Imagine your company as Camelot and the people within your marketing department as members of King Arthur’s Court. As you gather at the round table, your gallant team discusses their campaign performance and daily battles with siloed and dirty data as they pursue the elusive Holy Grail of marketing – the single, centralized customer view. You’ve heard rumors of companies that have harnessed its intoxicating powers for decades, but it seems they are only rumors. You consult Camelot’s resident Merlin of marketing operations to bring wisdom to the situation. He informs you that not only is a single, centralized view of the customer a real possibility; it’s available to anyone wielding the right tool. Hope rises within your chest. That’s when Merlin drops the knowledge that the modern-day marketing equivalent of Excalibur (the right tool) is the customer data platform, a.k.a. a CDP.
What Is a Customer Data Platform?
A CDP is a type of software that equips you with a clean and connected customer database — enterprise-wide. It accomplishes this by integrating seamlessly with all tools, apps and systems throughout your organization that house data, whether on or offline. As it pulls data from all of these sources, it cleans, completes and standardizes that data, and shares the improved data back to each source. This continual process ensures that everyone in the company has real-time access to a single customer profile comprised of clean and complete information.
The Switzerland of the Martech Stack
If you think of your martech stack as the world, then your CDP is Switzerland. It is data neutral in that it accepts and processes large volumes of all kinds of data from a variety of sources, including:
- First-party — Data sourced from tools in your stack and throughout your organization
- Second-party — Data gained freely from a joint campaign or business partnership
- Third-party — Data purchased from a broker, like ZoomInfo, Dun & Bradstreet, Leadspace, etc.
Your CDP is also neutral in that it should be able to integrate and work with all types of tools in your stack without issues. Above all, like a Swiss bank account, it should be a secure repository that protects the data it receives from each system from unauthorized access.
Integrating Your CDP
Systems and tools with which you will want to integrate your CDP include everything from Marketing Automation Platforms (MAPs) and Customer Relationship Management (CRMs) systems, to data housed within your website (forms, emails, ecommerce, etc.) to Google and Microsoft-based data such as web ads, social media posts, views, likes, purchases, etc.
How Is a CDP Different From Other Data Tools?
While some marketers may confuse CDPs with other data tools such as Data Management Platforms (DMPs) and CRMS, there are some key differences. Here’s a short list on how they differ:
DMP — This tool primarily uses anonymous data such as IP addresses, cookies and third party data to enhance ad targeting. The life of a cookie is around 90 days and this is how long DMPs typically store data. Because a DMP is ad-centric and uses anonymous data, it is not able to create a single customer view or a customer journey.
In contrast, a CDP uses all types of data, and collects and stores personalized customer information such as names, titles, email addresses, etc. Over time, marketers use the history of trends found in this data to build customer profiles that are used for ads as well as all other marketing initiatives.
CRM — This tool is essential for gathering sales data and is often used for monitoring pipeline activity and forecasting future sales. Because CRMs are focused on data from customer input, they do not gather intel from anonymous data, so there is no ability to gain insights from potential markets and prospects.
A CDP collects and uses both customer and prospect (anonymous) data, which allows it to go beyond pipeline predictions and reveal trends and insights that occur throughout the lifecycles of individual customer relationships. In short, a CDP gives you a broader and deeper view of the customer journey.
What Problems Does a CDP Solve?
1. Problem: Data Blindness.
Regardless of the volumes of data the tools in your martech stack may be able to collect, that data is of little use to your marketing objectives if you have no ability to monitor its quality on a segment-by-segment level. After all, how are you supposed to track trends that impact campaign performance when you can’t see your segments in real-time?
CDPs Deliver Data Visibility.
In addition to uniting and centralizing access to data, a CDP offers the instant gratification of data visibility on a macro (general/big picture) and micro (segment-based) level. Being able to see what’s going on at any time is critical to your ability to respond to the trends and insights your data story is telling. Moreover, data visibility is at the heart of every business success story that begins like this: “We noticed (insert data trend) and so we responded by making this (insert data-informed decision) and suddenly our (insert leads/sales/profits/growth/etc.) spiked.”
