The average company juggles data across several platforms, none playing that nicely together. And they are running different systems — some of which were never intended to meet the needs of customers using mobile phones.
The result? A stressed-out marketing department and an overworked development team.
Not to mention business-stunting inefficiencies. Some are small and hard to find. Others are glaring at you through your desktop, slowly driving your CTO insane.
With data being collected and living across all these different areas, your customers aren’t receiving nearly the red-carpet, personalized experiences they expect. This means no hyping you up at Thanksgiving dinner. No gushing about your services to their buddies at the next industry event.
So how do we get you from here to there?
How do we get you from siloed data and overworked teams to a single data source driving brag-worthy experiences?
The short answer: a customer data platform.
What in the world is a CDP? And why do I need one?
A CDP is your central source of truth, collecting data from multiple channels, cleaning it, and compiling it into rich singular customer profiles.
With your CDP, you can target customers in real time with experiences across the web, app, and social channels, all while adding new data sources and destinations with ease.
A CDP gives you better data agility, actionable customer behavior insights, and robust engagement capabilities to target your ideal customers with the right experience at the most opportune time.
In other words, a CDP is a time and sanity-saving tool freeing up space for more creativity and critical thinking so your team can take serious action in moving your business forward.
What’s the difference between a Customer Data Platform and a Customer Engagement Platform?
A Customer Data Platform (CDP), like Segment or mParticle, takes a holistic look at offline and online customer data and analytics and captures it in a single user profile. The information is integrated across multiple tools, decreasing manual audience management and giving you superior data insights.
On the other hand, a Customer Engagement Platform (CEP), like Braze, looks at the customer’s actions and interactions with the brand and sends personalized, localized offers and messages across various channels.
In short, a CDP gives you the insights you need to take the right action in your CEP.
Now that we have a basic understanding of what a CDP is, I’d like to break it down even further for you.
There are five primary stages within a CDP: the collection of data, standardization of that data, transformation, integration, and activation.
First, data is collected through your tag management systems and your APIs, or rather your client-side data source and our server-side data sources. This comes from your website, point-of-sale systems, call centers, applications, etc.
Secondly, this slew of data is then standardized. It’s true CDP vendors may have their own way of standardizing data. However, this is a good time for your company to define their data sources. This is the time to sync the CDP to your company vision and not the other way around.
Thirdly, the data you’ve collected on your customer from all of these data sources are then compiled together and aligned with individual customer profiles. Here you can identify different audience segments and ensure you adhere to customer preferences.
Fourthly, integration of your growth stack! Integrate your tools to communicate with your customer with your CDP, ensuring each tool has real-time information on your customer to take the best action possible.
Now, activation. Your data is clean, consolidated, and enriched into actionable customer profiles. Now is the step to implement that data through omnichannel campaigns and nurture flows.
The average business has 17 different technologies housing customer data from over 28 unique sources (Deloitte Digital).
Combining that data circus with the finding that 60% of customers now have higher expectations for their digital experiences than before COVID-19, it’s clear you have a gap to fill (Experian).
The path to reliable identity resolution of your customers to create those epic customer experiences requires a customer data platform to give you a holistic view of your customer profiles.
With a CDP, you can leave behind the days of disconnected, siloed customer data, inefficient batch and manual processes, limited growth capability; untrustworthy data; expensive maintenance; and unactionable data.
Bringing in a CDP to your growth stack frees up your team to solve business challenges so you can scale faster and wiser.
The value of a CDP can be broken down into six areas:
CDPs iterate data sources faster and improve data quality with forced rules and logic.
Your team can efficiently do data orchestration and audience creation without complex querying.
CDP technologies evolve with market demand, giving you the best-in-class experience with connected, relevant tools.
CDPs empower faster data analysis in multiple tools with consistent audience sharing for higher visibility into your customer base.
A CDP requires fewer people to upkeep your data. Your team then has more time and brainpower to generate insights, take more informed actions, and solve more significant customer challenges.
Within a CDP, customer segmentation and personalization increase limitlessly.
Now, let’s talk about some data collection considerations.
Proprietary data management silos lead to performance issues and investment loss.
However, using intelligent, scalable capabilities with reduced manual overhead enable experimentation and innovation leading to those “WOW” experiences that drive return on investment (ROI).
Let’s dive into those data sources.
Data that your costumes share voluntarily and deliberately with you. It can be collected and matched to customer profiles through surveys, polls, or questionnaires.
Information about your customers is collected directly from those that your business owns. This data is stored on customer profiles to help you create powerful audience segments and personalized campaigns. Examples of these data sources include Shopify and Oracle.
Information purchased directly from another entity’s first-party data. Data is ingested from trusted partners but only customers already known to your brand. Examples of these data sources include Amazon or Braze.
Data is collected by an entity with no relation to the party it is collected from. This data integrates with customer profiles, but rising privacy concerns and cookie depreciation limits its value.
A CDP will work with whatever information you feed it. Prioritize zero and first-party ahead of second and third-party data to keep your data the most relatable and meaningful.
However, a CDP unifies all your data sources to give you a thorough 360-view of your customer throughout their journey with you.
Now that we’re getting serious about CDPs, it’s time we dive into the financial impact.
Here are some questions to ask yourself:
A CDP will reduce the time it takes to do each activity.
What tangible benefits can you expect from a CDP?
