What is a CDP and why would you (not) need one?

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The market for CDPs is growing, and with a good reason. It helps companies achieve the 360 view of their customer, which is important in today’s demanding society. Whether your company is ready it, depends on a few factors, but if it is, it could enable several new marketing capabilities.

For many companies, a customer data platform (CDP) sounds like a good solution to combine all their siloed customer data, have it enhanced by AI, and then expose it in real time wherever it’s needed to optimize and personalize the online and offline customer journey at all touchpoints. Sounds great, right?

On the other side, we see more vendors offering CDP functionalities or even full platforms. This blog lists what we consider as some of the key (minimum) functionalities of a CDP, what the benefits are, but also the challenges.

What is a CDP?

By now there is a whole range of vendors that you can pick from, each with their unique functionalities that differentiate them from other CDP vendors. We have a list of criteria that we think a vendor must have, at a minimum, to qualify as a CDP:

  1. Open platform: The only way to create a full view of the customer is if the platform can connect to every customer data source, online and offline. It shouldn’t matter if you use Salesforce as CRM, Adobe for your marketing, CommerceTools for your ecommerce, and SAP for your customer service. Everything should be able to connect, all relevant customer data should be stored in the CDP, and everything should be made available in real time.
  2. Unified profile: A CDP is all about creating a full view of a customer over all touchpoints (e.g. web, customer service, app, offline) and all these touchpoints should come together. So, if a customer started using your app, browses a bit, and then makes a purchase, you want that information available on other touchpoints. In other words, whenever a customer is identified at a touchpoint, all data (including the data of before the identification) should enrich the existing profile. A customer is identified by unique identifiers, such as email address or a mobile phone number. Next to these unique identifiers, there are also the probable identifiers. These will generate a match based on a certain probability level, without it being verified due to the lack of unique identifiers.
  3. Intelligent: A CDP, if not used for generating insights, would only make it an expensive database with integrations. To make your marketing campaigns successful, you want to make use of segmentations (e.g., “all customers that bought pants X in the last month”), triggers (e.g., whenever someone has collected enough loyalty points to advance to the new tier), and business intelligence (e.g., measuring the effectiveness of an online campaign on your offline purchases).

The value of a CDP

We’ve listed what it takes for a platform to qualify as a CDP, but what value does a CDP bring? Here are some of the capabilities you can unlock with a CDP:

  1. Data driven: If you collect everything about your customers and combine that with the right metrics, you can generate insights that will help you make the right decisions. Which campaigns are most effective? What kind of content is more relevant? What is a client most likely to purchase next? How is a client’s sentiment towards your company? These questions are examples of insights you can generate by adopting a CDP.
  2. Personalize the customer journey: Each customer requires their own journey based on their actions, intensions and preferences. A CDP gives you the data and insights to segment, hyper-personalize and do predictive targeting. By analyzing a customer’s grocery shopping behavior, you could predict a new family member is on its way, proactively engaging (after you reach a determined level of certainty) on that would definitely generate a wow factor and increase the customer lifetime value.
  3. Continuous improvement: Implementing a CDP is not a one-time project – which is good. Each time you use data to optimize the customer journey, new data will arise from that engagement. Analyzing that data will enable you to further improve your segments, recommendations, and other data-driven initiatives.

    Challenges and misfits

    Unfortunately, a CDP is not the holy grail. It should, as all technology, support your business goals. Even if your business goals could be enabled or enhanced by a CDP, we see more challenges or reasons why a CDP might not be a fit:

    1. Digital maturity: On both the IT and business side, it requires a certain level of maturity. Do you have data science capabilities and experience? Are you already doing basic customer journey personalization? Do you have the right marketing, commerce and/or CMS tooling and capability in place to start using your new insights?
    2. Business fit: A Ferrari for doing groceries in the supermarket down the street is purely for show, an expensive show. An important factor is the number of channels your customers can engage on with you, online and offline. The higher the number, the more interesting it becomes to consider a CDP since those channels all generate data and could potentially use data coming from the CDP.
    3. No data silos: A CDP brings together different sources that contain customer data to generate a single view of the customer, if you already have such a view, the benefits of a CDP are probably not worth the effort. It could even make your landscape more complex.

Conclusion

The market for CDPs is growing, and with a good reason. It helps companies achieve the 360 view of their customer, which is important in today’s demanding society. Whether your company is ready for it, depends on a few factors, but if it is, it could enable several new marketing capabilities.

Are you interested in a CDP, or not sure yet and just want more information to see what the potential benefits are for your company? Feel free to contact me at: robin.vanden.hoven@capgemini.com 

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