2. Problem: Disparate Data.
When data is trapped in a variety of disconnected databases, there is no opportunity to capitalize on data-driven marketing opportunities because the information upon which you are basing decisions is perpetually incomplete. It’s also impossible to work together with other departments to achieve objectives when everyone’s view of the customer is based on a different set of data points.
CDPs Connect Siloed Databases.
Once all data sources are integrated, then, and only then, is it possible to see the big picture and understand your customer’s journey across all touchpoints. Without these gaps being bridged, sales will respond to joint initiatives via a customer view that is different from the one the folks in customer service have, which is different from the information that marketing has, etc.
3. Problem: Dirty Data.
It’s hard to believe with all the martech that’s available today that a majority of B2Bs are still suffering the damning effects of dirty data, but it’s true. Recent research conducted by ZoomInfo found:
- 62% of companies use marketing data that’s up to 40% inaccurate
- 25% of B2B database contacts contain critical errors
- 40% of business objectives fail due to inaccurate data
To put things in perspective, imagine how great life would be if you were able to increase the success rate of your current marketing objectives by 40 percent. Or what if you were able to save an extra 25 percent of your marketing budget because you weren’t sending emails and direct mail pieces to the wrong addresses? How many more customers could you inspire to stay loyal, simply by not misspelling their names and titles?
CDPs Keep Data Clean, Complete, Enriched and Ready to Use.
Ignoring data quality is an expensive mistake. The same research we mentioned earlier found a correlation between dirty data and expenses known as the 1-10-100 rule. The 1-10-100 rule states that “it costs $1 to verify a record as it’s entered, $10 to scrub and cleanse it later, and $100 if nothing is done.” A CDP solves dirty data issues and allows you to spend your $1’s $10’s and $100’s on more important things.
4. Problem: Diverse Data Standards.
Most martech stacks are “best of breed” which means everyone is free to use their favorite tech. The only problem with a variety of tech tools is the subsequent variety of data standards each one operates by. This issue can create critical errors when integrated tools begin sharing information and key data points become lost in translation.
CDPs Empower You to Set Data Standards Enterprise-Wide.
Although data standardization may seem a small thing, it has a dramatic impact on customer confidence as it enables all company communications, whether from marketing, sales or customer service to appear uniform and well-coordinated.
5. Data Compliance
Upholding GDPR and E-privacy regulations, and ensuring customer and prospect information is secure is tough to do when data cannot be monitored through a central access point. After all, how can you enforce privacy standards when you can’t see if they are being followed across all data sources?
CDPs Enable You to Set Data Protocols Across Data Sources.
The ability to manage who has access to what data from a central access point is essential to the privacy and wellbeing of both companies and their customers. In addition to empowering data administrators to control user access, managing data from a mission control-style CDP dashboard enables data managers to address minor issues before they become major ones.
What Goals Can a CDP Help Me Achieve?
1. Data-Driven Marketing
A CDP is where informed decision-making begins. Because CDPs are perpetually gathering and storing both customer and prospect data, they are the first place to look for patterns and trends in behaviors throughout the customer journey. They are also your first and last line of defense against the ill effects of bad and disparate data.
2. Campaign Performance
When your team has access to customer insights on a segment level, it empowers them to develop and execute campaigns that resonate. Moreover, campaigns that consistently leverage data that is clean, complete, and up-to-date, enable you to deliver a more personal customer experience, which ultimately reduces churn and builds brand loyalty.
3. Smart Spending
Aligning budget spending with marketing campaign performance enables you to invest your marketing dollars into the initiatives and channels that are producing the greatest results. It also empowers you to objectively review past budget investments and reduce spending on those channels and marketing initiatives that did not deliver as expected.
4. Customer Engagement
Brian Carlson, a contributing editor of CMSWire and the President of RoC (Return on Content) Consulting, maintains that a CDP is an essential tool in the modern martech stack because of its ability to impact messaging through better targeting and enhanced personalization. “By aggregating and unifying data from all the places customers interact with your company, CDPs help organizations get a more complete understanding of their customer’s behavior. This enables them to deliver a more consistent message and overall customer experience across all channels,” said Carlson.