What is a customer data platform (CDP)?
Learn more about the industry-leading customer data platform (CDP).
A customer data platform (CDP) is software that collects and unifies first-party customer data—from multiple sources—to build a single, coherent, complete view of each customer. Digital sources include:
- Behavioral data, such as action taken on a website, in an app, or through other channels such as live chat or digital assistants, and the number and length of interactions and frequency of those interactions
- Transactional data, such as customer purchases and returns, from ecommerce or POS systems
- Demographic data, such as the customer’s name, birth date and month, and address
Customer data platform (CDP) definition
A customer data platform (CDP) is packaged software that creates a comprehensive customer database accessible by other systems to analyze, track, and manage customer interactions.
What’s the purpose of a CDP?
You may be asking yourself, “Why do you need a customer data platform?” There’s not just one reason why a CDP is important. A customer data platform serves three purposes.
Collect and unify all first-party data
Many of the systems—such as email, analytics, CRM, ecommerce, and social sites—that marketers use operate in silos and don’t pass data back and forth. It’s hard to get a complete picture, and even harder to analyze what you’re looking at. The purpose of a customer data platform is to eliminate those issues by connecting all the tools that marketers use and acting as a single source of truth for first-party customer data.
Customer data management
CDPs manage first-party data and consumer privacy and data rights by controlling the data flows between different marketing systems and managing consent. This is the world of GDPR and data privacy; your business needs to actively manage, and document that management of, consent and data flows.
Customer data activation
Once you've received permission to collect first-party user data and have unified and structured it into profiles, you can then take action on it. CDPs can create audience segments that can be used across the rest of your marketing platforms and channels.
For more information on activating customer data, see how can you use a customer data platform?
Why is customer data important?
Once customers experience truly personalized service anywhere, they expect it everywhere. To keep their business, you need to provide the same—or better—level of customer service, no matter the channel. It’s crucial to have up-to-date, well-maintained, accessible customer data—a customer data platform makes it possible.
How does a CDP help secure customer data?
As the data collector, a customer data platform (CDP) streamlines your data platform and centralizes your customer data infrastructure. By eliminating isolated customer data sets, you can surface data quickly if a customer makes inquiries. Suppose some customers object to their data being held or will only let a portion of their data be held. In that case, you must be able to easily identify where certain data points live and what’s being shared throughout your data pipeline.
In addition, CDPs let you share consent updates and only forward data based on consent attributes, ensuring your business can enforce and abide by data policies and regulatory standards.
How does a CDP help with data compliance?
Customer data platforms can improve compliance with existing and emerging data privacy regulations, such as the EU’s General Data Protection Regulation (GDPR) and California’s Consumer Privacy Act. These laws require companies to afford consumers the right to access their data and to have it erased (the “right to be forgotten”). Meeting these requirements can be a burden when different consumer data is siloed across other systems and can be easily overlooked.
What does a customer data platform do?
Customers are interacting with businesses in new ways and through different channels. They leave behind bits and pieces of information—first-party data—during every interaction. A CDP ingests this first-party data and then standardizes and transforms it by matching individual customer identities from each system (that is, identity resolution) and combining them into a single consistent and accurate customer profile. Then it reformats the profile data to support a variety of marketing processes and systems, including CRM, analytics, marketing automation, A/B testing, content creation and personalization, and social media outreach.
But this isn’t a "one and done" process. The customer data platform continues to ingest new data from various sources, maintaining a continually evolving, up-to-date history of customer interactions.
How does a customer data platform (CDP) work?
A CDP’s job is to collect lots of data about your customers, create unified, individual profiles of those customers, and deliver effective, personalized communication to them across all channels.
To create that profile, a CDP has to gather a lot of information about the user. Why? To build a profile of the "perfect" customer, which will then be used as the foundation to find similar "perfect customers." With the right data, baselines, and algorithms, marketers can extend their audience and match that new group to their "perfect" customer. Marketers can continue to build on that foundation and find more prospective customers and expand the reach of their marketing campaigns.
What are customer data platform features?
By creating and maintaining a single, unified database of customer profiles, each with a consistent identifier, CDPs provide a single view of every customer and a reliable source of data for various marketing functions. They connect with other marketing platforms and systems, providing data to support campaign management, marketing analysis, and business intelligence. The analysis of this data can even suggest the optimum next move the company should make to engage or retain a customer.
Because it’s designed for marketing and controlled by marketing, a CDP makes it easier and faster for nontechnical people, like some marketers, to access and query the data. Marketing owns the data, so it doesn’t have to request it from the IT department, which can be a slow process.
How can you use a customer data platform?
There are many scenarios in which a customer data platform (CDP) can help your business, including:
- Connecting online to offline
- Customer segmentation
- Customer personalization
- Lead scoring
- Retargeting and lookalike advertising
- Product recommendations
- Optimizing conversion rates
- A/B testing
- Omnichannel automation
- Improved email deliverability
- Better and more online reviews
- Improve customer lifetime value (CLV)
Customer data platform (CDP) vs. CRM
CDPs are also sometimes confused with customer relationship management (CRM). Along with DMPs, they deal with customer data. However, a CRM has an entirely different purpose than a CDP.
| A CDP is designed for marketing. | It collects and unifies first-party customer data—from multiple sources—to build a single, coherent, complete view of each customer and then makes that data available to marketers to create targeted and personalized marketing campaigns. |
| CRM solutions are designed for sales. | They can, as well, help marketers gather customer data that marketing teams can use to build a stronger relationship with the customer. CRM solutions differ from CDP solutions in that they typically do not aggregate or analyze data from multiple sources. However, a CRM solution can use CDP data. |
CDP vs. CRM vs. DMP
A customer data platform works best in conjunction with other marketing technologies. It can piggyback on current data management platforms (DMPs) and customer relationship management (CRM) solutions.
