What is a CDP and how does it give marketers the coveted ‘single view’ of their customers?

Customer data platforms (CDP) are marketer-managed systems designed to collect customer data from all sources. Customer data is then normalized and unified, to build unique profiles of each customer. The result is a persistent, unified customer database that shares data with other marketing technology systems. Marketers are increasingly interested in customer data platforms. A report by Mordor Research predicts that the number of these platforms will triple by 2028.

Our new report, “Customer Data Platforms: A Marketer’s Guide” is now available for free download.

One reason for this trend is the growing focus on customer experience. This is achieved by collecting data in a timely manner, using AI to segment customers, and personalizing interactions. At the same time, marketers are facing the gradual, but seemingly inevitable, extinction of third-party data as fuel for their marketing programs. Businesses are using CDPs to strengthen their own data and follow privacy rules, such as sharing data in clean rooms.

CDPs enable marketers to create a single view of the customer by gathering data from software deployed throughout the organization. Having high expectations and many ways to reach customers means that cross-device IDs and identity resolution are important. This means combining data from different sources to create a profile of each customer. This helps marketers, salespeople and service providers give customers the best experience possible. CDPs offer this consolidation and normalization and also make the data profiles freely available to other systems that deliver campaigns, webpages and other interactions.

Table of contents

• What is a customer data platform (CDP)?
• Different types of CDP
• Customer data management
• CDP Analytics
• Orchestration
• Data regulation compliance for CDPs
• Third-party systems integration
• What are the benefits of using a CDP?

What is a customer data platform (CDP)?

A CDP provides three core features that make it unique from other systems.

• A unified, persistent customer database that provides data transparency and granularity at the known, individual level. A CDP can identify customers from many different data sources by stitching together information under a unique, individual identifier. The CDP then stores its own copy of the data.
• Control over customer data collection, segmentation and orchestration through native (out-of- the-box) integration that minimizes the need for IT or developer involvement.
• Data integration of both known and anonymous customer data with any external source or platform, including CRM, point of sale (POS), mobile, transactional, website, email and marketing automation.

CDPs can be used as systems of record, storing both known and unknown customer profiles in a central repository that integrates data from all of the organization’s software and operational systems. The data is accessible for marketing analysis, segmentation and insight discovery, with the goal of increasing the velocity and effectiveness of omnichannel marketing campaigns.

A CDP is not a CRM, DMP or marketing automation platform. A CDP provides a unified, persistent customer database that provides data transparency and granularity at the known, individual level.

CDPs help marketers manage customer data without needing IT or developers. They can collect, segment and organize data easily with built-in integration. And lastly, CDPs offers data integration of both known and anonymous customer data with any external source or platform, including CRM, point of sale (POS), mobile, transactional, website, email and marketing automation.

The CDP Institute’s definition of a “RealCDP” requires it be able to do the following seven things:

• Ingest real-time 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.
• Respond in real time to new data and to profile requests.
• Govern customer data in compliance with local privacy and security regulations.

Virtually all of the CDP vendors that meet that criteria provide the following core capabilities:

• Data management (collect, normalize and unify customer data in a persistent database), often after IDs have been matched by other systems.
• Features designed for use by the marketing organization and other departments, without the aid of IT or data science resources. (Though some functions, like building connections to other platforms and performing sophisticated data modeling, still require additional resources.)
• Connections to and from all external systems on a vendor-neutral basis.
• Structured and unstructured data management.
• Online and offline data management.

CDP vendors differentiate by offering more advanced capabilities that include, but are not limited to, the following:

• Native identity resolution to stitch customer data snippets from disparate sources.
• The number and breadth of robust pre-built connectors to other martech systems. The near-universal availability of APIs means connections are always possible (with more or less developer involvement), but offering pre-built, tested integrations adds value.
• User interface (UI). The vendors differ in the user-friendliness of their interfaces and the methods people use to do things like create segments, view profiles, etc.
• Analytics, including those powered by machine learning and artificial intelligence, that surface insights, enable journey mapping, audience segmentation and predictive modeling.
• Orchestration for personalized messaging, dynamic interactions and product/content recommendations.
• Compliance with vertical industry and international data regulations.

