There’s been a lot of buzz around customer data platforms (CDPs) in the last few years. As a relatively new martech category, many businesses are still assessing whether they need a CDP to achieve their business goals while thinking through the role it should play within their tech stacks. Meanwhile, the CDP technology landscape continues to evolve — with new entrants joining seemingly every day. Each one has a slightly different take on the category, so it can be tough to get clear answers to questions you may have.

In this blog post, I answer a few common CDP FAQs we’ve been hearing.

FAQ #1: To start, what is a CDP exactly?

According to the CDP Institute, a CDP is “packaged software that creates a persistent, unified customer database that is accessible to other systems.”

The CDP is the solution where all of your customer and prospect data comes together – including both structured data (e.g. CRM, marketing automation, loyalty, etc.) and unstructured data (e.g. behavioral, contextual, intent, etc.). Many other solutions will collect and store customer data within your organization, but the CDP is meant to be the central system where you create one single and complete picture of every individual. This means that your CDP must be able to take in data from multiple sources (in addition to data it tracks natively), produce insights from all that data, and be able to pass data and insights out to other systems as well.

FAQ #2: How is disparate customer data reconciled within a CDP?

In order to create a single picture of an individual, data within a CDP must be stored at the individual level, with a single profile for each person (and account, in the case of B2B companies).

The challenge is that customer data enters the CDP from different systems, which all store data in their own ways in their own profiles. Thus, all of the data about a person must be stitched together within the CDP to create comprehensive individual profiles. Most CDPs can do this either through deterministic matching — stitching profiles together based on a clear, common identifier (such as email address, user ID, loyalty program number, etc.) — or probabilistic/heuristic matching — making an educated guess about which profiles represent the same person based on behaviors, location, similar data, etc.

In short, the CDP is responsible for storing individual-level data that represents a single individual’s identity. If a system isn’t storing customer data at the individual level, it isn’t a CDP.

FAQ #3: How is a CDP different from a CRM?

For a long time, the CRM system was hailed as the single source for all customer data. However, while CRMs are adept at handling well-structured attribute data, they were not built to ingest and interpret complex behavioral and other unstructured data. There’s so much you can learn about an individual from her behavior across channels. CRMs cannot take in all the data that each website visit, app session, email open, digital ad clickthrough, etc. generates about an individual and then infer what it says about her interests.

Additionally, CDPs can store data for anonymous visitors, not just known individuals. CRMs can only store data if the person has some kind of identifying information like a name, email address or customer number.

Therefore, while a CRM can certainly be valuable, particularly in B2B sales and customer success efforts, it’s not suited for handling and making sense of large volumes of “big data” in our digital age.

FAQ #4: How is a CDP different from a DMP?

There can be overlap between CDPs and DMPs depending on the specific system, but there are some clear differences. Typically, a DMP collects data from second- or third-party sources and contains only non-personally identifying (non-PII) information such as cookies, IP addresses and device IDs. Leveraging DMP data, businesses can segment website visitors or app users based on information gleaned about them from other parts of the internet such as their demographic information or in-market intent — primarily to use for paid media efforts.

A CDP, on the other hand, brings all customer data together in one place no matter whether that data is first, second or third party. CDP data can be used for targeted advertising as well, but it goes much further; it can also be used in analysis to better understand customers, as well as deliver personalized experiences across other channels.

The distinction can get a little hazy because some CDPs and DMPs natively track their own first-party data as well, but the biggest difference is that the DMP is not meant to be a single source of truth for all customer data. And of course, as that single source of truth, CDPs can take in and use DMP data.

FAQ #5: Are CDPs relevant to B2B companies?

Much of the conversation around CDPs is focused on B2C companies, especially retailers who are frequently turning to CDPs as a solution to their omnichannel challenges. But the goal of fully understanding customers is not unique to retailers. It’s something all companies across industries care about.

Forrester Research recently published a report analyzing CDP vendors, specifically covering the B2B market, called The Forrester New WaveTM: B2B Customer Data Platforms, Q2 2019 (Forrester login required for download or for purchase). In the report, Forrester referred to the B2B CDP landscape as a “classic emerging market.” It’s in its early stages, but there’s rapidly developing interest there. It’s clear that CDPs aren’t just for B2C companies.

FAQ #6: What do I do with the data in my CDP?

A CDP should be able to make the data it aggregates available for analysis purposes and to take action on (often referred to as “activation”).

For analysis, once you have all customer data together in one place, you can dive into it to uncover key differences in customer segments, learn more about how customers respond to different promotions, and much more to answer any questions about your customers and prospects that you may have.

Activation can take many different forms. Generally speaking, though, it’s about acting on the data and insights in the CDP to improve customer experiences or marketing effectiveness. Personalization, the act of tailoring an experience based on what you’ve learned about an individual, is one of the most common forms of activation. Our perspective is that if you’ve gone through the trouble of bringing in and interpreting all your customer data in a CDP, you should be able to use that information to execute highly effective activation campaigns — whether the CDP executes such campaigns itself, or triggers actions in other systems.

FAQ #6: Should my CDP be able to personalize?

If your goal is to deliver more relevant and effective customer and prospect experiences, you need both insights and engagement. In this context, a system of insight aggregates customer/prospect data and enables analysis of that data (i.e., a CDP), while a system of engagement delivers experiences to customers/prospects in one or more channels and enables measurement of the outcomes.

Some businesses split this functionality across two or more solutions: they’ll purchase a CDP as a system of insight first and a separate system of engagement like a personalization solution later on. But in order to select the most relevant experience at the individual level and do it in real time, the system of engagement needs access to all of the customer data in the system of insight. That’s why we believe your CDP should be both a system of insight and a system of engagement.

At Evergage, we’ve been working with clients on their personalization initiatives since the platform’s launch in 2012, and we have found that the only way to deliver maximally relevant, personalized experiences at the individual level, in real time, is by also serving as the system of insight. That’s why Evergage has been a unified personalization and customer data platform since inception.

Final Thoughts

As you conduct your search for a CDP and go through the set-up process, always keep your ultimate goal in mind. More often than not, the goal is activation and personalization, not just analysis and insights.

CDPs are getting a lot of press right now, but it’s never a good idea to invest in technology just because it’s trendy. Be sure you know what you want to accomplish with a CDP and then pick and implement one that will best serve your needs.

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