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A customer data platform (CDP) is software that centralizes and unifies your first-party data from multiple sources. The goal is a single, comprehensive view of every customer and their relationship with your brand.
The right CDP delivers measurable business value by helping you to better understand your customers and activate successful marketing campaigns. This requires a handful of key customer data platform capabilities.
Source: Forrester
To provide a unified view of each customer, your CDP must be able to seamlessly process, integrate, and share different types of data across your tech stack. This includes:
Top CDPs store all of this structured and unstructured data in a scalable, secure, compliant central repository — where it can be processed by AI to unlock new layers of intelligence.
CDPs use deterministic and probabilistic matching to create unified customer profiles for all of your shoppers. This allows you to recognize and engage all consumers on an individual level as they interact with your brand.
The best customer data platforms will also enrich the first-party data in your customer profiles with interests, behaviors, and demographic data to create one unified, comprehensive view that can be used for better marketing.
Your CDP uses out-of-the-box data models to understand your customers’ behavior, preferences, and needs. These analytics on customer data give you insight into patterns and allow you to segment your audience by all sorts of variables, such as:
The most advanced customer data platforms also give you the option to create custom data models using machine learning. This capability offers an unprecedented level of enrichment and analysis — and allows you to create hyper-individualized campaigns.
Using real-time data from your entire tech stack, you can understand customer behavior and preferences at scale — and execute campaigns accordingly.
For example, your CDP can analyze a customer’s purchasing history, social media activity, and website browsing behavior to create customized product recommendations, promotions, and content.
Rinse and repeat for every customer in your database.
A CDP brings all of these capabilities together in a way that allows you to better understand your customers and execute more successful marketing campaigns.
Here’s what that process looks like with Zeta’s CDP. These steps are taken from the CDP Institute’s RealCDP™ audit certification.
Unified data sounds great and all…but what are businesses doing with it?
Learn more: How a Customer Data Platform Improves Travel Experiences
Learn more: How a CDP can Improve Retail Customers’ Experience
The benefits of a well-equipped customer data platform go far beyond capabilities and use cases. At the end of the day, these CDP functions are a means to a more important end: business outcomes.
For example, marketers expect a modern CDP to contribute to benefits like:
Unfortunately, not all CDPs are living up to the hype — 45% of Forrester’s respondents said their current CDP has underperformed against business expectations. While security (54%) and technical support (52%) were the biggest concerns with their current CDPs, marketers were also disappointed with:
That’s an awful lot of CDP customers that aren’t happy with their platforms. These numbers illustrate the importance of choosing the right tools (CDPs and otherwise) to meet your company’s specific needs.
Learn more: Forrester: Marketers Need CDP Solutions That Transcend Data Management
There are a lot of data platforms out there with similar but different roles to play in your tech stack. Let’s take a moment to get clear on all the acronyms.
The customer data platform is often confused with the data management platform (DMP). The choice of whether to use a CDP or DMP depends on your data needs and what you’re trying to accomplish. But when it comes to unifying your first-party data into useful customer profiles, the CDP reigns supreme.
Learn more: CDP vs. DMP: The 3 Main Differences & What’s Right for You
When considering a CDP vs. a customer relationship management (CRM) platform, it’s important to remember that these tools are complementary. Using these technologies in concert can help you improve customer relationships, increase customer loyalty, and drive revenue growth.
Learn more: CDP vs. CRM: Understanding The Difference
Data warehouses load data from source systems or data lakes and process the data to prepare for analysis or operational tasks (like sending marketing messages). While a data warehouse can theoretically perform the same functions as a CDP, in practice, few data warehouses are designed for that purpose.
An optimal company data architecture will make the best use of each system, assigning some applications to one, some to the other — and sometimes using a combination of features from both.
Learn More: CDPs and Data Warehouses: Making the Best Use of Both Systems
Once you’ve established your need for a CDP, the next step is to understand the types of customer data platforms available to you.
Composable CDPs use a microservices architecture to allow you to create a highly customized customer data platform. You and your team select and combine the components that best meet your needs. The upside is a great deal of flexibility, while the downside is a host of technical barriers.
A packaged CDP offers a ready-made solution that’s optimized for specific use cases. Packaged CDPs come with pre-defined features, tools, and integrations that make implementation fast and straightforward. You can get up and running quickly and with minimal development effort.The biggest drawback of packaged CDPs is their lack of flexibility.
