What Is a Customer Data Platform? (And Why Use a CDP?)

Sarah Berry is a Google Analytics-certified Web Marketing Consultant at WebFX. She's written over 400 articles on digital marketing, covering topics like SEO, CRO, and Amazon. When she isn't polishing her Time Magazine Person of the Year Award, she's spending time with her flock of ducks.

Do you use customer relationship management (CRM) software or a data management platform (DMP)? Then get ready, because there is a new way to manage customer data, relationships, and marketing touchpoints. Say hello to the customer data platform (CDP), which offers businesses a fast and streamlined software solution for organizing, managing, and using customer data.

Keep reading to learn more about CDPs and get the CDP definition and answers to questions like:

If you’re curious about how a CDP could make using and managing your customer data easier, contact us online or call us at 888-601-5359 to see how our customer data management software, MarketingCloudFX, can help your business make smarter, revenue-generating decisions.

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What is a customer data platform?

A customer data platform stores and unifies real-time customer data.

CDP Definition: A CDP or customer data platform is a software that provides users with a customer database that stores and unifies real-time customer data by creating individualized profiles that detail the person’s purchases, marketing channel interactions, and more.

How does a customer data platform work?

Let’s go beyond, “What is a customer data platform?” and talk about how a CDP works.

A CDP works by collecting first-party data, as well as second- and third-party data from your website, email lists, and CRM, which it then stores and organizes into individual profiles. These profiles help you see and follow along with a current or potential customer’s journey.

For example, in your CDP, you could see the journey of Lucy.

A CDP collects first-, second-, and third-party data, like from your website, email lists, and CRM, which it then stores and organizes into individual profiles.

Lucy first discovered your business through Google. Later, she visited your social media profile on Instagram and became a follower.

After a few more touchpoints, Lucy came back to your website and signed up for your email newsletter. Finally, she purchased your product, thanks to an email. Using the journey of Lucy (and plenty of others), your company can find ways to improve its marketing plan.

Even better, you can increase your understanding of how long a user takes to convert, which can lead to more realistic expectations about a strategy and its uses, like social media marketing.

CDP vs. DMP vs. CRM

For many marketers and business owners, it’s helpful to understand the CDP definition by comparing it. If you’re familiar with CRMs and DMPs, for example, it’s easier to see the difference between a customer data platform by comparing it to what you know. As a reference, here is a quick summary of what CRMs and DMPs do:

  • CRM: A CRM, like a CDP, collects and stores customer data.

    Unlike a CDP, however, a CRM database focuses solely on intentional customer interactions, like when someone calls a company for a quote or purchases a product. Salesforce is an example of a CRM.

  • DMP: A DMP, like a CDP, collects and stores customer data. Unlike a CDP, however, a DMP takes a broad approach to data collection, resulting in general audience takeaways versus insights into individual users, as with a CDP.

    Google BigQuery is an example of a DMP.

Ok, so how does a CDP compare to a CRM and DMP? Check out this table for a summary of a CRM vs. CDP vs. CMP:

FeatureCDPCRMDMP
Anonymous user data??
Known user data??
User identifiersName, email address, phone number, etc.Name, contact information, etc.Cookies, IP address, devices, etc.
Online data??
Offline data?Requires manual entry
Data sourcesFirst, second, and third-party dataFirst-party dataThird-party data
Data storage durationLong-termLong-termShort-term
Customer data integrationFullPartialNone
Software integrations???
Data analysisCustomer behavior
Customer journey
Marketing Sales
Sales pipeline
Sales forecasting
Online advertising
Ad targeting Ad
audience targeting

If you look at CDPs vs. CRMs vs. DMPs in the table above, you can see that CDPs offer a competitive edge. They take all your data from your sources and compile it into a single platform, which you can then use to analyze and improve several areas, like your sales and marketing strategy.

Why use a CDP?

Now that we’ve answered the question, “what is a CDP?” Now we can ask ourselves, “Why use a CDP”? There are multiple CDP use cases and investing in a CDP can help your business in a few ways, including the following:

Collect actionable customer data

With a CDP, your company can collect tons of helpful information, including:

  • Name
  • Email address
  • Location
  • Account number
  • Purchase history
  • Website visits
  • Personal interests
  • Product or service interests
  • Customer support history
  • And more

This data helps your business learn about your target market, from what they like to how they research purchases.

With that level of understanding, you can create a better user experience, like by creating content that targets a specific question or emails that provide personalized recommendations. Many shoppers and business buyers want personalized experiences too. A recent survey, for example, discovered that 71% of consumers rate themselves as frustrated with impersonal shopping experiences, while another study found that 67% of users consider it important for brands to adapt content based on a user’s current context.

A customer data platform can allow your company to move towards achieving these user expectations.

Improve omnichannel marketing

A customer data platform can also function as an omnichannel marketing platform. An omnichannel marketing approach helps your business focus on using and coordinating multiple channels, like social and search, to accomplish an overall goal, like sales. Since a CDP collects and stores all a user’s touchpoints, you can see how channels work together to reach your goals.

A CDP can also compile a tremendous amount of data, which means you can look for trends across your entire market.

Since a CDP collects and stores all a user’s touchpoints, you can see how channels work together to reach your goals.

For example, you may notice that users discover your company via search, but don’t convert until months later. During that time, however, they visit your blog often. This finding motivates your business to increase its investment in content marketing and search engine optimization (SEO).

You don’t have to guess how your channels and strategies interact when you have a CDP. Or, spend hours trying to link your data pieces together. A CDP does it for you, saving you time and streamlining your omnichannel marketing.

Erase data silos

A CDP also helps your business remove data silos.

Data silos frequently prevent companies from achieving their goals, from closing a high-value lead to reaching a quarterly sales goal. When you have a data silo, you have isolated information that can leave one team, like your sales department, underprepared and ill-equipped. With a CDP, you make customer data accessible to everyone in your organization.

Plus, you can eliminate the need for staff members to check multiple programs to get information. Instead, they use your CDP, which can integrate with CRM programs like Salesforce, to get what they need.

Eliminate data collection and organization headaches

For many businesses, the biggest benefit of CDPs comes from their ability to streamline data collection and data organization. You don’t have to worry about manually entering information or organizing customer profiles.

A CDP does it for you, which saves you time and headaches.

Make data-backed sales and marketing improvements

Investing in a customer data platform also empowers your business to make upgrades to its sales and marketing processes. You don’t have to guess that a change will work. Instead, you can use your data to power your recommendations and improved procedures.

You don’t have to guess that a change will work with a CDP.

Instead, you can use your data to power your recommendations and improved procedures.

Backing your marketing and sales strategy with data from your customers and future customers gives your business an unmatched competitive advantage too. You can move ahead with an approach, like programmatic advertising, while your competitors remain unaware of its role in your buyer’s journey. Save your company time, plus enhance your marketing strategy with the power of a CDP.

See what a CDP can do for you.

Try our customer data platform today!

Hopefully, you now know the answer to “What is a CDP?” Now that you know the CDP definition, are you curious about how a CDP can streamline your customer data collection and organization? Then, you’ll want to see MarketingCloudFX in action. Customer data management is critical to implement campaigns that  grow your business.

This CDP helps your company take control of its data and use it to improve your marketing strategy, resulting in more sales and revenue. Get a preview of our CDP software today by contacting us online or calling us at 888-601-5359!

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