Customer Data Platform Software 2021: Ultimate Guide

All Customer Data in a Single Place

Customer data in a company can reside in multiple applications and can come from multiple sources - first party, second party or third party. Customer Data Platforms are built to collect data from a wide range of sources and bring it together to give businesses a comprehensive view of the customer. This data is cleansed, normalized and reliable making it easier for marketers to consume.

A Unified View of Customer

CDP makes it possible to have a unified 360-degree view of customers by bringing data from all aspects - identity, behavioral, qualitative. This makes it possible for marketers to run effective campaigns to deliver the right content at the right time to customers. Also, this helps to run targeted marketing, personalized marketing which in turn improves conversion rate.

Operational Efficiency

Effective Customer Marketing

With a Customer Data Platform in place, marketers gain a complete view of customer behavior that can be used to drive the most comprehensive customer experience in their campaigns without blind spots. This helps to optimize campaigns which inturn optimizes marketing spend.

What are the industries that benefit from a Customer Data Platform?

Most businesses that engage with end customers across channels or in a personalized manner will find a Customer Data Platform very useful. This is especially critical for those that depend on long term continuous engagement and repeat visits to drive revenue - such as businesses in BFSI, insurance, grocery, fashion, departmental stores, food & beverage, entertainment, and telecom.

Personalized Engagement throughout Customer Journey

There is a critical need for businesses to interact with their buyers through a highly personalized engagement. This requires that customers be engaged in a seamless fashion across all channels to provide appropriate product recommendations/information tailored to their immediate needs. When businesses have access to customer data in a fragmented fashion, it is very difficult to deliver a unified customer experience. CDP helps marketers to solve this problem.

Access to reliable customer data

Brands are constantly playing a game of “catch up” when it comes to meeting their customer needs at the right time. Even though businesses have access to more data than ever before, the sheer overload of information can be a staggering superset that provides little to no guidance to the fundamental question “What do customers want?”

According to a Gartner study, 52% of marketing leaders responsible for data and analytics cite data management, data integration and formatting as some of their most time-consuming activities. CDP solves this problem for marketers.

Overcome Data Silos

A Customer Data Platform is the first step towards solving the problem of fragmented, siloed data. It arranges customer data in a way that provides a complete 360-degree view of a customer. A Customer Data Platform provides a centralized data hub that enables teams the ability to provide omnichannel experiences that are always up-to-date with the latest customer interactions.

Unify Cross-Channel Communication

Customers need to be engaged through their preferred choice of channels. Also, across all these channels, consolidated and accurate data needs to be delivered and the experience has to be seamless. This can become more complicated when different departments drive different marketing campaigns targeting the same set of customers. This problem is solved by CDP as it can help to unify marketing efforts across multiple cross channels.

Better Understanding of Customers

By leveraging the information obtained in a Customer Data Platform, businesses can build customer profiles that enable them to truly understand their customers’ wants. Supported by customer behavior analysis, marketers can then formulate effective loyalty-building strategies and make personalization at scale possible

Ensure Data Privacy and Compliance

Additionally, Customer Data Platforms help companies comply with data privacy regulations like the GDPR. With privacy law compliance becoming a priority in the wake of serious lawsuits hitting data powerhouses like Facebook and Google, having a consistent, reliable and secure way of protecting consumer data is important. CDP helps companies to achieve this goal.

Data Management

Data Management involves the ability to collect, integrate, cleanse and organize complex data to a form that is usable. CDP should have the ability to ingest raw data from multiple sources - online, offline, historical, first/second/third party data, multiple devices. The data should be unified to create individual customer profiles.

Products like Arm's Treasure Data Enterprise CDP collect data from different sources and reduce the need for data cleaning and preparation. The platform integrates customer attribute and behavioral data in a single system, including PoS, IoT, web, SaaS, mobile and offline – in batch and streaming – for multi-channel marketing.

CDP should necessarily have the ability to deal with large scale data and deliver the right level of performance in providing trends, analysis, and reports out of this data.

Visitor Stitching

Visitor Stitching is the ability to combine multiple visits of a single person across multiple devices into a single profile. This capability is crucial to understand the customer journey across multiple channels and gain insight into customer behavior. Many of the CDP platforms incorporate AI and ML technologies to implement visitor stitching.

Customer Segmentation

CDP provides data analysis capabilities to create and define new customer segments which help to create personalized campaigns. CDP helps to build segments based on various attributes including behavioral attributes. For e.g. customers who visited the website in the last month, customers from the west coast region, customers in the age group of 25-38, etc. CDP helps to keep the customer data up to date with automated updates so that segmentation stays relevant. Segmentation helps in running targeted and personalized marketing campaigns.

Dashboards and Reporting

Integrations

Most Customer Data Platforms are designed to enable the data to be made accessible to marketing and sales tools for campaign management, analysis, and business intelligence.

A truly unified customer experience requires integration across your entire marketing technology stack - including analytics platforms, customer data management solutions, and customer experience channels.

Products like Tealium, Amperity and Treasure Data provide out-of-the-box integrations with leading marketing tools across email, display, site personalization, clienteling, customer care, and more enable you to clone predictive individual-level insights throughout your marketing stack – ensuring that personalization tools are delivering the most consistent and relevant experiences to every customer.

