How Does a CDP Work?
Customer data platform (CDP) is a marketing term that describes a technology platform that helps organizations to manage their customer data. It’s an umbrella term that encompasses several different types of software, including customer relationship management (CRM), data warehousing, and marketing automation tools.
What is a CDP?
A Customer Data Platform (CDP) is a data platform that manages customer data from multiple sources and makes it available for analysis. The CDP stores all of your customer and prospect information in one central repository so you can use it to make better business decisions.
Companies are using CDPs to help them:
- Increase conversion rates by improving the experience on their websites, mobile apps and call centers.
- Improve retention rates by personalizing messages based on past purchases or behavior patterns.
- Reduce churn rates by identifying which customers are at risk of leaving and taking action to keep them from doing so (e.g., sending out an email reminding them about upcoming expiration dates or offering loyalty discounts).
How does a CDP work?
As a data scientist, you have to think about many different things. You’re responsible for determining what data is relevant to your problem and ensuring it’s stored, processed, and analyzed properly. This involves integrating data from different sources (such as databases), managing large amounts of information that may be unstructured in nature (like text or images), understanding the limitations of the tools you’re using, and ensuring that all stages of your work are reproducible so others can quickly check on your progress.
How can you make this happen? This article talks about how CDPs work!
Who should consider a CDP?
In a nutshell, CDPs are a good fit for companies with a lot of data about customers, products and services. So if you’re in that boat, then it’s worth considering a CDP—especially if your team is doing more than just running reports from Excel and hoping for the best.
CDPs are also helpful for making data-driven decisions in real time (for example, when deciding what price to charge for an item) or over time (like when you’re thinking about launching a new product).
Are there different types of customer data platforms?
Yes, there are different types of CDPs. The exact type you choose for your organization will depend on several factors:
- On-premise vs. cloud-based: An on-premise CDP requires that you purchase and maintain hardware, software, and infrastructure in your own data center, whereas the vendor hosts a cloud-based CDP. While an on-premise solution may make sense for some businesses needing more control over their data storage and security, it’s also possible to use both options in tandem.
- Industry-specific or not: Some vendors serve specific industries like financial services (big banks), while others provide solutions for multiple industries (e.g., telecom companies).
- Functionality specific or not: Some platforms offer functionality only related to customer data management (such as cleansing), while others include analytics capabilities such as predictive modeling tools.
Adobe Experience Cloud explains, “CDPs help fix this by unifying data, but Adobe Real-Time CDP goes beyond other solutions by assembling actionable, real-time profiles for personalization at scale.”
A CDP is a big deal, but it might only be right for some. So if you’re looking to build your own customer data platform, now you know what it is and how it works!