Modular CDPs bridge the gap between composable and packaged platforms by blending the best elements of both solutions.
Like composable solutions, modular CDPs give you the freedom to customize your platform infrastructure with a wide range of capabilities. You can selectively activate components that are essential to your specific requirements, and you can use flexible data models to wrap around your existing technology stack.
And like packaged tools, modular CDPs offer pre-built integrations and faster time to value.
Learn more: The Modular CDP: Simplifying the Path to Better Customer Experiences
Composable, packaged, or hybrid — to find a customer data platform that delivers the business outcomes you’re looking for, you need to get the CDP RFP process right. But for the RFP process to deliver a tool your business loves, an extensive checklist won’t cut it.
The RFP is just one step in the CDP acquisition process. A complete process starts well before the RFP and includes the following steps.
Properly defined use cases will identify all the capabilities and resources needed to achieve your goals.
This conversion requires a deep understanding of the tasks being executed and the system features that support each task.
This initial screening will quickly reduce the huge field of CDP vendors to a manageable number, as many CDPs lack expertise in your industry or offer capabilities that you aren’t looking for.
Initial product demos will give you a general feel for each system, which should eliminate some additional contenders.
Once you’ve narrowed your list of contenders, it’s (finally) time to issue the RFP. The written document gives you a chance to collect many details that can’t be covered in a demonstration.
In your second round of demos, you should specify what you want to see from the vendor. Ask all vendors to demonstrate the same scenarios, so your buying team can get a clear sense of how the products compare.
You may need to complete other types of research — like technical demonstrations, proof of concept implementations, or pilot projects. This is also the time to check with reference clients, clarify pricing questions, and meet prospective vendor team members.
Many teams develop a scorecard with all major factors, weight those factors, and score each vendor against each factor.
Learn more: Getting the Best Customer Data Platform Starts with the Right RFP
You’ve clearly defined your use cases and created an extensive list of requirements — what else could you possibly need? Considering that many customer data platforms still aren’t living up to marketers’ expectations, there are a few more key factors to look for.
One of the biggest CDP pain points is that many marketers feel the need to devote lots of resources and time on integration. This leads to unnecessary spending on outsourced, third-party vendors who will likely be disconnected from your desired solution and team. Instead, look for a partner that offers native integration and implementation services as part of their core offering.
Instead of logging in to different campaigns under different vendors according to strategy, look for a vendor who can consolidate these into one simplified view. Make sure that data can be shared across vendors in this centralized hub so that you can leverage the power of these insights across the scope of your audience.
Many tools exist to help you derive value from your customer data. But the flexibility of that data — the ability to access it cleanly and employ it at the speed of business — is the key to operationalizing your data successfully. Make sure your CDP solution has data usability features like:
Learn more: The Business Case for Data Usability
As we march through 2024, the top CDPs already have AI-driven functionality integrated into their platforms — and more on their roadmaps. We see four key opportunities for AI to drive better CDP performance in the near future.
Without AI, marketers use historical data to determine which audiences to target in a given campaign. But AI can identify pockets of people that have a high propensity to respond and/or convert to your offer — and build the ideal segments for you.
AI-powered content recommendation engines have been around for a while, but most of them are channel-specific. Integrating AI within the CDP will allow for consistent and cohesive personalization across channels.
Speaking of channels, most channel outreach is determined by the consumer opt in. (e.g. marketers send emails to everyone who’s opted into their email list). But integrating AI into the CDP can help you predict which channel each person is most likely to respond to. This creates a more positive experience for the consumer, but it also helps marketers reduce spend on touches that are unlikely to drive revenue.
“This is a very new area for people that maybe already squeezed the utmost out of their conversions and cannot improve conversion rate. Reducing costs by reducing sends also helps to optimize profits.”
Daniel Eisenhut
VP of CRM, Zeta Global
Most brands still send their messages to everyone at the same time. Adding AI to the equation allows you to find the optimal send time for each recipient, based on when they are most likely to open, click, and buy.
Powered by proprietary AI and trillions of consumer signals, Zeta’s CDP is designed for marketers, individualized for consumers, and built for growth. We might be a little biased, but we’re pretty confident you should include us on that initial RFP list.
Zeta CDP is powered by the Zeta Marketing Platform with solutions specifically designed for data management, omnichannel engagement, marketing automation and more. Contact us for a live demo.
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