Data Processing

How a customer data platform (CDP) benefits your business and protects your customers

February 16, 2022
7
 min read
customer data platform (CDP)

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Implementing a customer data platform (CDP) is an important step in planning for and encouraging the continued growth of your business.

Satisfied customers are more likely to return and more likely to evangelize your product, attracting potential new customers and growing your business. To satisfy your customers you need to know how and why they are using your service and understand their changing expectations. This can only be achieved by turning the raw data you collect from your users into actionable information.

Customer data platforms are the infrastructure you will use to host and query customer data and build marketing profiles linked to real people. This enables you to provide them with an experience which is tailored to their expectations.

This article will explain the benefits of using a CDP and some of the features you should look out for when choosing one for your business.

what is a cdp

What is a customer data platform (CDP)?

A customer data platform is a centralized data store for all of the customer data you generate in your applications and business process. Your data is available and queryable in a single data store, rather than having it spread across different databases with different table structures and data formats.

Unlike data warehouses and data lakes, a CDP goes further than just storing customer data – it's a unified platform for data collection, storage, and analysis. A properly tuned CDP will go as far as being able to build unique individual customer profiles from multiple connected data sources.

Why is customer data so important?

Without your customers, your business would not exist. When launching your business you must acquire customers, and to continue trading you must keep them engaged with your brand or product.

New customers will be made aware of your brand through your marketing channels. They will be influenced by the opinions of your existing customers on how satisfied they are with their interactions with your business.

Existing customers will be encouraged to continue making valuable interactions with your product or service if they are receiving a tailored, personalized experience which caters to their interests and exceeds their expectations.

Proper analysis of customer data through a CDP provides the required insight into these engagements and the people behind them. Data points collected from a variety of services are combined and analyzed to find out what is driving engagement with your users.

Customer data is important to the growth of your business, and it is a valuable asset which needs to be properly stored and handled.

customer data profiles

How does a CDP benefit my business?

Having your customer data in one place makes it easy to manage and query.

For example, if your users’ browsing habits are stored with your analytics provider but your sales data is stored in your e-commerce solution, it will be difficult to associate the browsing habits of a user with their purchases from you.

By capturing data from multiple sources and sending it to a CDP, interactions can be associated with specific users to help identify who is spending money, and give insight into what in your service is encouraging this valuable interaction. Tailored experiences can be provided to your users based on the profiles you have built on them.

A CDP allows you to identify both trends in your user cohort and the habits and actions of individual users. In conjunction with mobile data attribution, CDPs are a powerful tool for building an accurate profile of your customers and figuring out exactly what they want – so that you can adjust your products and services accordingly.

CDPs help to protect customer data

There are two types of protection you should consider when deciding on a platform to host your customer data.

The first is the integrity of the data: it should be protected against accidental loss, deletion, or corruption.

The second is security from unauthorized access. To remain compliant with regulations both in your region and worldwide, you must be able to prove that the correct measures are being taken to ensure that your customer data is not being used improperly. Keeping your customers’ private data secure also benefits you – companies that experience data leaks often suffer long-term damage to their reputations.

Your customer data is valuable to your competitors. A data leak could give the less scrupulous of your competitors insight into how your business is succeeding where they are not.

By centralizing your customer data in a CDP you have one valuable resource to protect. Data stored in multiple places provides multiple potential vectors for that data to leak. Having it in one secure location reduces the risk of data being improperly accessed.

Authorization policies for your team can be implemented through a CDP. This ensures that your team members only have access to the data they require for their job role, preventing accidental modification or disclosure of vital information.

GDPR, CCPA, and other emerging privacy regulations can be more easily complied with through a CDP. Personal data can be filtered from data streams, preventing it from being sent to destinations which do not (or should not, for legal reasons) need to receive that data.

CDPs help activate customer data

Activating your customer data means taking action based on insights gained from it. A CDP should take the raw data you are collecting from your user interactions and turn it into actionable information that you can then use to better target and serve your user base.

Accurate user profiles built on your existing satisfied customers will allow you to target them more successfully and will direct you on how to attract new users with similar characteristics.

To fully activate your customer data, you should build profiles for audience segments. This will provide feedback on how effectively your marketing channels and product are performing with your audience based on broader grouped characteristics.

Identifying audience segments may lead to you developing differing marketing messages based on regional, interest-based, or demographic subdivisions, making your product more attractive to more diverse groups.

A CDP is different from a DMP or CRM

CDPs are not the same things as DMPs or CRMs.

A data management platform (DMP) collects anonymous data from the web and through apps - data like browsing habits collected through websites.

