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A Beginner’s Guide To CDPs: What They Can Do For Your B2C Business

With the arrival of a new CRM vertical - the “customer data platforms,” marketers should be well versed in how they differ from incumbent martech solutions

Matt McAllister
December 10 2018

Decades ago, one of the biggest hurdles marketing companies faced was collecting consumer data. Thanks to modern technology, they now confront the exact opposite problem. The Internet has granted marketers access to an unprecedented level of data, but there is simply so much to process across an entire spectrum of data points. Establishing a useful context can be difficult.

Customer Data Platforms help marketers not just collect but contextualize the information at hand. It’s so new that many companies are just becoming aware of them, yet the field is projected to grow from $300 million to $1 billion in revenue by 2019.

So what are Customer Data Platforms? Why are they useful? And how can marketers best integrate them into their services?

Defining Customer Data Platforms

The Customer Data Platform Institute defines a CDP as “packaged software that creates a persistent, unified customer database that is accessible to other systems.” In short, it is a data unifier – collecting data from multiple sources, linking key points together as a customer profile, and storing it in a format that’s easily accessible. Once the profile is complete, it can be made available to other marketing systems.

Differences from Other Data Management Tools

CDPs may sound similar to a Data Management Platform, but there are a few key differences. Most importantly, a CDP uses personal data such as name, address, email, and phone numbers to create a unique, individual profile. Its built-in algorithms clean up and unify data points that would otherwise appear fragmented, and organizes it into a format which will be updated with each interaction.

A DMP, on the other hand, builds an anonymous profile using cookies, device IDs, and IP addresses, which are not attached to specific individuals. Both can be used for marketing campaigns, but CDPs are more effective at aggregating personal information by design.

CDPs also have some overlap with data warehouse platforms. Both use algorithms to compile and organize data from multiple sources into a usable format. That said, data warehouses are not usually packaged software – they tend to work by routing data from different systems. They’re also designed with IT departments in mind, rather than marketers who focus on customer profiles. On the other hand, CDPs operate from a central server, where it can be used again when other systems might need it.

Current Benefits of CDP Software

Marketers have no shortage of tools for assembling customer data, but aggregating and analyzing them is an increasingly onerous task. CDPs offer a straightforward method of measuring any data point metrics a business requires, while built-in algorithms “streamline” the information into presentable forms.

And that’s just a basic function of a CDP – depending on the specific software used, a variety of optional features are available to you. Some packages combine CDP and DMP functionality, allowing you to create anonymous customer profiles as well. Others automatically determine which data sets belong to specific identity profiles. Many have built-in analytical features, including segmentation, predictive models, campaign management, and more. A few even support real-time interactions that quickly respond to ad impressions.

CDP Limitations and Drawbacks

That’s not to say CDPs can do everything. As a relatively new service, most do not offer a standard set of features. Marketers should carefully review all available options to make sure they are for them. Once you’ve chosen a CDP, you’ll need to integrate them with your systems and format the data parameters accordingly. And as always, CDP analytical features are only as comprehensive as the data itself – if your data collection tools are incomplete, so too are subsequent profiles.

Data security is also a potential issue. The capabilities that make CDPs unique – personalized customer profiles, systems integration support, and a conveniently centralized database –  also make it a lucrative target. It’s crucial not only to make sure stored data is secure but used in conjunction with your organization’s privacy and security policies. Depending on the chosen software and the business in question, that may require building an internal security infrastructure.

All the same, when it comes to unifying and analyzing the overwhelming amount of information at a marketer’s disposal, Customer Data Platforms can be an incredibly useful tool. All B2C companies should expect to hear more about them in the future, especially as the field continues to grow.

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Matt McAllister

Matt McAllister is the CEO of Fluid PR, Inc. and twenty-year marketing veteran. Matt most recently ran marketing for Tapjoy, a mobile ad-tech platform. Matt also served as VP of marketing and content for High Voltage Interactive, an online ad network that was acquired by Aptimus, Inc. He started his career as an account executive for the PR agency Niehaus Ryan Wong.

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