Customer Data Platform: the ultimate guide (2023)

As a webshop, you are sitting on one big mountain of customer data. Think of personal data of your customers but also their interests, purchase patterns and demographics. You collect all this data without you having to do much for it. Customers provide you with this data simply by placing an order with you. All this data is incredibly valuable. By using it in the right way, you can turn a one-time customer into a fan for life. But... These days, turning customer data into something tangible and acting on it is almost an art. Often your data is stored in different places. This makes keeping an overview and actually using the data complicated. A CDP helps you with this!

In this article:

• What is a CDP?
• How does a CDP work?
• Why is a CDP a good idea?
• What are the benefits of a CDP?
• What types of CDPs are there?
• What is a CDXP?
• How do you use a CDP?
• For whom is a CDP suitable?
• CDP comparisons: why a CDP and not another data platform?
• A CDP for e-commerce

What is a CDP?

A Customer Data Platform (CDP) is an all-in-one platform for customer data. In a CDP, you collect all customer data and aggregate it into one big knowledge base. It is the key to engaged customers. Thanks to a CDP you always have the right data at your disposal, with which you can personalize contact moments at the right time. This makes a CDP indispensable for marketing, sales and service.

To form a complete customer view, the data comes from various sources, such as:

• CRM systems
• E-mail systems
• POS systems
• Marketing automation systems
• Data management platforms (DMPs)
• ERP systems

How does a CDP work?

The purpose of a CDP is Customer Data Management. It merges different data sources (both online and offline) to form a clear picture of each customer: a Single Customer View (SCV). A CDP provides you with insights into various first-party customer data, such as:

• Demographic data
• Behavioral data
• Event data (clicks, downloads, opens)
• Browsing data (on the website itself)
• Optional: partner and third-party data

With all this first-party data (data from your own management), you create a 360-degree customer profile in a CDP, including all stages of the customer journey. This puts you a step in the right direction for online and cross-media personalization. The right message, at the right time, for the right customer. A CDP is therefore also the building block of campaign automation, customer journey management, data analysis, marketing solutions and segmentation.

Below you can see how a CDP works. You capture all the customer data in a data integration, such as a DMP. From there, you immediately have the ability to segment endlessly. Predict from your data which content connects to which unique customer and the matching channel. The engagement data, or the data in which it becomes clear how the customer reacts to the expression, in turn comes back to the CDP.

Source: Email Vendor Selection

Why is a CDP a good idea?

The answer to this question is simple: a CDP helps you centralize and make sense of data. And that's necessary. This is because in recent years, the number of channels and data types have grown tremendously. This has created a lot of data in many different places. Think of data in a CRM system, an e-mail marketing tool, a Data management platform, a POS system and many more locations. In most cases, these systems do not work well together or cannot merge and interpret the data properly. As a result, keeping an overview and analyzing all the different types of data has become a true art. Such an art, in fact, that many parties no longer do anything with all their relevant data.

A CDP makes first-party customer data available and understandable, because three essential dimensions come together:

1. Control. With a CDP you have complete control over both the way of collecting and the classification of the first-party customer data.

2. Accessibility. Using a CDP does not require technical knowledge, such as the help of a developer. It is possible for marketers to control which data from which platform ends up where.

3. Transparency. In a CDP you can see exactly where your data comes from. How transparent.

What are the advantages of a CDP?

A Customer Data Platform has many advantages. Apart from the fact that a CDP gives you a 360-degree customer view of each unique customer, it offers many more advantages:

• It is an integration of all customer-related data into one system
• A CDP gives you full control over cross-channel customer data
• It offers deeper insights to get to know your target audience
• Data is collected and stored more efficiently
• Lends itself perfectly to increasing the Customer Lifetime Value (CLV).
• Thanks to the personalization and targeting possibilities, you can significantly reduce your advertising costs.
• A CDP can be used for all your marketing activities.
• It offers you better insight into KPIs.
• Suitable for cross-channel personalization
• The ROI (Return On Investment) is easier to measure
• Easy to integrate into any current customer data setup
• Future-proof

What types of CDPs are there?

There are different types of CDPs. This doesn't make choosing the perfect fit for your e-commerce business any easier. To help you out, below the different CDPs explained.

Data CDP

A data CDP is all about collecting customer data and linking it. The results are stored in a database that is available to the external systems attached to it. Target group segmentation and controlling external systems is also something that is possible in a data CDP. This is the minimum CDP you want to work with.

Analytics CDP

This is a data CDP with analytics applications added to it. So you can expect the same as a data CDP, plus customer segmentation, journey mapping, a revenue attribution and in some cases machine learning (for predictive modeling).

