What Is a CDP? A Guide to Customer Data Platforms

A customer data platform (CDP) is a software platform that centralizes and manages customer data from various sources. This technology gathers, cleanses, and organizes this data into a repository, creating a single source of truth. It differs from a customer relationship management (CRM) or data warehouse in that it integrates first-party customer data. By doing so, it creates a unified, real-time profile of each customer from informative data such as email engagements, website behavior, and purchase history. 

The data collected is accessible to multiple departments and systems across an organization. As a result, all customer interactions can be tracked and analyzed for more strategic, data-driven decision-making. This functionality allows organizations to optimize and personalize customer experiences. 

CDPs include the following features and functionality:

• Data integration: Collects data from multiple disparate sources (e.g., web, mobile, point-of-sale systems) and makes it easy to pull in the data from anywhere, regardless of format or structure. 
• Data unification: Combines data into a single view of each customer and addresses any mismatched identifiers. 
• Real-time data processing: Updates customer profiles instantly and allows you to act on the latest customer activity with real-time personalization.
•  Segmentation: Helps you group customers dynamically based on their behavior, demographics, and preferences for targeted marketing campaigns. 
• Data analytics and insights: Includes tools to predict customer behavior and dashboards to inform decisions. 
• Privacy and compliance: Complies with regulations like GDPR and CCPA and manages customer consent and preferences. 
• APIs and integration: Customizes through APIs and works with tools, platforms, and systems. 
• Machine learning and AI: Automates interactions and delivers recommendations to enhance experiences. 

These features are critical for creating targeted, personalized campaigns that increase customer engagement, retention, and revenue. 

CDP vs CRM vs DMP: What are the differences?

A CDP is often integrated with other marketing tools such as CRMs and data management platforms (DMPs). Each of these tools has its own purpose and means of managing data. To get the most out of your marketing stack, it’s important to understand their unique roles and what sets them apart.

How do CRMs differ from CDPs?

Sales, marketing, and customer service teams use a CRM platform. These platforms track and manage interactions with leads and customers, such as communications, lead status, and pipeline stage. What makes CRMs different from CDPs is that CRMs do not unify data from multiple sources, nor do they provide real-time insights. They simply store detailed individual customer data. By contrast, a CDP aggregates data from multiple systems to create a comprehensive picture of customer profiles.

How do DMPs differ from CDPs?

DMPs are specifically designed for advertising and acquiring new customers. These platforms collect anonymized third-party data, often through cookies. DMPs help inform programmatic ad targeting campaigns. They differ from CDPs in that the anonymized data is only stored temporarily, typically for 90 days or less. While they’re useful for targeting a broader audience, they are not as effective as CDPs at creating personalized, continuous customer experiences.

How they work together

CDPs, CRMs, and DMPs can be used together to help businesses become more responsive, adaptable, and customer-centric. All three platforms can be integrated to drive stronger marketing efforts. CRMs are ideal for managing and nurturing customer relationships, while DMPs are best for creating ad campaigns that attract new audiences. CDPs bring data together into a unified view, delivering insights to create personalized marketing campaigns.

The benefits of customer data platforms

CDPs have emerged as one of the top tools for providing organizations with a deeper understanding of their customers. When leveraged effectively, these platforms help customers achieve a competitive advantage by delivering customer insights, informing personalized engagements, and driving better marketing results. 

Enhanced customer understanding

By consolidating first-party customer data from sources such as websites, social media, and email into a unified profile, CDPs give businesses a detailed understanding of each customer. This information can be used to dive deeper into preferences, predict future behaviors, and segment customers. As a result, marketers can craft highly detailed, tailored strategies that reflect each target audience’s likes, expectations, and needs. 

Improved customer engagement and personalization

Personalization is essential for how businesses operate today. Marketers use CDPs to combine customer profiles and deliver personalized content, offers, and experiences across multiple touchpoints. Targeted content results in greater engagement, satisfaction, and brand loyalty.

Optimized marketing campaigns and returns-on-investment (ROI)

As businesses tailor their marketing campaigns to achieve better results, they rely on the data provided by CDPs. CDPs can be used to segment and track audiences through multiple channels. They also provide real-time campaign performance tracking to allow for quick adjustments. Having this single source of truth is also essential for fostering collaboration among stakeholders in marketing, sales, and customer service departments.

What data goes into a CDP?

CDPs rely primarily on first-party data. This information is collected directly from customers by a company. It is typically used for marketing and sales purposes. First-party data allows for greater control and transparency than other types of data, which is critical for creating highly personalized campaigns. This type of data may include:

• Behavioral data, such as customer interactions with your website and applications, clicks, page views, and history logs. 
• Engagement data from email campaigns, push notifications, and social media interactions. 
• Transaction data, which is most commonly found in purchase history, subscriptions, and interactions with loyalty programs. 
• Demographic data such as age, gender, and location.
• Support data, which can take shape as chat transcripts or call logs from customer service interactions.

