What you need to know about a Customer Data Platform

18 October 2023
Blog Image

If you are a marketer, you are most certainly familiar with traditional marketing suites that offer capabilities for email campaign management, marketing automation, or social media management, to name a few.

Typically, such tools offer functionalities for email campaign interactions, website interactions, social media interactions, … with your customers. Such interactions, however, represent only a small part of the customer data stack you could access today.

So, it should be no surprise that many traditional marketing suites have evolved into a Customer Data Platform (CDP).

What is a Customer Data Platform?

Customer Data Platforms offer a comprehensive solution for collecting, organizing, and acting on data related to every single interaction you have with your customers through any channel. They are, in other words, software suites designed to ingest and transform data from any of your ‘customer data’-generating applications to provide a 360-degree view of each customer. On top of that, they provide typical marketing capabilities such as segmentation, automation, customization, and driving user experience.

A fragmented solution landscape

However, the current landscape of off-the-shelf CDP solutions is very fragmented. All the more so because some of those Customer Data Platforms started from a different angle. Originally there were two distinct flavours, some focused on offering strong data processing capabilities from different data sources, others focused specifically on marketing functionalities. Both groups eventually expanded their functionalities vertically with more functionalities they hadn’t covered yet and thus grew closer to each other.

Instead of losing ourselves in an overview of this fragmented landscape, we’d like to focus on a Customer Data Platform's typical approach and features (regardless of how it originated and evolved) and how competitive it is compared to your own data stack (whether it already exists in some form or not). Is buying an off-the-shelf CDP really the best solution for your organization? Or should you build what is missing on top of your own data stack?

The features that set a Customer Data Platform apart

Off-the-shelf CDP solutions promise to handle the "boring stuff" that usually falls on the data organization’s shoulders, offering a swift resolution to all the foundational work needed before marketers can start to work with their customer data. This sets Customer Data Platforms apart from legacy marketing tools that require clean and enriched customer data, making them a dream come true for marketers.

Let’s dive deeper into the typical features of an off-the-shelf CDP solution to understand how this could be achieved.

Data ingestion

Customer Data Platforms provide plug-and-play integrations with various applications that generate customer data. A good CDP will enable you to ingest data from a vast array of sources such as your CRM, website/app analytics platform, ordering system, social media platforms, customer service solution… or any other supported app.

In addition to ingesting your customer data, CDPs can also register the different levels of consent your customers give. That helps ensure compliance with regulatory requirements, making sure customer data is used only for authorized purposes.

Identity resolution

Once customer data has been collected from different sources, it must be unified. If not, you will only have small slices of the 360-degree customer view you’re looking for. Off-the-shelf CDPs typically use different approaches to accomplish this so-called identity resolution. Those range from uploading mapping tables to heuristic methods matching fuzzy data together.

Stream processing

At this point, the data should be ready for the marketer to take action. You can now define segments that can be used across your marketing channels and set up your marketing automation.

Keeping this data up to date is obviously essential. Customer Data Platforms typically utilize so-called ‘stream processing’ to accomplish this, meaning that a customer data event is incorporated in the 360-degree view with near instantaneous speed for most purposes. Such a real-time understanding of your customer's interactions, preferences, and behavior enables a broad array of modern marketing use cases by allowing for highly personalized engagement.

Data governance

Data governance capabilities are another essential feature of a Customer Data Platform. A good CDP solution will at least provide the tools to define and monitor data quality. Most CDP solutions will also manage data access, determining who in the organization has access to which kind of data in which form. For example, they can mask Personal Identifiable Information (any data that can be used to identify a customer, PII in short) depending on the role of the CDP end-user.

We briefly referred to regulatory compliance before, mentioning that CDPs can also register the different levels of consent your customers give. Because the level of consent is kept for every customer, it is easy to integrate targeted marketing campaigns that comply with data protection regulations. The centralized setup also makes it very efficient to offer streamlined support for GDPR requests related to a customer’s right to be informed about the collection and use of personal data or the right to be forgotten.

Is a Customer Data Platform the best solution for me? Or should I build upon my own data stack?

As much as off-the-shelf CDPs promise to offer a click-and-play solution, they cannot magically crack every intricate data engineering challenge. Without adequate IT buy-in and expertise, there is a risk that Customer Data Platforms fall short on the details, leading to a cascade of downstream issues that you wanted to solve in the first place.

Also, ask yourself whether you want to have yet another proprietary solution in place. Don't overlook the risk of vendor lock-in that potentially comes with every off-the-shelf solution.

So whether you should buy an off-the-shelf CDP or look at your own data stack and build what’s missing depends on your organization’s unique context, needs, and capabilities. The best choice will depend on a deep understanding of your organization - which we are experts at here at Datashift. Let’s get in touch to see how we can help you out.