The most significant difference you’ll see with a CDP is a substantial decrease in engineering time. Your team will be able to integrate new sources and destinations faster with time-to-value reduced.
It increases the speed of your marketing cycles and sends marketing messages faster.
Through a connected ecosystem with a CDP, automate daily, weekly, and monthly reports to fuel quicker data-driven insights.
Increase acquisition and lifecycle marketing efficiency with better visibility into your customer for optimized customer experiences in real-time.
Improve the time-to-value of new technology integrations, reporting, and querying, and save cost through reduced engineering hours.
However, these changes aren’t easy as the flip of a switch.
That is unless your CDP has the right integrations for your current tool stack, then it kind of is as easy as flipping a switch.
Our hot tip: underestimate the headcount that goes into each of these activities when calculating the time you’ll save with a CDP. Because, yes, you’re going to save an immense amount of time and money with a CDP. But you will also gain many insights that you’ll want to put to work. The work doesn’t go away; it becomes more thoughtful and efficient.
The next question quickly becomes, how effective and mature is your marketing today?
How effective are your targeting and advertising?
If your ROAS and engagement effectiveness are lower than industry standards, then a CDP will help.
Are you taking a robust omnichannel approach when engaging with your audience?
If not, a CDP will enable and make your marketing 200% more effective.
How effective are your emails?
If your click-through rate is less than industry standards, a CDP will help you segment more effectively and drive your results up.
Determining the financial impact of a CDP starts with understanding your current processes and your current state of marketing. A CDP will make you more efficient, but it is not a brain that will develop and orchestrate your marketing strategy for you.
However, with a clear view of your processes and strong marketing behind you, a CDP will clean your data and give you the insights your team needs to take powerful action.
We know a CDP will work wonders for your business. Your stress-free team will send beautifully designed, data-driven emails to the right customers at just the right time.
But before we dive into that potential future, let’s talk about cost drivers.
First up, your one-time costs.
The first cost will be the time cost. The time required to get buy-in from your stakeholders and align on integration scope, prioritization, and data needs.
The second cost will be the build and quality assurance process. There will be an upfront investment of engineering hours to build, source-destination integration, and test for data validation.
Next up are your ongoing costs.
One ongoing cost is maintenance hours required from engineering resources to monitor the CDP and troubleshoot any bugs when needed.
Another cost will be audience list creation. This will include the resources required to define, build, and upload audience segments for ongoing marketing activation requests.
A CDP is nothing if not an efficiency-driven game-changer for your company. If you’re looking for the section of the blog post to print out and insert into your CDP pitch deck, this is the one.
Adding a CDP into your growth stack increases integration efficiency, audience building efficiency, marketing efficiency, and extends the lifetime value of your customer.
How does it do each of these?
With the ability to access data from a single, consistent source, you’ll be able to add new integrations at scale with minimal cost.
Your CDP eliminates the need for complex SQL pulls or support from your analytics team to build audience definitions and lists.
Active suppression eliminates waste from acquisition campaigns, while personalization boosts retention ROI.
Better personalization using CDP data for known customers drives higher lifetime value as customers move through your funnels.
A quick tip: Don’t overcomplicate it.
Even if you start small and receive an efficiency gain of 1-2%, that may be a minor change in your operating or marketing efficiency, but you will more than pay for what you invest in the platform in a year.
Initial setup costs may be high, but most companies see a return on investment in the second or third year with a CDP from relatively minimal changes.
Is a CDP right for you?
The industry for CDPs is an ever-growing place. Over a hundred vendors currently offer CDPs, all with a similar architecture process to load data, create segmentations, and enable activations.
However, CDPs are not created equal and will not optimize your business equally.
According to Forrester (1), there are three lessons current CDP browsers should follow:
When choosing a CDP, there are some negotiable requirements that you need to consider:
Do I need a standalone CDP or an add-on?
Some CDPs are open, standalone platforms that integrate your customer data and activations. These are very versatile. Other CDPs act more as add-ons for your current CRM, CMS, or experience platform.
Are scale and compliance concerns?
If so, only a few platforms are considered enterprise scale and give you the compliance and organizational capabilities you’ll need to scale. You'll want to consider an enterprise-ready CDP if you have multiple business units, products, or customer segments.
Do you need a CDP specialized in your industry?
Industries like financial services or automotive would benefit from CDPs specializing in their industry's use cases.
On the other hand, you’ll want to list your non-negotiable requirements:
If you’re looking for a CDP, chances are you already feel the pain of not having one.
With tools like CRMs and CMSs, you have a breadth of capabilities to automate marketing campaigns, gain analytic insights, and respond to your customers. However, data remains siloed, teams are not optimized, and your customers feel disconnected.
With a CDP, your entire business becomes optimized when your data becomes centralized and integrated. The depth and sophistication of your campaigns increase, your team is freed up to expand their capabilities rather than troubleshoot their current ones, and your customers finally experience the personalization that will make them loyal fans for life.
When you bring on a CDP, you gain clarity for your team with an added boost of data rocket fuel to propel substantial transformation and business growth.
So our advice is, don’t wait.
In short, we don’t recommend investing in a CDP based on their AI. AI is changing too much.
Take advantage of the CDP to feed you healthy, clean, actionable data. Then let your marketers take it from there.
At WillowTree, we are happy to dive into your business with you and help you find the right CDP for your business needs.