Campaign CDP

This type of CDP goes a bit further again. A campaign CDP provides you with data insights as well as customer data. What sets a campaign CDP apart is that personalization is possible on a segment-by-segment basis. This means you can send personalized e-mails and set up marketing campaigns ín the CDP. Marketing campaigns include real-time interactions (customer has looked at a certain page of your website) or product or content recommendations, for example.

What is a CDXP?

We haven't mentioned one important CDP yet. And while a CDP is already pretty complete, a CDXP (Customer Data Experience Platform) goes even further. In a CDXP, the following things come together:

• A Customer Data Platform
• Artificial Intelligence
• Marketing automation

By now you know what to expect from a CDP. But what about Artificial Intelligence and marketing automation in a CDXP?

Artificial Intelligence in a CDXP

AI in a CDXP, that sounds very interesting, of course. But what are the possibilities? Among other things, you can use AI to show product recommendations. These recommendations are based on the entire customer profile and can be shown on the website but also in marketing automations and even print.

Other examples of AI in a CDXP include predicting behavior, creating templates for expressions tailored to the recipient and predicting the right time to send emails, for example.

Marketing automation in a CDXP

In a CDXP, you can directly use all data to set up campaigns. How? Various channels are integrated into the CDXP. Think of the website itself, e-mail marketing, marketing automations, social media, SMS, print.... And we could go on and on. In short, a CDXP brings together both all customer data and all marketing channels in one platform. Overview and at the same time lots of details of each customer. Exactly what the marketer of the future is waiting for.

A CDXP provides a well-organized database, where you can easily zoom in on each customer in detail.

How do you use a CDP?

By now you know that a lot of customer data and metrics come together in a CDP or CDXP. But how do you use such a platform in practice? Here are three examples.

Personalization

A general advertisement with this week's offers works less and less well. Consumers expect a personalized approach. What does such a personalized approach look like? Imagine a customer of yours views a specific product on your Web site. This data flows through to your CDP. Does the customer not complete a payment and just keeps looking? Then, after an hour, you send an email to the customer stating the viewed product. At the same time, you display the viewed product, for this specific customer only, more prominently on the website. In turn, other customers see products that match their viewing behavior.

This is just one example of a personalized approach. Tailor all your content to the previous purchases, interests and desires of each unique customer. See conversions increase thanks to this personalized and therefore relevant approach.

Exclusion

A second step in personalization is exclusion. Imagine you have a marketing campaign about a particular brand. You want to reach only the target audience that is really interested in this brand. In that case, it is convenient to exclude the rest of your customers from this communication. With a CDP system you can see the purchase data at a glance. This way you exclude customers who are not interested in this brand.

Do you promise a high discount in the brand campaign? Even then it is useful to exclude customers who just bought this very brand. The communication is no longer relevant to them. Indeed, it comes as mustard after the meal.

By excluding target groups, you save money. After all, you only include the customers who are interested in the campaign. Fine for the customer and fine for you. You then spend your remaining budget in ads for new customers, for example.

Insights

A CDP brings you many insights. Because all data becomes linked visible in one platform, it is possible to gain organization-wide insights. Marketing campaigns, e-commerce data and website data come together in one customer profile. Imagine this: a customer contacts customer service. The service representative looks up the customer in the CDP and immediately sees all available data on this person. Based on the data, the employee can better assess the likely need and thus provide appropriate advice.

💡 So don't use a CDP just for marketing campaigns. Use the CDP to improve your customer service and sales as well.

For whom is a CDP suitable?

Do you still doubt whether a CDP is suitable for your business? The checklist below will help you make a good choice. Do you work in an organization where...

• ... a large increase in different data sources, which puts pressure on the overview and workability of data?
• ... you are not doing a good job of analyzing the large flow of data, preventing you from responding accurately to customer behavior?
• ... the IT department spends a lot of time updating data models?
• ... it is becoming increasingly difficult to comply with privacy laws as the number of data sources continues to grow?
• ... the current structure is not secure for storing data as the organization continues to grow?
• Is the answer to most or even all of these questions "yes"? Then it is high time to move to a CDP.
• When is a move to a CDP not a good idea? When...
• ... your customer database is clear enough and workable
• ... the infrastructure is so well organized that all data is stored in one system
• ... your organization does not yet have a data-driven marketing strategy. In this case it is wise to start by thinking carefully about the strategy. Once you have a clear picture of this, it is time to consider whether a CDP is necessary for this strategy.

CDP comparisons: why a CDP and not another data platform?