Third-party data has a limited role in CDPs. It is often collected through cookies or purchased from external sources. It is generally not as accurate as first-party data, and customers don’t always give their consent to have this information collected. For that reason, third-party data isn’t as useful for the purpose of CDPs.

To get the best results from your CDP, prioritize data quality and relevance. To do so, make sure you’re gathering data that aligns with your marketing objectives. Be sure to clean and update your data regularly. Finally, data must always be collected with customer consent and comply with any applicable privacy regulations. 

How does a customer data platform (CDP) work?

CDPs include architecture, data, flow, and segmentation, as well as personalization capabilities. A CDP unifies and organizes first-party customer data from various disparate sources through four key layers:

1. The data ingestion layer collects the raw customer data from sources such as websites, apps, CRMs, email platforms, and offline systems (e.g., point-of-sale systems). 
2. The data unification layer combines all the data identifiers to create a full-picture profile for each customer. Identifiers can be email addresses, cookies, phone numbers, etc. 
3. The data storage layer stores unified profiles and data in a centralized, secure, and accessible format. 
4. The analytics and activation layer analyzes data and has tools for segmentation and reporting across marketing channels. 

Customer data flows from the ingestion layer and is then unified and stored. Finally, it can be analyzed to inform personalized marketing efforts. 

We can also examine the structure of CDPs through three core steps: data collection, storage, and processing. The data collection step is as it sounds: the gathering of first-party customer data. It is then fed through the ingestion layer in real time or through patch processes. 

Data storage is organized into a centralized repository. This step allows each department to tap into the customer information. For data processing, the data is cleansed. Any duplicates, inconsistencies, and redundancies are removed. Finally, multiple data points are linked together into one profile for each customer. 

CDPs enable data segmentation and personalization. Through data segmentation, marketers can develop customer segments. For example, marketers may divide customers by the value of purchases over a certain time period. Or they may group together users who engaged with a targeted campaign but failed to convert. 

The unified customer profiles are essential to delivering personalization. Marketers can adjust offers for buyers on their websites to sync in real time with their behavior. Or they can deliver personalized product recommendations on an e-commerce site. 

CDP platforms hold the key to delivering personalized marketing campaigns that result in higher engagement, conversions, and ROI.

CDP use cases

CDPs are highly useful in a variety of industries because they work with customer data. Unified first-party data can be used to build targeted, personalized marketing campaigns that drive engagement and revenue. No matter the industry, CDPs are essential for building customer-centric strategies that provide a competitive advantage and drive value at each stage of the customer lifecycle. Let’s take a closer look at some use cases of how CDPs can be used across sectors. 

Retail 

Retailers can use CDPs to bring in-store and online customer data together into unified profiles. This allows for more personalized product recommendations, promotions, and omnichannel experiences. For example, an e-commerce boutique could display different items for sale to customer segments based on their past purchases and browsing history. Likewise, the marketing team could build automated campaigns to deliver promotional codes to shoppers 24 hours after abandoning their carts. 

Travel 

Travel and hospitality companies often lean on CDPs to analyze customer preferences for destinations as well as accommodations and activities to do once they arrive. They also integrate data from apps and loyalty programs. This allows them to deliver insights to customer service teams when receiving inquiries from potential customers. A hotel chain could use a CDP to offer personalized packages to target audiences based on past stays and engagements with email marketing campaigns. 

Healthcare

CDPs can be used in healthcare to bring together data from disparate sources such as electronic health records (EHRs), patient engagement platforms, and appointment scheduling systems. A potential use for a medical clinic could be based around a goal to reduce no-shows. The clinic could send personalized reminders for annual checkups on a regularly scheduled cadence with options to confirm, cancel, or reschedule. 

Financial services

In the financial services industry, CDPs are useful for tracking customer interactions across channels. They are also leveraged to identify unusual activity that may indicate fraud. A CDP could also be used to analyze a customer’s transaction history and promote investment opportunities to them based on savings activities. 

Media 

Media and entertainment companies analyze viewing habits and preferences of their audiences through CDPs. This information helps build personalized recommendations, such as curated weekly playlists in music apps. They are also helpful for analyzing engagement patterns. CDPs can identify subscribers at risk of canceling based on engagement and offer discounts to retain them. 

Consumer packaged goods (CPG)

Loyalty programs are common in the consumer packaged goods market. CDPs can track purchase behavior to deliver customized rewards. For example, a sparkling water company could promote limited-edition flavors to frequent customers. 