Different types of CDP

Customer data platforms (CDPs) come in various forms, each with distinct origin and focus. According to MarTech contributor and CDP expert Greg Krehbiel, there are up to 10 types of CDP and it is essential to have an understanding of these differences in features and focus to select the right CDP that aligns with your company’s needs. Here are the ten types:

1. Data collection CDPs
   • These platforms primarily aggregate data from diverse sources, making them ideal for businesses needing a unified customer view. However, they often struggle with data cleansing, activation, and orchestration.
2. Data cleansing CDPs
   • With a primary emphasis on cleaning, deduplicating, validating, and normalizing data, these CDPs are suitable for companies requiring high data accuracy. Their limitation lies in activation and potentially rigid data accuracy rules.
3. Analytical CDPs
   • Focusing on generating deep insights through analytics and data visualization, these platforms are best for deriving complex insights and forecasts. They may, however, be less precise in segmentation and campaign orchestration.
4. Campaign CDPs
   • These CDPs are designed to manage and automate marketing campaigns across channels from a single system, making them excellent for coordinating comprehensive customer views. The challenge is the risk of overlapping automated campaigns.
5. Segmentation CDPs
   • Specializing in dividing customer data into meaningful groups, segmentation CDPs are useful for creating targeted engagements. A potential downside is over-segmentation, leading to inconsistent brand messaging.
6. Content CDPs
   • These platforms align data insights with content management to personalize customer engagement, ideal for delivering tailored content based on behavior and preferences. They require extensive metadata and sensitive user information, which can be a drawback.
7. Retail CDPs
   • Integrating online and offline data to create real-time customer profiles, retail CDPs enhance customer experience by consolidating data from various sources. Their effectiveness may be limited by dependency on advanced POS systems.
8. B2B CDPs
   • Managing complex business structures and longer sales cycles, B2B CDPs unify data from CRM, emails, social media, and direct marketing. They face challenges in accommodating diverse B2B prospects.
9. Customer service CDPs
   • Enhancing customer service through data aggregation, these platforms provide personalized support by unifying customer interaction data. However, they may struggle to capture certain interactions, such as social media exchanges.
10. Real-time CDPs
    • Acting on new customer data instantly for immediate marketing activations, real-time CDPs excel in real-time personalization on various platforms. Their limitation is often the dependency on non-instantaneous systems.

These 10 CDP types offer varied features and emphases. Understanding this variety can help marketers think creatively about how a CDP can add value to their business.

Customer data management

Real-time data collection and maintenance is a core CDP customer data management platform function. All CDPs provide a central database that collects and integrates personally identifiable customer data across the enterprise. From there, however, CDPs vary in their abilities to manage the following:

• Data ingestion capabilities: CDPs use various mechanisms to ingest the data that goes into the unified customer profile — mobile SDKs, APIs, Webhooks or built-in connectors to other platforms.
• Identity resolution: The platform “stitches” together customer data points, such as email addresses, phone numbers, first-party cookies and purchase data, from various channels matching them to create a single customer profile. Some players partner with other providers for this capability, while others have their own systems.
• Online/offline data: The platform leverages identity resolution or an identity graph to stitch together behaviors in order to create a unified profile.
• Data hygiene: The platform enables users to clean and standardize customer records.
• Structured/unstructured data: CDPs differ in their capabilities to manage unstructured data (i.e., social media feeds, product photos, barcodes), which may comprise up to 80% of all data by 2025, according to IDG.

The importance of each of these data management capabilities will depend on a particular organization’s business goals, and whether it has a significant mobile presence, direct mail budget or brick-and-mortar stores and/or agents.

CDP analytics

CDP vendors offer analytics capabilities that can do some or all of the following: allow marketing end-users to define and create customer segments, track customers across channels and glean insights into customer interest and intent from customer behavior and trends.

The functionality provided can include predictive models, revenue attribution and journey mapping. To one extent or another, many of these capabilities may utilize machine learning or artificial intelligence to surface insights about audiences and proactively offer suggestions about the best next step to move a prospect through their purchase journey.

AI-powered CDP features

Whilst some form of machine learning (ML) has underpinned most customer data platforms for some time, the rise of generative AI is enhancing the capabilities of these platforms, making their value proposition increasingly attractive. The integration of AI and ML capabilities into CDPs varies widely. While predictive AI has been a staple, the surge in generative AI is leading to more prominent integrations. 

AI is most commonly used behind the scenes, for data cleansing, normalization, audience targeting and attribution modeling. Some CDP vendors already offer natural language interfaces and chat functionalities to enhance usability and data interaction, while others integrate large language models (LLMs) for automated content creation in marketing campaigns.

Arguably more advanced AI powered CDP features include enhanced customer insights, predictive analytics, real-time data processing, and personalization at scale. Automated decision-making for routine marketing tasks, and advanced data quality management are also notable. Finally, capabilities like sentiment analysis, social listening, and anomaly detection are becoming more prevalent, particularly in platforms focusing on comprehensive digital marketing strategies.

