The top 10 benefits of customer data platforms

In the ever-evolving landscape of digital marketing, customer data platforms (CDPs) can be pivotal tools for some organizations aiming to harness the power of data-driven strategies. There are drawbacks as ever. Not everyone agrees on the definition of a CDP; they can be expensive and take considerable time — and expertise — to implement. We are witnessing the evolution of traditional CDPs into composable CDPs that draw data from data warehouses or lakes without copying it into the CDP itself. And there are even those who question the benefits of having a so-called 360-degree view of the customer.

Here, we delve into the top 10 proclaimed benefits of CDPs and some questions that have been raised about them.

CDP features

1. Unified customer view CDPs excel in aggregating data from multiple sources, eliminating silos and providing a holistic view of the customer journey. This unified perspective enables marketers to craft campaigns that resonate on a personal level with each customer.

72% of marketers who believe they need every customer data point to be successful also report that the more data they collect, the less benefit they see. The cost of integrating data across channels rises exponentially as channels are added (on average, marketers use nine channels, but some use as many as 20). This is easily visualized. To integrate four channels with each other requires six cross-channel integrations; fully integrating 20 channels will require 200 integrations.

The conclusion? Give up on the 360-degree view of the customer because the cost of attempting to achieve it will become unmanageable.

Based on research by Ben Bloom, VP analyst at Gartner

2. Enhanced personalization Sometimes using AI and machine learning, CDPs analyze and predict customer behavior, making it possible to create hyper-personalized experiences. This level of personalization isn’t just about addressing customers by name; it’s about understanding their preferences and delivering content that aligns with their interests and behaviors.

In 2019, Gartner (again) predicted that 80% of marketers would abandon their personalization efforts by 2025. Of course, that was before the widespread democratization of AI.

3. Data compliance and governance As data privacy regulations continue to tighten, CDPs provide a framework for compliance. They ensure that customer data is managed responsibly, respecting privacy and consent across all touchpoints.

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

4. Omnichannel orchestration The modern customer interacts with brands across various channels. CDPs attempt to synchronize these interactions, ensuring a consistent and seamless experience whether the customer is online or offline.

The challenge here, of course, is achieving a unified profile so that you know, for example, that the user communicating with your business by text is the same user posting about it on social media and making purchases (or abandoning carts) at the website. To get the unified profile right you need quality data, adequate data management and speed in updating profiles. Knowing what a user was interested in last month may not tell you what they are interested in today.

5. Revenue growth By delivering relevant experiences and reducing friction points, CDPs directly contribute to revenue growth. They enable marketers to identify upsell and cross-sell opportunities effectively.

That may be true, but it doesn’t necessarily happen — or be demonstrable — fast. “There are many use cases for a CDP, but some provide a faster time to value than others. If you purchase a CDP with a plan to implement all your use cases at once, or focus on more complex ones right away, you will struggle to show the value of the implementation early.” That’s from a CDP, Treasure Data.

6. Operational efficiency CDPs streamline marketing operations by automating data collection, segmentation and campaign execution. This efficiency frees up valuable time for marketers to focus on strategy and creativity.

Although CDPs may automatically populate audience segments based on the profiles in the database, it will often be the responsibility of the marketer to define the segment they wish to target.

Dig deeper: Real-time customer data platforms: The promise and the reality

7. Actionable insights Beyond mere data collection, CDPs provide actionable insights. They help marketers understand the ‘why’ behind customer actions, enabling data-driven decisions that drive conversions.

However, not all CDPs are equal when it comes to the “decisioning” capabilities that support such insights.

8. Customer loyalty and retention CDPs play a crucial role in retention strategies by helping brands stay relevant and top-of-mind. Through personalized engagement, customers feel valued, fostering loyalty.

To some extent, anyway. There’s also plenty of data to show that consumers are uncomfortable with their behavior being tracked for marketing purposes. The word often used in that context is “creepy.”

9. Scalability As businesses grow, so does the complexity of their data. CDPs are designed to scale, managing increasing volumes of data without compromising performance.

Or at least that’s true of some CDPs. Some are designed to handle smaller data sets.

10. Agility In a fast-paced market, agility is key. CDPs allow marketers to quickly adapt to changes in customer behavior and market conditions, maintaining a competitive edge.

This does not, however, necessarily happen in “real time.”

Dig deeper: 10 CDP implementation mistakes to avoid

At its best, a CDP is not just a tool; it can be a strategic asset that empowers marketers to navigate the complexities of customer data. By leveraging the full spectrum of benefits offered by CDPs, businesses can achieve a level of customer engagement and satisfaction that was previously unattainable. But it’s also important to be aware of the challenges that come with such solutions.