Today’s data landscape is an emerging one. Month over month, quarter over quarter, organizations are learning to more effectively harness and democratize customer data in furtherance of their business goals.
The Customer Data Platform market is no exception. According to the CDP Institute, the industry is rapidly approaching $1 billion. That growth represents thousands of companies making investments in customer data and all the opportunities it can open, all the decisions it can drive, and more.
Below, we cover everything you need to know about CDP platforms, including:
- What a CDP is
- Why they’re important
- Leading CDP platforms and how to choose one
- Implementing a CDP platform
What Is a CDP Platform?
Customer Data Platforms (or CDPs) are software that pulls together customer data generated across a myriad of other platforms, systems, and touchpoints. The CDP then organizes this information into individual customer profiles that span the entire customer journey, giving users a holistic, 360-degree view of the customer.
That centralized view is the defining feature of CDPs and what differentiates them from other similar data software (more on that later).
Other systems and software can then integrate with the data from the CDP to use for analytics, marketing, automation, customer success, and other efforts.
What Is Not a CDP?
Understanding what exactly the term “customer data platform” entails is sometimes easier by separating out what CDPs are not. There are three other types of data platforms often confused with CDPs:
- Data management platforms (DMPs)
- Customer relationship management platforms (CRMs)
- Event tracking platforms
The Differences Between a CDP and a DMP
DMPs are also focused primarily on collecting third-party data. Despite some integrations enabling DMPs to collect first-party data, CDPs tend to wield a much more dedicated focus on first-party data.
The effects of those data collection methods bring us to the second big difference: how each is used. DMPs are primarily used for advertising—to improve ad targeting. Because CDPs are able to provide in-depth customer profiles, they’re more frequently used by business teams of all kinds, across marketing and product.
The Differences Between a CDP and a CRM
The chief difference between CDPs and CRMs centers around their intended purpose. CRMs are built primarily for sales operations and for storing data—they store transactional data about known customers and cannot track anonymous users. As such, CRMs are limited as to the type of data they contain and the other systems they can integrate with.
CDPs, on the other hand, focus more on data collection, in addition to storage. Because they’re designed to collect data on the end-to-end customer journey, they involve more data including lifetime customer behavior, anonymous visitor data, and offline data.
The Differences Between a CDP and an Event Tracking Platform
Perhaps one of the most oft-confused with CDP is the event tracking platform or behavioral data delivery platform. These platforms—which include popular software like Snowplow—focus on customer data, too. So the confusion is understandable.
The difference flows from the breadth (or lack thereof) of each platform’s focus. Behavior data delivery platforms have a narrower focus—they’re concerned with strictly first-party data, including website and app engagement. The goal is to create a central repository for the data in your data warehouse.
CDPs have a broader focus, on both first- and third-party data.
Many businesses opt to choose between a CDP and a behavioral data delivery platform like Snowplow. As an open-source web, mobile, and event analytics platforms, Snowplow can be a cost-effective option over the long-term—but the initial implementation is often resource-intensive.
Typically, Snowplow is much beloved by engineers for the flexibility and control it offers engineers over their customer data. Business users, on the other hand, tend to prefer CDPs because they require less maintenance and resources in the long run.
Why Is a CDP Important?
With all the similar and ancillary data platforms on the market, you may be wondering why CDPs are uniquely important for marketers and product managers. CDPs offer a multitude of benefits that other data products (like the one we discussed above) simply don’t. Those benefits include:
- A single view of the customer: CDPs collect data from a broad swatch of sources and condense all of it into a holistic, unified view of the customer—across devices, across channels—and they make those comprehensive customer profiles available for other systems to use. In other words, CDPs eliminate the data silos that often creep up with other data collection and storage platforms.
- Democratization of data: By breaking down silos and making customer data more accessible, CDPs enable all teams—from marketing to product to customer support—to put customer data to work.
- Operational efficiency: When compared with resource-heavy custom solutions, CDPs save companies a ton of time on building a customer data solution and connecting it with other key software.
- A better customer experience: At the end of the day, CDPs enable companies to provide a better customer experience. By centralizing customer data into comprehensive, lifetime profiles, CDPs eliminate potential blind spots and streamline every marketing effort. They enable marketers to serve more targeted, effective, and beneficial messages to customers.
Use Cases for CDPs
In addition to the broader reasons above, CDPs also benefit a variety of use cases more specifically. Below are a few examples of how CDPs are used in the wild.
- Personalization to increase customer loyalty: According to The Relevancy Group, 62% of companies using a CDP use it to personalize their email marketing, and 53% use it to boost real-time targeting capabilities. Complete customer profiles enable companies to personalize customer communications more accurately and across more channels, offering a more cohesive and personalized experience for customers.
- New target audiences: A CDP allows marketers to use their own version of Facebook custom audiences across every marketing and advertising platform they use. By pulling data from their CDP and integrating the platform with other marketing channels, marketers can build lookalike audiences to target new customers across the web.
- Smart behavioral retargeting: CDPs enable marketers to make their retargeting efforts even more effective, by taking purchases already made and other buying triggers into account.
