The What, Why, and How of Customer Data Platforms (CDPs)

In an ever-evolving competitive landscape, nothing is more important than the customer—but you can’t measure and improve the omnichannel customer experience if your customer data is still kept in channel-based silos. Data is valuable to all business units, from marketing to sales to service, and the ability to access and action customer insights across business units is the foundation for a strong customer experience. Enter: CDPs.

Today’s consumers have grown to expect frictionless, personalized experiences, no matter how, when, or where they interact with your brand—and the only way to provide those experiences is by collecting, unifying, analyzing, and accessing customer data in real-time at every customer touchpoint.

The trouble is, traditional retail systems and teams are siloed, channel-based, and uncommunicative, leading to disjointed customer experiences. If you struggle to both understand and act on your data from a customer-centric perspective, the customer experience your brand offers will suffer.

Customer Data Platforms (CDPs) solve the fractured customer experiences caused by fragmented data. By unifying all of your customer data—including first-party data like past purchases and email engagement, zero-party data collected from surveys and sweepstakes, and third-party data from sources like Experian Mosaic—and transforming it into a single customer view, businesses can gain clearer insight into and more control over the customer experience.

In this blog, we’ll provide a beginner’s overview of CDPs, including:

  • What a CDP does.
  • Why a CDP is valuable for customer-centric businesses.
  • How to use a CDP to enhance marketing, sales, and service.

What is a CDP?

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

In other words, a CDP integrates data from multiple sources; transforms it into a streamlined, easy-to-understand format; links it to individual customer profiles to store and track customer behavior over time; and activates that data within other systems to orchestrate the customer experience as needed.

Although CDPs are intended to be a marketer-managed system, a CDP with analytics and activation capabilities can add value to every business function. From collection to unification to activation, a CDP acts as a single hub for marketers, customer service team members, and executives to perform sophisticated customer analytics, track changes in consumer behavior, and quantify the impact of their various business activities.

Why is a CDP valuable for customer-centric businesses?

As more and more businesses make the shift from channel-led to customer-centric business models, the need for customer-centric data ecosystems rises as well.

Unlike customer relationship management platforms (CRMs), which typically focus on sales and retention, or data management platforms (DMPs), which focus on third-party data or unknown prospects, a CDP supports comprehensive data management at every touchpoint, centered around the individual customer.

In other words, CDPs democratize data to benefit every business function. A CDP can be used to drive high-powered lead generation campaigns, increase revenue and customer loyalty, and boost customer satisfaction more effectively and efficiently. CDPs with functional, easy-to-use dashboards mean that small and mid-sized brands can reap their benefits without the help of an extensive IT resource.

A CDP with deep third-party enrichment capabilities enables the most holistic customer insights possible; instead of basing your customer analytics only first-party data, you can fill the gaps in your customer understanding to learn more about customer lifestyles, attitudes, and behaviors. This insight can guide the way you communicate with particular customer segments. For example, if you know that your highest-value customer segments tend to be affluent, female, and middle-aged based on enrichment from a third-party source like Experian’s Mosaic, you can tailor your creative to appeal to those characteristics.

Additionally, CDPs with built-in tools for tracking change and quantifying impact streamline the communication between day-to-day business activities and the board of directors. That means you’ll be better equipped to show off your progress and business impact.

Ultimately, all of these features and benefits lead to one thing: Revenue growth. With a CDP to gain granular insights, activate personalized campaigns, and streamline processes across the business, you’ll be able to drive ROI fast.

Learn more about the difference between CDPs, CRMs, and DMPs.

How do you use CDPs to enhance marketing, sales, and service?

1. More Effective Marketing

The brand-customer relationship begins with marketing. As the central hub for managing the brand-customer relationship from beginning to end, CDPs enable a number of impactful marketing use cases.

For example, the customer insights and segmentation capabilities within a CDP enable you to acquire high-value customers by:

  1. Identifying your “hero” products—the products most likely to attract loyal, high-value customers—for acquisition.
  2. Selecting your highest-value customer segments for each hero product.
  3. Building lookalike audiences that mimic each high-value customer segment.
  4. Targeting each high-value lookalike audience with creative featuring the hero product they were built around.

Additionally, a CDP helps marketing teams save money with advanced audience suppression, including the suppression of frequent buyers from branded search, recent buyers from product ads, existing customers from social lookalike audiences, prospects from sweepstakes audiences, and churned customers from customer audiences.

With this level of advanced customer analytics and audience segmentation, you can avoid wasted ad spend and target the prospects who are most likely to offer a high return for your business.

2. Sales Growth

As with any martech investment, the end-goal for investing in a CDP is to accelerate revenue growth.

When implemented and utilized effectively, a CDP will have a direct impact on sales. The customer insights it enables increases the likelihood of first-time conversions from your campaigns, and a CDP can help you create loyal, long-term customers by driving the second sale with optimized audiences, timing, messages, and channels.

Additionally, a CDP with extensive third-party enrichment from sources like Experian’s Mosaic can help you fine-tune your acquisition, retention, and growth strategies to drive profit. When your CDP is linked with form functionality, you can orchestrate survey and sweepstakes campaigns that build your email database with quality prospects, re-engaging existing or lapsed customers, and capturing missing customer data to power your future prospecting campaigns.

Learn more expert tips on capturing more sales and growing the lifetime value of your customers.

3. Customer Service

Finally, a CDP enables service team members to engage with prospects and customers more effectively. By unifying customer data and giving customer service team members access to insights that were traditionally only used for marketing and analysis, you empower them to offer focused, personalized, and human-to-human customer engagement wherever your customers prefer to shop.

The best way to do this is with a CDP that has built-in clienteling technology. Clienteling gives employees the ability to access a detailed history of a customer’s interactions with your brand and proactively engage with them both in-store and online. This informed, proactive engagement leads to tailored recommendations that boost order value and encourage higher customer satisfaction.

Driving maximum value with your CDP

Although CDP and general martech investments are on the rise, one survey found that "executives are struggling with a skills gap that has hampered getting everything out of their data," while another survey found that 30% of marketers are "staking their futures on data analysis skills."

Without the skills to analyze your data effectively and draw accurate, actionable conclusions, your investment is wasted. That's why it's so important to choose a vendor who can act as a partner and a consultant as you're learning to navigate the complex landscape of customer analytics.

Improving the customer experience begins with the technology to unify your customer data, but that technology goes nowhere without the human expertise behind the wheel.

By partnering with a CDP vendor like Lexer, which offers strategic consulting and support services in concert with services from an agency like Liquid, you’ll be in the best position possible to master your customer data and offer the exceptional experiences your customers deserve.

About Lexer

Lexer is a CDP partner on a mission to help customer-focused companies drive profitable growth by delivering their customers the experiences they deserve. The company’s next-generation tools unite marketing, sales, and service to help its clients genuinely understand and engage with their customers. Lexer has successfully driven marketing ROI, customer loyalty, and revenue for well-known global brands.