Technology and SaaS

CDPs monitor product usage data and analyze customer activity. If a software-as-a-service (SaaS) company identifies a segment that is nearing usage limits, it could offer add-ons to these customers as an upselling strategy. 

Non-profit organizations

CDPs can deliver valuable insights to inform outreach efforts and improve donor engagement for non-profit organizations. CDPs provide a full-picture view of supporters for targeted communications. For example, fund development managers could leverage a donor’s giving history and interest to inform a fundraiser event and related campaigns. 

Education

Educational institutions may use CDPs to improve student engagement and learning outcomes. The platforms track student interactions and attendance to inform interventions and any necessary support. A potential use case for a university is monitoring student attendance and engagement in online courses. If the university notes a pattern of declining activity, it could flag the student as at-risk and inform advisors. The advisors could personalize interventions based on the student’s unified profile.

What to look for when choosing a CDP

When selecting a CDP, it’s important to align your business objectives with the functionalities of the platform. Starting with the factors below will help you narrow down your short list of options. 

• Defined goals: Before evaluating CDPs, write down your business goals and the main problems you’re trying to solve (such as reducing churn or improving data management). Not every platform will be the best for supporting different types of goals. 
• Involve stakeholders: Bring key stakeholders from marketing, sales, IT, and data analytics into the selection process. 
• Capabilities for data integration: The CDP should integrate with any existing tools your organization uses. Think about your CRMs, DMPs, e-commerce systems, and marketing automation platforms. Any options you consider should ingest the data in real time and be able to process a range of data formats and sources. 
• Real-time processing: It’s essential that the CDP you select processes data in real time so you can personalize recommendations and experiences for customers with the most up-to-date information possible. 
• Data security and compliance: Because the platform works with first-party customer data, make sure it complies with applicable privacy regulations (GDPR, CCPA, and HIPAA). Consider also the level of data encryption it provides and the user access controls. 
• Analytics and reporting: Consider what type of data analytics you’ll want to inform your customer segmentations and campaigns. For example, you may want to make sure the platform includes predictive analytics and campaign performance tracking. 
• Scalability: The platform you choose should grow alongside your organization. Evaluate each option’s ability to manage large volumes of customer data without negatively impacting performance. 
• Customization and flexibility: Look for features that allow you to tailor data models, workflows, and integrations. 
• Ease of use: The platform should be intuitive enough for business users to access without having to involve IT. It should also offer the features required for each department to access the necessary insights for their campaigns and objectives.
• Total cost of ownership: Consider how much the platform will cost including licensing, implementation, training, and maintenance. You may also want to weigh its overall ROI.

Evaluation criteria for assessing CDP vendors

Once you’ve narrowed down your options for a CDP platform, evaluate providers with the following criteria:

1. Provider expertise

Assess the provider’s background and reputation in the industry. How long have they been in the market? Do they work with companies like yours (regarding industry, size, revenue, objectives, etc.)? 

Established providers will have a proven track record of success. Review their case studies and customer testimonials. These documents will showcase their strengths and how they deal with challenges to deliver measurable results. You want to make sure your provider aligns with your goals and needs. You can also ask to speak with existing customers to better understand their experiences. Finally, take advantage of any demos of trial periods to further evaluate the CDP.

2. Implementation support

Evaluate the level of support provided during onboarding and implementation. Ask potential providers what resources they provide, such as hands-on training sessions and documentation resources. Ideally, you’ll have a dedicated customer success manager to guide your team through setup and beyond. These resources help ensure a seamless implementation and long-term success. 

3. Custom use cases

To further refine options, you may want to ask providers how their CDP solution can address your organization’s unique use cases. For example, if you have an initiative to reduce cart abandonment, ask the provider to walk you through how their platform identifies at-risk customers in real time, what automated actions it can trigger to re-engage them (e.g., personalized emails or targeted ads), and how it measures the success of these efforts over time. Request specific examples or case studies showcasing how similar businesses have achieved measurable improvements in cart recovery rates using their solution.

4. Integration ecosystem

Your CDP won’t operate in isolation. It needs to integrate well with your existing tech. Assess whether the provider you’re evaluating has pre-built integrations with the systems you already rely on, like your CRM, marketing automation platforms, or analytics tools. This will save you time and resources while delivering a smoother workflow from the beginning. 

5. Scalability in action

As your business grows, your CDP should grow with you. Ask for examples of how the provider’s platforms have scaled with businesses similar to yours in size, industry, and complexity. A provider with a strong track record of scalability will be able to meet your needs not just today but in the future. 

Carefully planning your evaluation and taking the time to build out a thorough selection process is critical to ensuring your CDP fits your business objectives and delivers impactful results.