Today every business aspires to be more data-driven, particularly when planning marketing campaigns. The persistent problem of fragmented data has been a challenge for marketers, which is why they see great value in CDPs.
A new term is born
It was in April 2013 that David M. Raab applied the acronym of CDP to easily identify a customer data platform on his blog. In the post, he explained how the three parts fit together:
– “Customer” shows the scope extends to all customer-related functions, not just marketing;
– “Data” shows the primary focus is on data, not execution; and
– “Platform” shows it does more than data management while supporting other systems
Raab founded the CDP Institute, a vendor-neutral organization concerned with using customer data for more effective marketing. Over the past several years, marketers have come to recognize that CDP is an essential tool for any business seeking a competitive edge.
As the amount of customer data continues to grow at an exponential rate, it becomes more and more important to manage it effectively. In an article on the best use of customer data, Bhavesh Vaghela clarified why it is essential to break through silos:
“With a myriad of touch points connecting customers to brands, it’s now more important than ever for these different touch points to connect and form a cohesive brand experience. But when data is not shared between departments, this cripples the ability for companies to make the most informed decisions about their customers.”
“The martech stack is getting bigger and more complex for many organizations,” observed Martech Today. Consequently, it is important to get the different parts to work together to reveal the full picture of the customers, which is only possible with a CDP.
More than standard segmentation
Gathering basic customer information to identify them by demographic and personality is only the most basic level of segmentation. Beyond that is the type of data CRMs gather like transactions they’ve had with your business. But a CDP goes way beyond those segments to deliver a 360-degree view of the customer.
A CDP delivers the best possible marketing results because it integrates all the data to enable a complete view of the customer. That means taking in data that encompasses three distinct categories of customer behavior:
1.Purchases
This is not limited just to the question of what they buy but how frequently they are buying. Relevant data points also include what they’ve shown of their purchase experience: how they place their orders, how often they return versus how often they keep products.
2. Digital Activity
What your customers are looking at on your site gives important insight into what catches their eye and what fails to keep their interest long enough to make it a purchase. This is very important information that can be used to understand what hooks them and what makes them move on. These can reveal deeper patterns than demographics and even purchase history combined can.
3. Campaign Engagement
Not every customer responds to every marketing campaign with the same level of engagement. Identifying which ones do succeed in drawing a response is very valuable in planning which campaigns to deliver to those customers in the future. The same goes for seeing which channels they engage with, whether they come to your site by clicking through an email you sent, a link in a paid ad, or via an SMS. When you can identify which channels draw which customers, you can tailor not just what you communicate to them but how you communicate it.
What to look for in a CDP
A CDP will not just inform but enable actions in near or even full real-time to capitalize on customer signals. It works because it packs several key capabilities into a single package.
According to RealCDP, a project of the Customer Data Platform Institute, there are five definitive capabilities for a CDP:
- Ingest data from any source
- Capture full detail of ingested data
- Store ingested data indefinitely (subject to privacy constraints)
- Create unified profiles of identified individuals
- Share data with any system that needs it
The CDP supplier should also have proven itself. That means not just that it has experience servicing many businesses but also that it remains innovative. It should be constantly developing new features to improve results. That gives you assurance that the system you subscribe to is flexible enough to scale up to meet your business’ changing needs as it grows.
What CDPs do for customer relationships
More comprehensive data plus better insight and action delivered in real time all add up to a whole system of personalization that can transform your targeted marketing. A CDP’s data and analytics capabilities translate into the following marketing effects:
- Data unification – All your customer data is unified, so that you no longer have the obstructed view that results from scattered information and silos and can achieve a true 360-degree view.
- Privacy compliance – As the CDP stores all your customers’ preferences in one place, including opt-ins for email and SMS notifications, as well as any opt outs, it can also be helpful in managing these preferences and complying with regulatory demands set by GDPR and CCPA.
- Analytics – In-depth customer data analytics enable you to identify and understand the customer.
- Individuation – Drive highly personalized customer interactions across web, email, and any other marketing channel by leveraging not just demographic data, but also behavioral and transactional data. That makes it possible to generate an accurate profile for customer personas, segmentation, and targeted efforts.
- Action in real-time – These individualized interactions can deliver precisely the right offer at the right time. Whether you push it through your site, ad-tech, or social media should be directed by your insight into your customers’ preferred channels.
CDPs in action
Nearly all businesses aim to extract as much value out of their data as possible and improve targeted marketing. However, each company also has particular goals related to CDP outcomes.
Optimove* has helped several brands achieve their marketing goals with their complete CDP solution. For example, luxury brand, Paul Stuart sought to get better results than they were able to achieve with the segmentation based on their CRM. The goal was to improve results from weekly emails and to be able to respond to customer signals with accurately targeted and automated marketing communication.
(* – This website, PostFunnel, is owned and operated by Optimove)
After applying the Optimove solution, Paul Stuart was able to use data on purchase history and campaign response history to achieve advanced customer segmentation. That formed the basis for predictive analytics that drive customizing messages automatically sent out by Optimove to “granular customer segments.”
“Optimove helps us understand where to focus our limited resources to have the greatest
impact on the business,” observed Jessica Granata, then Director of Digital Marketing & CRM at Paul Stuart.
Another retailer, Adore Me, wanted to be able send out automated emails customized to distinct customer personas and to have accurate measurements of its marketing campaigns’ impact. Within a few months of deploying the CDP solution, the company saw
the following metrics:
- 15% increase in monthly revenue generated by Optimove-driven campaigns, as compared with control groups
- 22% increase in average order amount
- 3X growth in the number of active customers, year-over-year
- 66 unique customer personas targeted on a monthly basis
It also gained the efficiency of having 85% of customer campaigns fully automated. Josselin Petit-Hoang, then Head of CRM at Adore Me observed. “Optimove lets us be super-personalized in our customer messaging, by making it easy to target customers based on any number of attributes.
Even more impressive results from utilizing a CDP were reported by Lastminute.com. The Amsterdam-based digital travel company aspired to deliver more personalized and targeted communication for its millions of customers scattered around 40 countries.
After implementing the Optimove solution, which allowed it to achieve a segmentation smaller than 500 customers for 68% of the target groups and a 90% automation rate for recurring campaigns, it found the following improved results:
- 18% increase in order value
- 35% increase in email open rates
- 10% increase in email click rates
- 160 unique target groups
- 10+ million customers every month
“Optimove has helped us significantly improve our customer marketing, by automatically personalizing and delivering emails at a very large scale”, said Marco Bardicchia, then Marketing CRM Team Leader at lastminute.com.
Conclusion
A CDP can prove its ROI within months in terms of the gains in customer engagement and conversion. Reaching out with the right message at the right time and on the right channel to show your customers you’re listening and responding to their concerns means you not only succeed in attracting new customers but in retaining them for the long term to maximize their lifetime value.