What is a customer data platform, and how does it work?

Customer data platforms, also called CDPs, bring together data from a company’s marketing and sales software.  After analyzing it, they then provide a 360-degree view of its customers. Furthermore, they also provide insights into the best ways to engage and support customers due to moving through the customer lifecycle. Is this new technology a “must-have” for 2021?

Some would say – yes! A new survey from Segment suggested that you must have the CDP in your marketing/sales tech stack. This is after studying over 4,000 customer data decision-makers.

But why is this technology so important? Digital transformation is happening faster due to the necessity to be digital and the coronavirus pandemic. However, due to Covid-19, companies need to find ways to reach their customers while also standing out against all the competition, direct or non-direct. All of that means it’s crucial to understand your customers and anticipate their needs.

That’s not as easy it is sounds though. Gathering customer data from multiple applications and trying to get a cohesive view based on them so you can make decisions using it is nothing short of complicated. According to the study, it’s that complete view of the customer that will help gain a company’s success. 58% of those surveyed stating they expect customer data to drive revenue growth.

In this study, 73% think a CDP is crucial to customer experience efficiency. Furthermore, it is important for customer privacy and insights and reporting, as well.

How can you use CDPs?

A CDP is an essential part of the technology. Companies use it to achieve several goals. According to the survey, 73% uses CDPs for data collection, 61% for access and accountability, 58% for data unification, as well as comprehensive customer profiling, 57% for data standardization and 48% for privacy compliance.

However, these are only data collection use cases. Personalization is equally important. A CDP creates a consumer profile in real-time. On the other hand, such profiles enable a marketer or a salesperson to provide a targeted and personalized experience in many ways – website, email, chat, messaging, etc.

Additionally, there’s one more use case that is growing in popularity. Some companies use a CDP for AI, as well as machine learning. Predictive analytics is not unique to Customer data platforms’ solutions. But the CDP ingests real-time interaction data (behavioral, demographics, transactional), profile data, product data, campaign data, mobile, customer support data, and IoT data. If you think about all these different types of data,  you will understand how well the CDP can predict customer behavior.