Thanks to all the previous information, you know exactly what a CDP is. But... What really makes a CDP different from other ways of storing data, such as a Data Warehouse? We explain the differences between the best known ways of data storage. Because only when you understand all forms can you make a well-considered choice in what suits your business. Therefore, in this chapter:

• CDP versus Customer Management Software (CMS) or Customer Relationship Management (CRM)
• CDP versus Data Warehouse
• CDP versus marketing automation software
• CDP versus Master Data Management (MDM)
• CDP versus Data Management Platform (DMP)

CDP versus Customer Management Software (CMS) or Customer Relationship Management (CRM)

About the difference between a CDP and a CMS or CRM, we can be brief: the purpose of the software is completely different. A CMS aims to indulge new customers and retain existing ones, from the perspective of customer-focused employees. The CMS keeps a log of customer interactions. In this way, it is possible for a salesperson, customer service representative or a customer success manager to see at a glance which customer is involved and what his or her customer needs are.

The purpose of a CDP is to manage and understand all customer data. All contact moments with each customer are salvaged in one system. This is not only customer data such as purchase history, name and address information and previous conversations, but also website traffic. A CDP therefore brings together much more data from different systems, unlike a CMS or CRM. The customer view in a CDP is therefore many times more extensive and provides insight for marketers, IT professionals and department managers.

Within a CRM or CMS, all customer contact points are recorded in one central file. Recording these contact points is done manually. Standardizing these logs is difficult because everyone processes and logs information in their own way. How is this different with a CDP? A CDP records every contact automatically thanks to various integrations. The CDP combines all data with existing customer data so you have complete knowledge of who your website visitors are.

In summary, the differences between a CMS/CRM and a CDP at a glance:

• A CMS only logs customer contact points, while a CDP system goes beyond customer contact.
• A CMS must be maintained manually, where a CDP connects to multiple integrations through which information is automatically relayed
• The information in a CMS is often transferred to a CDP. The other way around is not possible.
• A CMS is more customer-centric, where a CDP is more focused on creating a complete customer profile.
• A CMS is incapable of linking data, where a CDP is all about linking data.

Saying goodbye to a CMS is fortunately not necessary when switching to CDP. Integrate the CMS with your CDP and create even more complete customer profiles!

CDP versus Data Warehouse

A Data Warehouse - the name really says it all - is a platform on which your data is stored. That's it! The data that is stored is organization-wide. Not only relevant data for marketing activities, but really all data. This makes a data warehouse interesting for the entire enterprise.

A big disadvantage of a data warehouse is that all the data comes in raw. When a purchase is made, it is written away as code. In addition, all data remains as individual pieces. Together, this makes it difficult to quickly analyze and act on data in a data warehouse.

There are other differences between a CDP and a data warehouse:

• A data warehouse has access to all data within a company and is therefore focused on functions for the entire company. A CDP only has access to customer data.
• A data warehouse is not able to link different information to a single customer profile, a CDP is. As a result, a CDP has a single customer view and a data warehouse does not.
• A data warehouse is not able to "normalize" data. The data comes in raw, without insight.
• A CDP synchronizes in real time. A data warehouse does not.
• A data warehouse needs an IT person to connect data sources, where a CDP can be used by anyone.

CDP versus marketing automation software

Are you already working on marketing automation? Then you're already on the right track! A marketing automation can do many things that a CDP also does. Yet there is a significant difference between the two.

Marketing automation software allows you to automate and improve campaigns. Something that quickly increases your ROI. It allows you to send automated messages to customers via email, the website itself, social media or SMS messages. Recurring tasks and workflows are easily captured in a marketing automation tool. There are a host of different marketing automation tools, specifically focused on customer relationship management, lead management, email marketing or marketing ROI, for example. Plenty of choice, in other words.

What makes a CDP different from marketing automation software? The answer won't surprise you. This is because in a CDP you get a more complete picture of your customer. Also, a CDP uses real-time data, which you (often) don't have in a marketing automation tool.

List the differences between a CDP and marketing automation:

• Marketing automation software is useful for capturing repetitive tasks and workflows to increase ROI. A CDP cannot do this, but a CDXP can.
• A CDP gives a more complete picture about your customers because it unifies customer data through various integrations or other sources (email, Web, online channels), where a marketing automation software collects customer data from CRM systems.
• CDPs use real-time data, making it possible to predict when and what your customers will buy, under what circumstances. A marketing automation tool does not go as deep into this data.
• Because a CDP goes deeper into the data, it helps you tailor the customer experience to your customers' needs.

As you can read, marketing automation and a CDP go hand in hand. That's why we see more and more CDXP platforms, combining both strengths. That way you enjoy all the benefits of a CDP as a marketing automation tool, without losing the overview. Best of both worlds!

