What is a Customer Data Platform? The Ultimate Guide to CDP

Senior Writer: Priya Naha

Reading Time: 9 Minutes

Published : September 16, 2022

Summary:  A customer data platform (CDP) combines multiple tools to create a unified database that contains data on all interactions and touch points. Customer data platforms are essential to business and marketing operations. Read our definitive guide to know more about CDP, customer data, types, and benefits. We’ve also churned out the top CDP service providers for you.

A customer data platform organizes marketing and improves customer lifetime value, resulting in better sales. The craze for customer data platform (CDP) software is such that the global CDP market will grow at a CAGR of 34.6% by 2026!

If you want to know more about CDP, you’ve come to the right place. This blog will conduct an in-depth study on what is a customer data platform, types of customer data, the difference between CDP vs CRM, CDP vs DMP, the benefits of CDP, and where to search for CDP software providers. We’ve also churned out some of the best CDP software providers for you! 

What is CDP? (Customer Data Platform)

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A customer data platform (CDP) is a software that combines numerous tools to create a centralized database that contains data on all customer touchpoints and interactions with your product or service. A customer data platform structures and collects real-time data into individual customer profiles and is used by other software, marketing efforts, and systems.

Customer data platforms build customer profiles with data integration from multiple first, second and third-party sources. It includes your transactional systems, CRM and DMP, social media activity, website, e-commerce behavioral data, social media activity, and more. CDPs put the customers at the flywheel’s center, a self-sustaining marketing model that generates a steady stream of prospects and leads for your brand. 

What is Customer Data?

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Customer data is the demographic, behavioral, and personal information about customers that businesses and marketing companies collect to communicate, engage and understand customers. 

It is the data and information that your customers provide while interacting with your business via your mobile applications, marketing campaigns, social media, surveys, and other offline and online avenues. 

A customer data platform exists because customer data has become essential to marketing automation and business operations. Therefore, it is precious for businesses. 

What are the 4 Types of Customer Data? 

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The four types of customer data that CDPs organize and collect are:

• Identity Data-
• Descriptive Data
• Quantitative or Behavioral Data
• Qualitative Data

1. Identity Data

Identify data sets up the foundational base of each customer profile in a CDP. It allows businesses to identify customers and prevent expensive replications uniquely. Identity data includes:

• Name information– like the first and last name
• Location information-like city, address, and zip code
• Demographic information-like gender and age
• Social information-like Twitter handles and LinkedIn addresses.
• Contact information-like email address and phone number
• Account information-like company-specific user IDs and account numbers
• Professional information-like company and job title

2. Descriptive Data

Descriptive data extends on the identity data and gives a fuller picture of your customer. The descriptive data categories vary based on company type.

For example, a flower company may collect the flower preferences of their customers, whereas a car dealership’s data collected will be different. They may collect lifestyle details about their customers.

Descriptive data includes:

• Lifestyle information– like types of home, pets, and vehicles
• Family information– like marital status and number of children
• Hobby information– like gym memberships and magazine subscriptions
• Career information– like job level, industry, income, and previous employers.

3. Quantitative or Behavioral Data

Quantitative data permits businesses to understand how each customer has engaged with their company, whether through specific reactions, transactions, or actions. Quantitative data includes:

• Email communication information– like email click-throughs, email responses, dates, and email opens.
• Transaction information– like the type and number of purchased or returned products, order dates, and the number of abandoned carts. It also includes RFM analysis. RFM stands for recency, frequency, and monetary value.
• Customer service information– like query details, communication dates, and service representative details.
• Online activity information– like website click-throughs, product views, website visits, and social media engagement. 

4. Qualitative Data

Qualitative data offers context for customer profiles and gives customers’ data personality. It collects opinions, attitudes, or motivations expressed by a business’s consumers-whether it is relevant to the company operations or not. Qualitative data include:

• Attitude information– like favorite food, animal, textile, or color.
• Motivation information– like why did you purchase this? What made you choose this product over others? Or how did you hear about us?
• Opinion information-like how would you rate our customer service? How likely are you to recommend us? or How would you rate this product or service?

As you have now understood the basics of what is customer data platform, it is essential to note that specific data categories will vary based on your industry and business needs. 

Before we dive more deeply into what is CDP, let’s try and understand what CDP is not!

CRM vs CDP: What’s the Difference?

CDP (Customer Data Platform) and CRM (Customer Relationship Management) provide value to your organization and collect customer data. However, that’s the only similarity between both CDP and CRM.

A customer data platform creates unified customer profiles with data gathered across various online and offline channels. But customer relationship management (CRM) tracks a customer’s intentional interactions with an organization by a manual entry.

The key differences between CDP vs CRM are:

1. CDP software analyzes customer journey and customer lifetime behavior, whereas CRMs analyze the forecasting and sales pipeline.
2. CDPs collect data on anonymous visitors, whereas CRMs only report potential or known customers.
3. CDPs handle data points from many sources, so the potential for lost data is slim. In contrast, CRMs collect individually centered data that can get mislabeled if not appropriately handled.
4. CDPs track offline and online data, whereas CRMs cannot pick up offline data manually until entered. 

