Chances are you’ve been approached in the last year by a myriad of Customer Data Platform (CDP) providers. But what is a CDP, and do you need one?
In a nutshell, CDPs are marketing solutions aimed at improving how data is acquired and used to create better experiences for people and better performance for brands.
CDPs are not new. According to the Customer Data Platform Institute, CDPs were originally identified by marketing technology consultant David Raab in 2013 and first appeared in Gartner’s 2016 Hype Cycle. Nearly a decade in, there is still no consistent categorization of CDP solutions. They can include analytics and measurement, marketing automation, campaign management, data management, data orchestration, marketing delivery, or any combination.
So, how do you know which CDP solution to choose? Here’s what the C-suite needs to know.
UNDERSTAND WHAT CDPs CAN AND CAN’T DO
CDPs are largely focused on improving real-time interactions between your brand and your customers. They collect and normalize customer-generated data and ultimately analyze the data for insights to determine your next best action.
Most major brands likely already have a wide variety of data, systems, and technologies that enable insights and collaboration across their teams—financial, customer service and support, e-commerce, and websites, for example. CDPs should be seen as solutions that expedite the way your marketing team collects insights and applies them to improve conversion rates.
However, every CDP will—understandably—have limitations on what it can do. Since many CDPs evolved out of smaller point solutions, like tag management or web analytics, it’s important to know an individual CDP’s strengths—essentially what it was truly built to do. Some common CDP strengths include:
- Personalization: Improves personalization experiences on your own web properties by ethically connecting known and pseudonymous data
- Audience insights: Provide incremental understanding of audiences by combining offline data and real-time interactions
- Analytics: Delivers enhanced insights by combining a wide variety of customer data sets
It’s important to note there are some capabilities CDPs cannot replace in your marketing tech stack.
First, a CDP is not a replacement for your centralized marketing data or CRM system, particularly if you have a sizable customer base. This type of intensive data management requires a different level of rigor. Secondly, CDPs don’t solve for identity over time or across channels—notably, the kind of first-party identity solution necessary to deal with a future without third-party cookies.
Instead, focus on use cases you want to solve and understand how a CDP can complement your existing tech stack, and where they can integrate with and enhance it.
GET TO KNOW THE PROVIDER LANDSCAPE
With over 150 CDPs in the market across a dozen categories, the evaluation and selection process can feel daunting. It helps to put CDPs in three major categories:
1. Major Providers
Adobe, Oracle, and Salesforce all have CDPs as part of their marketing clouds. If you’re already invested in these SaaS offerings, adding their CDP capabilities is a no-brainer. Ensure you understand the benefits you expect to see, and use their certified partners to deploy and orchestrate the connection between these systems and your larger technology stack.
2. Large-Scale Independents
Sitecore, Treasure Data, and other large-scale CDP providers have a growing solution stack and value proposition for brands. With plenty of referenceable clients and certified partners, these CDP providers are a safe bet when solving for gaps in your customer experience solution strategy.
3. Niche Providers
There are hundreds of providers that have solid capabilities across specific categories—for example, decisioning and measurement—as well as some that have a unique industry focus. The CDP Institute, Forrester, and Gartner all have research and insights to help you understand where these emerging applications perform best.
There is a CDP solution that can work for every company, but it’s imperative you understand the business goal you’re trying to achieve and the technology gap you’re trying to fill.
FOCUS ON THE THREE Cs
When it comes to CDPs, it’s easy to get enamored by technology. But don’t.
Instead, focus on the outcomes you’re trying to enable, both for your customers and your business. In today’s always-on world, this means delighting your existing customers and garnering new ones by delivering real-time interactions that are data-informed, relevant, and respectful.
When choosing a CDP, focus on three things:
1. Create
Before you start your search for a CDP, make sure you’ve created a data and identity strategy. Know what you have and what you need to deliver faster and more accurate customer experiences and insights. While a CDP won’t create a complete customer view, it can ensure data creation is enhanced. Many CDPs are excellent at real-time delivery of audiences and a great addition to your identity and data strategy.
2. Connect
Making data work for your customers requires it to be connected to your applications—for example, websites, campaign tools, and support systems. CDPs do an excellent job at enabling real-time data use, personalizing experiences, and customizing marketing. The more connected your data is, the higher ROI you can achieve.
3. Collaborate
Many agencies and strategic partners can leverage your CDP investment to build customer journeys, which is a great way to get the most out of your investment. CDPs can orchestrate decisioning to ensure your creative aligns with the experience your customers expect. Many partners have real-world experience and certifications on these platforms, so seeking their advice is paramount.
A robust CDP solution is likely to cost you north of $1M annually, and with 83% of marketers ripping and replacing a least one martech app each year, the wrong choice can be an expensive proposition, both in time and money.
The bottom line: choosing a CDP is not easy. To make the right choice, understand the CDP’s strengths and know your desired outcomes—how it will connect with what you have, improve your customer experiences, and grow your brand.
Chad Engelgau is CEO of Acxiom, the leader in helping brands use data, identity, and tech to better understand and connect with people.