Dig deeper: AI-powered features to look for in customer data platforms

Orchestration

A select group of CDPs provide campaign management and customer journey orchestration features that enable personalized messaging, dynamic web and email content recommendations, as well as campaigns that trigger targeted ads across multiple channels.

The customer data platform often automates the distribution of marketer-created customer segments on a user-defined schedule to external martech systems such as marketing automation platforms, email service providers (ESPs) or web content management systems for campaign execution.

For example, the CDP could deliver targeted content to a web visitor during a live interaction. To do this, the CDP must accept input about visitor behavior from the customer-facing system, find the customer profile within its database, select the appropriate content and send the results back to the customer-facing system. A customer data platform may also facilitate digital advertising through an audience API that sends customer lists from the CDP to systems (i.e., DMP, DSP, ad exchange) that will use them as advertising audiences.

Data regulation compliance for CDPs

CDP vendors vary in the support they provide for compliance with the wide range of vertical market and international regulations that safeguard customer data privacy. Some build compliance features into their platforms, while others rely on outside systems. The European Union’s GDPR was implemented in May 2018 and impacts all U.S. marketers and firms handling European data or serving customers in the EU. Brands marketing to Canadian consumers through email must also comply with the country’s CASL (Canada Anti-Spam Legislation). Meanwhile, the California Consumer Privacy Act (CCPA) went into effect in January of 2020.

Marketers in the highly regulated healthcare market must follow HIPAA and HITECH regulations. In addition, all organizations that accept, process, store or transmit credit card information must maintain a secure environment that meets Payment Card Industry Data Security Standards (PCI DSS), as well.

Third-party systems integration

CDPs streamline integration of customer data by providing out-of-the-box (or native) connectors for many martech systems, including CRMs, DMPs, marketing automation platforms, DSPs and campaign analytics and testing tools. Most marketing organizations have assembled a marketing stack that contains many of these types of platforms. But integrating the data that resides in the martech ecosystem is a huge challenge — one that costs U.S. brands millions of dollars annually. The majority of CDPs profiled in this report also provide at least a basic API to enable custom integrations.

Explore platform capabilities from vendors like Blueconic, Tealium, Treasure Data and more in the full MarTech Intelligence Report on customer data platforms.

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What are the benefits of using a CDP?

Marketing executives today are in charge of dozens of martech applications to manage, analyze and act on a growing volume of first-party customer data. But despite increasing efficiency, the emerging martech ecosystem has created problems with data redundancy, accuracy and integration.

Automating customer data accuracy and integration through a CDP can provide numerous benefits to marketers and to other functions across the enterprise. These include the following:

Expanded enterprise collaboration. A CDP fosters cooperation among siloed groups because it gathers data from throughout the enterprise and supports customer interactions across many touchpoints. The unification of data allows enterprises to see how strategies for audience, customer experience and execution all fit together – and enables audience portability to ensure a more consistent, informed customer experience.

Improved data accessibility. A CDP is a centralized hub that collects and houses customer information from every corner of the enterprise. Pieces of data are normalized and stitched together to build unique, unified profiles of each individual customer. The result is a persistent customer database whose main purpose is to gather and share data more easily and efficiently across the organization

Streamlined systems integration. A CDP unifies data systems across the enterprise, from marketing and customer service, to call centers and payment systems. By creating a single “system of record” for first-party customer data, data redundancies and errors can be minimized, and data can flow more quickly into — and out of — marketing automation platforms, email service providers (ESPs), CRMs and other martech systems.

Increased marketing efficiency. A CDP unifies individual data with unique IDs that create more robust customer records. Many manual tasks are also automated by the CDP, allowing marketers to focus on the creative and analytical tasks they are trained for. The result is more accurate modeling, targeting and personalization in marketing campaigns, and more relevant customer experiences with the brand across channels.

Faster marketing velocity. In many cases, CDPs are “owned” by marketing, minimizing the need for IT or developer intervention to collect, analyze and act upon data. With control in marketers’ hands, the time to segment and build audiences, execute campaigns and analyze results significantly decreases. That said, engineers may still be needed to perform deep data analysis and facilitate integrations. This is especially true as CDPs extend beyond marketing and into sales and service functions.

Stronger regulatory compliance. A CDP creates greater internal control over customer data, streamlining data governance to comply with the many regulations now impacting brands worldwide. Marketers in the healthcare industry must comply with both HIPAA and HITECH regulations. Businesses that handle European data or serve customers in the EU must also comply with GDPR and those dealing with Californians must deal with CCPA(California Consumer Privacy Act). The majority of CDP vendors are both ISO and SOC certified for best practices in handling personally identifiable information (PII).

Our new report, “Customer Data Platforms: A Marketer’s Guide” is now available for free download.