A customer relationship management (CRM) platform, on the other hand, is a system for tracking your existing customers and your business’ interactions with them as individuals. Emails, sales, and phone calls are logged to ensure customers are correctly identified and receive personalized recommendations or care.

Data from CRMs and DMPs can be fed into a CDP. Data you have automatically or manually captured about your customers can be added to your central data store so that it can be used to build further insight into your audience.

characteristics that must be present in any customer data platform

What features should I look for in a customer data platform?

There are several important features you should make sure are present in any CDP you consider:

Responsive data collection Seeing your customer data as it is generated makes adjusting your data analysis process more agile. Many CDPs collect data in real-time or near real-time, with very little delay.
Ability to connect with the marketing and sales platforms you are using, or plan to use Your CDP must be able to ingest data from the sources you are using to collect data, including marketing tools, web/app analytics and e-commerce.
Security and GDPR/regulatory compliance If you are not compliant with local and international regulation when handling customer data, you are putting the future of your business at risk.
Easy querying and usability Your marketing team needs to be able to quickly adopt new tools. Non-technical users need to be able to effectively navigate and query data and generate useful insights to drive business decisions.
Migration tools Things don't always work out. It is unwise to choose any software product that locks your data away and doesn't provide a mechanism to export it if you choose to switch to a different platform.
Identity resolution and segmentation Raw data must be cleaned up, structured, and associated with specific visitors or users of your service. It must also be possible to identify broader user habits for effective targeting of future marketing campaigns.

Unfortunately, a lot of acronyms and jargon are thrown around when discussing CDPs. Expert advice will cut through these confusing terms and ensure that you understand what you are investing in and what outcomes to expect.

How are the insights gained from a CDP applied?

How you apply the insights you gain from a CDP will depend on the outcomes you wish to achieve, and how your business interacts with and draws value from its user base. Some common applications are:

  • Associating online and in-app interactions with real people
  • Recommending products to customers based on their interests
  • Ensuring newsletters and email campaigns are covering topics that interest readers (avoiding being marked as spam!)
  • Encouraging positive online product reviews
  • Improving targeted online advertisements
  • A/B testing and audience research

Example CDP services and who's using them

mParticle is a CDP focused on collecting and processing large amounts of customer data. It has integrations for digesting data from other SaaS products and includes development APIs for building customized data streams. mParticle touts its focus on data quality and governance and provides a single data source for your customer data.

mParticle is used by the likes of Chewy, Airbnb, and Spotify, attracting large online services that collect user data.

Segment collects events from web and mobile apps and provides a platform to collect, process, and interpret customer data. Segment provides the tools to analyze large amounts of data and build customer profiles by matching activity from a variety of sources.

Segment is used by Domino’s Pizza, Levi Strauss & Co., and Staples, among other retailers with online and physical outlets who combine data from multiple sources.

Both Segment and mParticle are powerful CDP tools that support the warehousing of data for long-term historical insights.

Mighty Digital is certified to be partnered with both mParticle and Segment. An experienced team is ready to work with you to fully understand your business and the nature of your customers to ensure you choose the right customer data platform.

Tailoring a service to your needs

Once size doesn't always fit all, and implementing a CDP isn't simply a matter of signing up for a service and dumping data into it. To get the most out of your investment and to fully exploit the CDP platform you choose requires planning and experience.

Your business may require that an existing solution be customized to work with your unique data sources and required outcomes. Consulting with an expert team will ensure your CDP solution is suitable for your data requirements and enable decision making that grows your audience, without adding unnecessary costs to your business.

Fully utilize your customer data by choosing the right CDP

The key to implementing an effective CDP that will add value to and help grow your business is understanding what kind of customer data you will be collecting, as well as what information you wish to derive from it – both now and in the future.

By ensuring the right CDP solution is chosen, data collected now can remain useful long-term, and allow you to build an accurate profile of your users both collectively and as individuals.

Data collected and not fully utilized is data wasted. Mishandled data is also wasted – rendered useless or expensive to process if it is incorrectly handled and stored. Starting with the wrong CDP solution could be a costly mistake.

By consulting with industry experts like Mighty Digital, you can ensure that your investment in a customer data platform results in the full value of your data being realized.

The growth of your business is dependent on your understanding of your customers. By implementing a robust and long-lived customer data platform, you can make sure your business and marketing decisions are based on accurate contemporary and historical customer insights, bolstered by tailored experiences for your most valuable customers.

Vladyslav Hrytsenko

Top full-stack engineer and open-source contributor, data solutions architect. Chief Technology Officer at Mighty Digital

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