- Customer Analytics: Customer Analytics platforms (like Indicative) help marketers and product teams turn customer data into actionable insights to improve customer acquisition, engagement, retention, and more. Setting up a Customer Analytics platform is incredibly quick when you pull data from a CDP and ensure you’re making decisions based on complete customer data. It takes less than a minute to connect many CDPs with Indicative, like Segment, mParticle, or Rudderstack.
How Do Indicative Customers Use CDPs?
Speaking of Customer Analytics, many of Indicative’s own customers use a Customer Data Platform to connect their data to the Indicative platform—upwards of 30 percent, in fact.
Customers that opt for this route bring data to Indicative that’s already collected, tracked, and modeled. That means they bring clean data that enables them to start building analyses and making data-driven decisions with Indicative right away.
From there, customers can analyze their customer journey across various data sources and optimize the journey from there. The Multipath Funnel tool then allows marketers to measure the impact of support chat on conversion, for example, or how effectively email drives upgrades.
Leading CDP Platforms
There are many CDP platforms to choose from—here is a handful of the most popular, along with the types of businesses they serve.
- What they’re about: Segment is designed to streamline CDP implementation and lighten the burden on engineering and technical resources. The platform offers over 200 out-of-the-box integrations that can be turned on or off quickly. However, the strict schema means Segment offers less flexibility than some other CDPs.
- Pricing: Segment offers a free plan with paid plans starting at $120/month—true CDP features require their Business plan, which uses custom pricing.
- What they’re about: Exponea is a CDP built primarily for B2C and eCommerce businesses. The platform offers three packages that vary from pure CDP features to end-to-end customer experience and automation.
- Pricing: Contact their team for pricing
- What they’re about: Tealium is the CDP designed for business users from across the organization. Their platform includes more than 1,000 ready-made integrations that bring data together and make it easily accessible to all teams.
- Pricing: Contact Tealium for a custom quote
- What they’re about: mParticle differs from other CDP platforms in their mobile-first focus. While the software also supports web data, the mobile-first focus offers users access to more data, like push tokens, device telemetry, exceptions, and more.
- Pricing: Contact mParticle for pricing information
- What they’re about: Unlike many of the CDPs above, Rudderstack markets themselves unabashedly as the open-source alternative to Segment. Designed for developers, the platform offers more flexibility, more data privacy than cloud-based options, and a lower cost than Segment.
- Pricing: A capable free plan gives way to a Pro plan for $750/month, along with customer enterprise plans available
- What they’re about: Freshpaint requires the least amount of engineering resources to implement. The platform automatically tracks every possible event. From there, users can create and manage events through Freshpaint’s interface.
- Pricing: Freshpaint offers a free plan along with custom pricing for Business plans
How to Choose the Best CDP Platform
When it comes to evaluating the CDP platforms above (and others), there are several things to keep in mind.
- Your use case(s): Every search for a data platform needs to start with your use cases. What will you use the CDP for (primarily)? What business problems does your CDP need to help you solve?
- Integrations: The whole point of a CDP is to connect and unify all your customer data, so it’s vital that the platform you choose offers all the up- and downstream integrations you need. The simplicity and ease of those integrations is another factor that will affect how quickly you can implement a CDP and, ultimately, see value from it. It’s also important to consider whether you need a solution that allows for custom data connections.
Once you know the features and integrations you need from a CDP, you can compile an initial list of platform options.
From there, it’s a matter of doing your research. Check out each platform’s website, read reviews on third-party websites (like G2), and talk to their customers if possible. As you narrow down your list of potential CDP vendors, you can start to work directly with vendors to see in-depth demos, POCs, and more to further hone in on the best option for your organization.
Implementing a CDP: What to Expect
It’s important to head into the implementation of new software with the right expectations. You need to know upfront what kind of technical resources and timelines implementation will require. Here’s what to keep in mind for a CDP platform.
While it’s hard to know what technical resources will be required to onboard a new CDP platform, the key is to involve any internal technical resources in the process of evaluating possible CDP vendors.
“The biggest mistake companies make with CDP implementations,” Raj Kini, Director of Professional Services of Arm Treasure Data told CMSWire, “is not bringing IT and marketing teams together to make sure the implementation delivers the promised benefits of the investment. Companies should assign executive leads from IT and marketing to work together on their CDP implementation.”
From there, it’s important to be thorough in narrowing down your CDP vendor list—ask for detailed demos, proofs-of-concept, and even a trial.
As with most aspects of business, there’s no hard-and-fast timeline for implementing a CDP platform. How long it takes will vary based on your company, use case, and needs, among other factors, like:
- Integrations: The number of tools you need to integrate with your CDP and whether they’re up- or downstream is key factors in the timeline of your setup.
- Your existing customer data: What does your customer data look like today? If it’s messy or incomplete, CDP implementation may take longer. If data is siloed across different platforms, merging duplicate customer profiles will also add time to your implementation.
In terms of shortening the time it takes to implement your CDP, there are a few options. Our recommended approach is to start smaller at first, then expand from there. Build out a few integrations and use cases to get things moving and begin to see the value. Then add more data sources as you go.
It also helps to assign one team member whose job it is to monitor CDP implementation, onboarding, and training.