Predictive Analytics

Many Customer Data Platforms are also beginning to offer AI-based analytical tools to insightfully interpret customer behavior and offer predictive analytics to anticipated customer activity. Predictive Analytics helps to make sense of the attribute data of the customer profile and also predict trends in the customer journey. These predictions can be based on historical data, customer behavior, and even consolidated customer data across channels. Predictive analytics takes the guesswork out of marketers about when and how to reach the customers - provide accurate and reliable information and triggers to run effective campaigns.

Security and Data Privacy

CDP needs to store a large volume of customer data from multiple sources and this could include personal data. Companies are responsible for ensuring data privacy. Security is the foundation of data privacy. Rigorous security protocols are necessary in order to safeguard the privacy of sensitive customer data. CDP needs to provide a mechanism to secure private data and support compliance mechanisms like GDPR in accordance with local regulations.

AI and Customer Data Platforms

AI brings in advanced data analytics capabilities such as automated insights, anomaly detection, and contribution/driver analysis in order to quickly uncover more insights from their customer data.

Identity Resolution

Resolving customer identities from data collected from multiple sources is a complex task. The traditional rule-based approach will not scale as it needs ongoing upkeep and maintenance. This is where AI and ML technologies help. Companies like Amperity use patented ML technology to unify customer records from every system accurately and comprehensively, even when records lack an email address, phone number, loyalty number, or other traditional identity markers.

Predictive Modeling

AI in CDP helps to build predictive modeling that provides insights into customer behaviors.. Using key attributes and behaviors, AI technology helps to build models that help to create right-sized customer segments.

According to Forbes, 93% of executives expect that using more customer data in their campaigns will “create a noticeable shift in their ability to meet disruptive and competitive challenges.”

B2B or B2C

The choice of CDP can depend on the type of your industry and there are CDP tailored for B2C and e-commerce.

Industry Vertical

There are CDPs that are tailor-made for specific verticals like BFSI, healthcare, e-commerce.

Omni-Channel support

It is important to analyze your omnichannel strategy while choosing CDP. Some CDPs can be strong in providing orchestration with specific channels like email and website and not so much with social media. If your strategy is leaning towards social media, then you have to choose CDP which is strong in all these channels.

Time to Value

CDP deployment can be complex as it needs integration with several other tools like data collection sources on one side and marketing stack tools for data activation. So it is important to understand integration capabilities and time to set up and run and the complexities involved. Also, it is important to analyze how compatible CDP is with your company’s tech stack.

Scale and Performance

CDP, by its very nature, needs to deal with a large volume of data and the platform should provide necessary scale and performance.

Choice of Technology

Data Privacy and Compliance

Since CDP very often involves storing and managing private data of customers, CDP should have support to maintain data privacy and provide compliance as per local regulations.

In sectors such as banking, finance, and insurance;, healthcare, legal, etc, it is crucial to maintain prospect and customer privacy, as well as have the most real-time, up to date customer data available to communicate with them accurately and securely. So CDP should provide a robust and secure data management stack to facilitate this.

Budget

CDP is a great tool for marketers. But they can come at a cost, not just in the cost of the software, but also with additional professional services cost and ongoing support. It is good to understand the total cost implications to deploy CDP fully. However, ROI over a period of time could fully justify this investment.

Challenges in Deploying a Customer Data Platform

Deploying a Customer Data Platform can be complex. Every business is different and comes with its own unique legacy data, which needs to be sifted through and incorporated. Added to that are the business / industry-specific requirements and the marketing objectives, which can further complicate implementation.

Here are some of the common challenges faced by businesses when implementing a Customer Data Platform.

Lag in collecting threshold level data

For a Customer Data Platform to become fully operational in a company, there could be a lag due to time taken for new data to arrive. It could take a considerable time for new data to be gathered and ready for loading to the platform.

Training and Support

For organizations not used to CDP, there would be training and skill-building needed to effectively use CDP. Though CDP is meant for marketers, they could be challenged if they are first time users.

Scalability and Extensibility

Customer data can grow exponentially over a period of time and specifically if it is multi-channel and in a B2C environment. The Customer Data Platform also needs to be future-proof to company growth, else it can become obsolete in no time. A scalable architecture that can handle expected types of integration and sources is important.

Time to Value

Implementation can be easy or hard depending on the current state of data within the business. Also, every business will have different requirements, goals, and tools – so very often, it would be difficult to predict deterministically how long the implementation process will actually take.

RoI of a Customer Data Platform

Research from McKinsey shows companies deliver five to eight times the RoI on marketing spend, and boost sales by 10 percent or more when they leverage data-driven personalization.

But in addition to serving customers and prospects in a meaningful way, a Customer Data Platform can also impact your RoI through:

Operational Savings

With sales, marketing, and service automation getting more advanced, a Customer Data Platform will provide a firm foundation for future operational changes.

GDPR Compliance

Customer Data Platforms play an important role in both compliance and administration, saving on both associated costs and penalties.

Media Savings

Better data enables marketing teams to optimize targeting and save dollars on wasted clicks and impressions.

Data Monetization

Understanding customers also implies the ability to serve them with content or services that they need. Customer Data Platforms can, therefore, enable more paths to monetization through targeted advertising of your products and services as well as your advertisers or partners.

Customer Retention

It costs a business more money to find a new customer than to retain an existing one. A Customer Data Platform helps improve your communication and response with existing customers and delivers a positive impact on your bottom line.