Marketers can design programs that boost revenue and improve customer retention. They can be exponentially more responsive to their customers as new channels gain popularity.
Since CDPs are sometimes confused with data management platforms (DMPs) and CRM solutions, it is good to understand the differences.
- A customer data platform (CDP) is designed for marketing. It collects and unifies first-party customer data from multiple sources to build a single, coherent, complete view of each customer. It then makes that data available to marketers to create targeted and personalized marketing campaigns.
- A data management platform (DMP) is made for advertising, and is specifically focused on supporting web display advertisements. Geared to campaigns designed to gain new customers, a DMP gathers data from cookies. Unlike the data collected and aggregated by CDPs, the data collected by DMPs is often anonymized and retained for a short period of time, usually around 90 days.
- A customer relationship management platform (CRM) is a technology product or solution for managing all a company's relationships and interactions with all their customers and prospects.
CDP vs. marketing automation
Marketing automation systems typically handle automated, repetitive tasks such as sending out mass email marketing campaigns, scheduling social marketing posts, or updating marketing campaign data. They’re also used for segmentation, lead targeting, lead scoring, and more. However, as the number of customer channels grow, marketing automation systems struggle to leverage data from all those online and offline channels in a way that marketers can use to build, deliver, and scale marketing campaigns across digital channels. Customers expect truly personalized marketing, and marketing automation systems aren’t designed to quickly deliver true omnichannel and cross-channel marketing campaigns at scale.
That is where a customer data platform (CDP) comes into play. A CDP can ingest data from online and offline data sources and unify it for that all-important single view of each customer. With this 360-degree view, marketers no longer have to make educated guesses. They can easily see customers’ channel preferences, their buying propensity, website behavior, and product preferences. With these insights, marketers can successfully target the right customers with the right strategies.
How is a CDP different from a data warehouse? How is a CDP different from a data lake?
Data warehouses and data lakes are not tailored to a marketer’s needs. Data lakes are collections of data, usually in the same form as the original source systems. Unlike customer data platforms, data warehouses don’t process the raw data to make it more usable; they’re designed to support analysis, not drive customer interactions.
Neither can identify customers across different channels or devices. Without identity resolution, they can’t be used to build an all-encompassing customer view.
What are the implications of these differing purposes? Data warehouses and data lakes are usually updated less frequently—weekly or less often. Customer data platforms ingest data in real time, and the better ones make that data available instantly.
What are the benefits of CDPs?
By bringing all types of data (structured, unstructured, online, offline) together for a centralized view, CDPs improve customer experience (CX). They create a constantly updated 360-degree view of the customer from data gathered from every customer touchpoint—email, social media, loyalty programs, and in-store transactions—as well as existing data sitting in other internal systems, such as ERP, CRM, DMP, and more.
With the same view of the customer, different departments can work together because they’re able to see who is interacting with a certain customer, or if no one is interacting at all. With CDPs, businesses can deliver consistent messages and integrated customer engagement.
With a CDP, a business can precisely target individual consumers, personalize their experience, and cement a lasting relationship that improves retention rates. Personalization impacts revenue as well. Marketers who have mastered personalization drive 5 to 15 percent increases in revenue and 10 to 30 percent increases in marketing spend efficiency.
Because CDPs collect data directly from your customers, that data is more complete and up to date than data from other sources. A comprehensive, up-to-date view of customers makes marketing campaigns more efficient, effective, and unified.
Finally, having a centralized platform of reliable, integrated customer data enables you to make better, data-driven decisions and could even inspire new marketing programs.
Unifying customer data from different marketing and advertising systems is the only way brands will be able to eliminate blind spots and make every customer interaction matter.Rob Tarkoff Executive Vice President, Oracle Cloud CX and Oracle Data Cloud
Why do you need a customer data platform?
You may find that you have access to a lot of customer data, but you struggle to collect it, interpret it, and leverage it effectively. If you’re not able to provide a truly connected customer experience across multiple touchpoints, track customer behavior across all channels, and make recommendations to your customers based on their actions or behaviors, then your business would benefit from a CDP.
With a good data strategy and the right CDP, you can meet the goals of every marketer. You gain an instant, unified view of individual customers across online and offline touchpoints, allowing for real-time insights and interactions at just the right moment.
What is the future of customer data platforms?
At the heart of a Customer Intelligence Platform is the creation of a single unified customer profile for each customer that combines profile, transactional, and behavioral data from across the business. A unified customer profile provides not only with a complete view of each and every customer in the business, it provides with a complete view of the entire business.
For all of their benefits, CDPs are limited in their analytical and AI capabilities. The next evolution of these platforms is the customer intelligence platform (CIP).
Customer data platform (CDP) vs. customer intelligence platform (CIP)
Customer intelligence platforms incorporate anonymous, third-party data as well as first-party data. They use machine learning for predictive models and recommendations, which produces more powerful, actionable insights. Customer intelligence platforms can share those insights with sales and customer service systems—not just marketing systems. This provides every customer-facing team member with more intelligence to communicate better and provide superior customer experiences. This increased communication of data and intelligence among CIPs and other systems will open up new opportunities, such as omnichannel attribution, through which marketers can identify and compare the results of marketing campaigns among multiple channels.
Learn more about Oracle Unity Customer Data Platform