A CDXP is a convergence of marketing automation and a CDP.

CDP versus Master Data Management (MDM)

The fourth comparison we make is between a CDP and Master Data Management (MDM). MDM is a system in which the business collaborates with IT by bringing uniformity to data. Shared master data in the enterprise is thus ensured.

An MDM differs from a CDP in qualities, outcome and what part of the organization uses the data. The goal of an MDM is to create one consistent data stream that is of value to the entire company. Instead, the focus of a CDP is to streamline customer data from different sources to create targeted marketing campaigns.

An MDM is often tasked with increasing the quality of different types of data, especially entities such as customers, suppliers and products. MDM uses machine learning to do this. Therefore, an MDM is much less labor-intensive than a customer data platform.

In summary, the main differences between a CDP and MDM:

• A CDP focuses on synchronizing data, while MDM focuses on matching and transforming the data to form a more accurate picture.
• MDM uses machine learning, which makes it easier to unify data.
• An MDM is often used more broadly than just customer data (such as parts, products and suppliers). This is to provide a more complete picture to better match supply and demand.

CDP versus Data Management Platform (DMP)

The difference between a CDP and a Data Management Platform (DMP) is in the data the two platforms use. A CDP uses first- and second-party data, while a DMP typically uses second- and third-party data.

First-party data

First-party data is any data that the customer gives you directly, hence the name: "first-party data." This data is often considered the most valuable because it is reliable data that is directly issued by the customer himself.

Second-party data

Second-party data consists of data collected by another company and then shared or resold to a partner. An example of second-party data collection is through a webinar that you conduct with a partner. The e-mail addresses that sign up for this are shared between them.

A disadvantage of second-party data is that it is less reliable than first-party data. This is because you cannot prove that you obtained the data ethically, where your partner can.

Third-party data

Third-party data is literally collected by a data company. Consider Google ads. Google puts your interests (based on search behavior) into a bin, which another advertiser uses to target its ad. The advertiser then uses data from the third party. This is often done on the basis of cookies.

Third-party data is generally the least reliable data. There are two steps in between before you get the data. You do not know the quality and accuracy of the data. Nor do you know exactly how the data was obtained. In addition, third-party data is often available to everyone, which also makes it less valuable.

A DMP makes almost no use of first-party data. At the same time, a CDP hardly uses any third-party data. So they overlap, but then again they don't. In addition, there is a difference in the use of customer data. Whereas a CDP collects information about the users, such as personal data, a DMP often collects anonymous data about the users.

All in all, a DMP is an ad tech platform. As such, a DMP is often used to optimize advertising campaigns and create lookalike audiences.

The differences between a CDP and a DMP summarized:

• A DMP does not identify customers but anonymous visitors, where a CDP stores customer data, creating a 360-degree customer profile.
• A CDP uses first and second party data, where a DMP uses second and third party data.
• A CDP often stores data much longer than a DMP.
• DMP is designed more to improve targeting of display ads.

Reloadify: the Customer Data Platform for e-commerce

Choosing an appropriate CDP for e-commerce can be challenging. After all, an e-commerce business has different requirements for a CDP than a company providing services. But then there's Reloadify. Reloadify is completely tailored to e-commerce. So you can easily see the customer lifetime value per customer. How convenient is that? Would you rather look at large scale revenue opportunities? In Reloadify you can easily create a segment, where you can see exactly how much revenue came out of it, how many orders came out of it and how many customers it concerns.

In Reloadify, a CDP and marketing automation come together. Collect data from your webshop such as personal data and purchase history. Send automated emails based on this data and improve the relationship with your customers. Not sure which content will make your customers happy? Set up an A/B test to test what converts best among your target groups.

With our software, you don't just send emails. For example, do you have a Facebook campaign running to expand your customer base? Create a landing page in Reloadify that you share in the post and use to bring in leads. Add a tracking script to the page and be completely in control.

In Reloadify you have all the customer data in an overview: from order data, to pages viewed on the website and personal data. Would you like to enrich the profile of your customer? For example with the favorite pet, brand or something else? Thanks to our handy tagging system it is possible to request and store all the customer data you want from your customer. So you have full control over your cross-channel customer data.

Calculating your ROI is easy thanks to our various reports. No more V-lookup for retrieving data. Your data is neatly arranged in one system. That saves time and money. This enables every marketer to analyze and understand the data.

Example of newsletter report in Reloadify

Easy to link with e-commerce platforms

Reloadify is easy to integrate with your webshop. We offer ready-made integrations for the largest e-commerce platforms. Within 10 minutes you have connected your shop and can get started! Try it 14 days for free or request a demo.