The Customer Data Platform (CDP) is the hottest new piece of marketing technology.  In fact, CDPs are becoming ubiquitous in marketing and seem to pop up in every marketing-related report or search. According to the 2020 State of Marketing Report, among marketers who say they use CDPs, 86% are increasing or maintaining their use of them. This leaves many companies wondering if they need one too, with some asking, what is a CDP, anyway?

That’s what this guide is for. It’s your step-by-step playbook to help your organisation decide if you need a CDP and how to best select and prepare your organisation for one. Read the chapters below in accordance with your needs.

A Customer Data Platform (CDP) is a piece of marketing technology with a handful of tools that aggregates and organises customer data across various touchpoints. CDPs collect and structure real-time data into individual, centralised customer profiles to make it easier for your digital-first marketing team to manage and pull insights from customer data.

A CDP usually includes a customer database, marketing automation, multichannel campaign management, and real-time interaction management. Essentially, CDPs are for when you need a marketing database with user-level data. To best understand this software category, let’s look at some of the underlying challenges in marketing that resulted in its prominence.

CDPs focus on four primary tasks: collecting data, unifying data, activating data, and pulling insights from data.

1. Collecting Data

Your CDP is a centralised hub, or a home, for all the customer data your company has. It’s where anyone from your company can find customer data organised in a single place.

To accomplish this, your CDP needs to identify each individual customer by collecting and stitching together data from all of your company’s different customer relationship management (CRM) platforms and customer databases, including systems that don't usually share data, like marketing platforms, service software, and e-commerce engines.

Bringing together and unifying all this disparate data and identifying each customer based on their whole engagement history is called customer resolution.

2. Unifying Data

After your CDP brings together all your company’s data and creates customer identities, the next step is to resolve those identities across devices. This means linking identity information from your known customers (such as email addresses and phone numbers) with anonymous data they may have shared before they became customers (such as anonymous cookies and mobile device IDs).

The purpose of cross-device identity resolution is to help you understand the whole picture of your customer's journeys. For example, you can look at a customer and see that their interaction began with an email campaign and continued to your website before they shared their information and downloaded content or made a purchase.

3. Activating Data

Once your CDP creates and resolves fully unified customer profiles, it then activates that data, making it available for marketers to personalise customer experiences in real-time.

This personalisation is made possible by connecting the customer data in your CDP to all the different technology platforms you engage customers with, including email-send engines, demand-side platforms, and content management systems.

4. Pulling Insights from Data

With your CDP's unified customer profiles, it’s easy to see the entire catalogue of data each customer shares and track their whole customer journey. You can also use this data to get insights about customers, segment them into groups, and create lookalike audiences and personas to help reach new audiences.

As your CDP collects and organises all your customer data in one place, it’s a great source of information that proves the reach, revenue, and ROI of your marketing efforts.

There are hundreds of different CDPs on the market, but the differences between most CDPs really boil down to two key focus areas: insights and engagement.

An insights CDP integrates and manages customer data from your company’s different systems, and provides analytics and activation to ultimately deliver a single view of each customer.

An engagement CDP uses customer data to power real-time personalisation and engagement for customers on digital platforms, such as websites and mobile apps.

Data Cloud was created to be the best of both worlds, with real-time CDP capabilities built directly into the core platform.

To choose a CDP, your company’s stakeholders should consider whether an insights CDP or an engagement CDP would be best for your needs, and research the few CDP options that include both.

To narrow down the CDP selection, it may also be helpful to consider these questions.

Because CDPs make it so easy to manage customer data, there are countless ways a CDP can increase marketing success. In a category where there are too many success stories to count, here’s one of our favourites.

A Midwestern/Southern comfort food and convenience store chain wanted to deliver more personalised digital experiences to its customers. The company knew its customers wanted more relevant engagement, and it also knew it was important to showcase how friendly and relatable its brand and staff were.

After launching a loyalty program and reaching 2.5 million active customers, the business started using a CDP to make it easier to manage customer data. Before a CDP was added to the mix, it was difficult to engage lapsed customers and suppress non relevant email communications. But once all the data was brought together with a CDP, these previously difficult tasks became easy to do.

With customer data in its CDP, the business was able to personalise the hero images in each marketing email with a customer’s most recently purchased pizza — a simple adjustment that led to a 16% increase in conversion rates on pizza alone.