CDP vs DMP: What’s the Difference?

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CDP (Customer Data Platform) and DMP (Data Management Platform) are different as CDPs work with unknown and known individuals keeping track of personal identifiable information like names, email addresses, phone numbers, and postal addresses. In contrast, DMPs work with anonymous entities like devices, IP addresses, and cookies.

The key differences between CDP vs DMP are:

1. CDPs collect first-party data directly from the source, whereas DMPs collect third-party data through managers, data providers, and services.
2. CDPs influence all marketing types, whereas DMPs influence advertising to reach audiences and better target ads.
3. CDPs retain data for an extended period to nurture consumer relationships and build accurate, comprehensive customer profiles. In contrast, DMPs maintain data for a short period to create lookalike audiences and target ads. 
4. CDPs reflect specific and personalized customer identities like email addresses, customer IDs, and names, whereas DMPs reflect anonymous customer identifiers like cookies. 

Numerous companies are purchasing CDP software for their organization. But do you know the reason?

Well, you’ll know now.

What are the Benefits of Customer Data Platform?

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A customer data platform enhances customer relationships, complements your marketing efforts and current software, and improves your organization’s productivity.

Some key benefits of a customer data platform are:

1. CDPs avoid Data Silos

Data silos are the data available to one department but isolated from the other departments of an organization. They occur when technology can’t keep up, or businesses scale quickly to sufficiently share data. 

Silos create a less collaborative environment, slow the productivity and pace of your company, and threaten the customer data profile.

But with a customer data platform, your company can avoid data silos. By unifying your employees and your customer data, you can be sure that your data is accurate and that everyone can access it. 

2. CDPs Collect Data Directly from Your Audience 

You can be certain that your data is accurate by gathering first-party data directly from your customers, social media followers, site visitors, and subscribers. It is the best type of data that inspires marketing decisions because it comes straight from the audience. 

CDPs primarily focus on collecting first-party data through pixel and other tracking tools. In such a way, you can always be sure that your CDP software reflects accurate account information. 

3. CDPs Help You Get To Know Your Customers 

For customer-center marketing, knowing your customers is a must! With CDP’s customer profiles, organizations get acquainted with every individual. In addition, CDP can help construct identity graphs and inform customer behavior analysis. 

CDPs equip organizations to manage customer relationships and effectively market with their audience in mind.

4. CDPs Unify Cross Marketing Efforts  

Your organization may have multiple marketing efforts simultaneously. It takes time and energy to communicate, share, and educate each other on the data you collect and use for your efforts. CDPs unify cross and multi-channel marketing efforts by supplying accurate and consolidated data. In addition, it serves to organize and collect new data that may inspire other ongoing marketing efforts. 

Top 5 Customer Data Platforms in 2022

Many CDP providers are available in the market that can help your business of all sizes and shapes. But for your convenience, we have jotted down some of the most popular CDP software providers for you. Here’s the list:

1. Segment

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Segment is a CDP provider that helps businesses unify and manage customer data across numerous online sources and channels. It offers businesses an integrated and complete view of customer journeys across every touch point. 

2. Emarsys

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Emarsys is a CDP provider that assists businesses in building an omnichannel approach by analyzing and collecting data from multiple sources. It includes cross-channel automation, reporting and analytics, and industry-specific solutions.

3. Exponea

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Exponea is an end-to-end CDP platform that focuses on B2C and eCommerce businesses. It helps organizations connect and track online and offline data across sources and channels to create personalized campaigns. 

4. Optimove 

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Optimove is a relationship marketing hub with CDP at its center. It segments, analyzes, and collects customer data to help businesses turn it into actionable insights. In addition, the organization’s technology suite enables it to create, optimize and track personalized multi-channel campaigns. 

5. Tealium AudienceStream CDP

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Tealium AudienceStream is a CDP provider that helps businesses build detailed customer profiles and enhance audience engagement. The data within the profiles help companies define low or high-value customers, identify milestones that can be used to segment audiences, and drive key engagement insights.

Where to Search for CDP Service Providers?

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To search for CDP service providers, you can take a look at the below sources to consider for your team:

1. CDP Provider Service Directory by CDP Institute

The list features firms that provide CDP-related implementation, consulting, data, agency service, and technology. Some companies are CDP Institute Partners too.

2. The Best Customer Data Platform (CDP) Software Rankings by SoftwareSuggest

Like many of SoftwareSuggest’s unbiased review pages, you can filter results by star rating, organization size, and other options. You can also sort the results by SoftwareSuggest score, popularity, features, pros/cons, and satisfaction.

3. The Best Customer Data Platform Software Rankings by Capterra

With Capterra, you get various filter options to help narrow your CDP options search, including deployment, pricing, features, and others. 

Does your Company Need a Customer Data Platform?

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A business will never run without customers. And keeping track of customers is necessary for enhancing your sales. Customers are the focus of any business, and to keep them intact in their place, we need raw customer data.

With a customer data platform, you have the immediacy, unity, and accuracy to keep aligning companies, inspiring marketing, and engaging customers. What’s stopping you?

Get hold of one of the best customer data platform software providers and enhance your customer relationships in no time!

Updated : November 16, 2022

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