targeting a very specific cohort of Team X fans.
The power of a CDP lies in the ability to centralize disparate data and truly understand your customers at an individual level.
Why CDPs Are Taking Off Now
Now that we've established where the heck CDPs sprang from and why we love them, let's talk about the explosion in popularity. Five years ago, the only people talking about this technology were early adopters, like us here at DS. So why did they turn into such a big deal in the past two years?
Well, think about what your business was like in 2013, the year the term CDP was first used. You probably had a website, maybe an ecommerce store. Your website's Contact Us page had a form and a phone number, not a chatbot capable of nurturing leads and learning from the collected data. Digital advertising meant a Google Ads campaign, and your social media arm was a Facebook page (because everyone is on Facebook, right?). The world was changing, but small companies could ignore the changes and lean on existing customers. After all, not every customer was a digital native.
Now every company's digital footprint is a mass of websites, landing pages, social profiles, and apps, and they all provide their own slates of analytics. Even SMEs that would prefer to stay the course often can't. Pandemic safety concerns are forcing business into virtual spaces, and that means choosing between having a presence across all platforms or leaving money on the table. But the number of properties the average business now has is a data collection nightmare. That's why a growing number of companies see having one collection and processing point — a single source of truth for all their data — not as a luxury but a necessity.
Digital Surgeons lives and breathes martech. We can help you not only purchase and install a CDP like Segment, but also build a strategy around it and implement your data tracking to fit. CDPs can simplify data collection from your websites and apps, marketing, and strategic decision making if you maximize their value. To find out how we can simplify your life, book a consultation with us today.