Business

3 Types of Customer Data Platforms and How to Use Them

3 Types of Customer Data Platforms and How to Use Them

One of the biggest challenges that face modern businesses is building out robust, customer profiles from the data that they collect. Data has become an invaluable part of the digital landscape and is one of the most valuable resources that a company can have. One of the most important things that a company can do with data is analyzes it and discover new ways of improving customer experience.

Data gives companies the ability to better understand their customers and potential customers. This kind of information can lead to real-life data-driven decisions that can improve customer experience, reduce churn, and secure loyalty. The problem that most companies face is that it’s becoming increasingly difficult to create these robust customer profiles.

This is largely due to the nature of data acquisition and analysis. As more and more tools are developed that help businesses reach the success they want, more and more data is also developed. The more data that is developed from disparate sources, the harder it becomes to secure and utilize that data. While the digital world has allowed for a lot of advancements in business and customer experience, it has also brought with it a fair share of complications. 

When it comes to the specific job of creating strong, customer profiles, one tool that is becoming increasingly popular is the customer data platform – or CDP for short. If you have been curious about what a CDP is and what types of CDPs are on the market, here is everything you need to know. 

What Exactly is a CDP?

A CDP, which stands for customer data platform, is a simple concept however it is very far from being simple in execution. The idea behind a CDP is that it provides a platform for all of your customer information to live that is accessible to marketing and advertisement teams. This all-in-one marketing tool is supposed to be a dedicated database for all customer-related information.

The problem with doing this is that data can come from so many disparate sources that it can become challenging to not only aggregate but integrate it into one centralized location. The concept of a CDP is invaluable and something that could prove to be very effective at leveraging marketing departments for success.

In general, all CDPs have these three components in common:

  • Data Ingestion
  • Identity Resolution
  • Audience Building

This is also how a CDP sets itself apart from a common CRM. The idea behind a CDP, is that it gives a more robust and a fully 360 view of the customer than a CRM would be able to. This is due to the amount of data that is being put into a CDP that exceeds the kind of data that is typically used in a CRM. 

Because CDPs utilize APIs for their data ingestion, they can take in data from a variety of cloud-based tools across any given system. Identity resolution allows CDPs to build out customer profiles and map data back to single user IDs. What makes the CDP the most unique and the most important feature that sets a CDP apart from a customer data infrastructure, is the audience builder. 

This feature of a CDP allows for marketing and advertising platforms to seamlessly access data and run targeted campaigns. This is the layer of activation that is unique that CDPs bring to the modern data stack. 

Three Types of CDPs

In general, there are three types of CDPs 

  • Vertical Customer Data Platforms
  • Conglomerate Customer Data Platforms
  • General Purpose Customer Data Platforms

These three types of CDPs all have specific advantages for different kinds of businesses. For example, the general purpose CDP, as its name implies, can service a wide variety of use cases. These can fit a variety of different business types and are generally a safe bet.

The vertical CDP is a little more specific in that it targets companies based on industry, size, SaaS tool use, and maturity. These CDPs are used to solve specific problems for specific types of companies. 

Conglomerate CDPs are reserved for mammoth companies like Microsoft, Adobe, and Salesforce. These three general types of CDPs are the choices that companies have when looking to add a CDP to their data stack. 

Conclusion

The concept of a CDP is great and something that could and does benefit a lot of companies. Giving your marketing and advertising teams a platform to integrate seamlessly to show a robust 360 view of the customer is nothing short of a power move; however, there is one weakness that CDPs run up against – they aren’t the single source of truth for the company.

In general, every company will be running its single source of truth out of the data warehouse, database, or lakehouse. While the concept of utilizing a CDP is great, being able to do the same thing from your data warehouse can have big advantages because you will be connected to the most important, single source of truth.

About the author

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Mike K. Watson

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