What is a CDP:
Customer Data Platform?

You’ve probably heard of CDPs before. It’s a frequently mentioned acronym in the marketing world right now. And for good reason. CDPs are here to stay and are radically changing marketing and e-commerce as we know it. In this comprehensive guide, we’ll give you all the information you need to understand what CDPs all are about. And we’ll show you why they’re designed to help businesses like yours grow. So read on.

1. The CDP platform explained

Imagine you have a business with an online store, website, and physical stores. To manage your business, you use many different software tools and marketing channels. They all collect massive amounts of customer data.

One day, you realize how effective personalised marketing is. And you decide to start building personalised marketing campaigns. Unfortunately, you immediately run into a gigantic obstacle: all customer data is spread across different platforms and there is no way to effectively unify this data in one platform. Which means it is not possible to build effective personalised marketing campaigns.

This is where the Customer Data Platform (CDP) comes in.

A CDP platform is (online) software that brings all your data together in one place. From these vast amounts of data, a CDP creates individual customer profiles. This means that all known behaviour patterns, properties, and sales information for each individual customer is bundled into a 360-degree profile. This allows you to understand your customer inside out and offer personalised marketing that meets their individual needs.

Not only does a CDP effectively combine your data, it also gives you the tools to use the data effectively using smart algorithmic software. This allows you to create personalised customer journeys that are designed around the individual preferences of your customer. By combining behavioural, transactional, and demographic data, a CDP learns:

  • What the behaviour and needs of each customer are
  • How you can best reach and convince your customers
  • When you can best reach your customers

These unique individual data can then be segmented in an infinite number of ways to create personalised marketing campaigns. Or you let the smart algorithm decide how and when each of your individual customers is effectively reached.

2. The history of the CDP

The marketing revolution has led to a number of important technological solutions over the past 20 years. The transition from handwritten documents to mainframes to today’s cloud-based solutions was an exceptional development. The rapid innovations in technology and computing power have led to an ever-increasing number of potential tools to enable better marketing services.

It started with the development of the first Customer Relationship Management (CRM) software in 1985 called Telemagic, which was released for MS-DOS by creator Michael McCafferty. This digital solution made it easier for businesses to manage their relationship data and customer interactions.

The next step was the introduction of Data Management Platforms (DMPs) in the 2000s, which allowed organizations to integrate, organize, and activate customer data and build anonymous customer profiles for advertising programs. Additionally, DMPs made it possible to plan and execute marketing campaigns, which revolutionized the marketing world.

In the 2010s, the availability of marketing software became more fragmented as software providers began to focus on specialized solutions. This unfortunately led to organizations sometimes using more than 20 different software systems, each of which stored and analysed customer data. The explosive growth of mobile use and the rapid rise of social media resulted in a new generation of tech-savvy customers. Organizations had to adapt to this revolution by using different platforms for their marketing campaigns. This adaptation, however, led to the fragmentation of valuable customer data because these different platforms could not easily communicate with each other.

This was the impetus for David Raab to launch his idea for a new platform in 2013: The Customer Data Platform (CDP). Before the invention of a CDP, marketers were not able to effectively use all the data they had access to. The invention of the CDP changed this by solving the problem of data fragmentation. The CDP can communicate with both CRM and CMP systems and can send data back and forth between these platforms. This allows organizations to finally offer a personalised customer experience across all sales channels. This has led to new omnichannel marketing opportunities.

3. Distinguishing a CDP from a CRM and DMP

Although they may overlap in functionality, a CDP is not the same as a Customer Relationship Management (CRM) system or a Data Management Platform (DMP). These different tools can complement each other, but what are the actual differences?

A DMP is a data management platform designed for advertising. It collects and organizes data from various online, offline, and mobile sources. To acquire new customers, a DMP collects data from cookies. This data is often anonymous and is stored for a short time. On the other hand, the data collected by a CDP is yours and is available whenever you want to access it.

CRM is a customer relationship management platform primarily designed for sales. It is a solution for managing all relationships and interactions with customers and prospects. The goal is to improve business relationships and, as a result, grow your business.

As a customer data platform, a CDP is primarily designed for marketing. It collects and links first-party customer data to build 360-degree customer profiles for each individual customer. And it provides marketers with the tools to create hyper-personalised marketing campaigns.

4. The importance of customer data

Studies show that most customers are willing to pay more for a better customer experience. Additionally, it has been proven that the main reason for a customer to stop buying from you is that you have not met their personal needs. Today’s customers expect personalised experiences. So you better know who they are. And show them what they want to see, when they want to see it.

Offering personalised customer experiences without customer data is simply impossible. If you do have the data, but it is not easily accessible due to the use of different marketing sources, it is difficult to meet the expectations of your customers. And if you can’t meet their expectations, they’ll go elsewhere. And getting customers back is much harder than keeping them. That’s why it’s so important to unify and make your customer data easy to use in one place. A good CDP offers this possibility and helps you:

  • Increase conversions
  • Increase revenue
  • Improve marketing ROI
  • Build a loyal customer base
  • Communicate effectively with customers through multiple channels

But it all starts with customer data.

5. Customer data platform features

Now that we have explained what a CDP is, let’s dive a little deeper and look at all the different potential features that a CDP offers. Due to the many different features, we will focus on some of the most important ones:

As mentioned, a CDP aggregates all data from multiple sources on one platform. In addition, this data is also sorted and analysed in a clear and visible way. You can therefore interpret and use the data as you see fit. For example our CDP Spotler Activate shows your dashboard with unique insights on the landing page of the platform, with the most important data being displayed in different blocks:

  • Acquisition: Shows a visitor funnel that divides website visitors based on their purchase phase in the customer journey.
  • Retention: Shows the retention matrix that divides customers based on loyalty segmentation and lifecycle analysis.

This insightful data provides an overview of your total customer account and segments it into different groups. With these segments, you can easily set up targeted marketing campaigns.

A CDP provides the tools to use your customer data and set up targeted marketing campaigns. Spotler Activate distinguishes between three different campaign types, namely:

Smart campaigns

Show relevant content to specific target groups without focusing on the individual purchase phase of the customer journey.

Hybrid campaigns

A mix of your own rules and smart algorithms based on a specific website trigger. Examples of these are abandoned cart campaigns and mailing automations.

Conversation campaigns

These campaigns are used to start a conversation with your website visitors. This type can be used, for example, to create a shopping assistant that guides your visitor through the purchase journey.

By combining external data with your own customer data, you can set up even more effective marketing campaigns. The interplay between these two types of data collection makes targeted campaigns possible, such as sending an automated email highlighting air conditioners on an exceptionally hot day.

Examples of external data that can be used in a CDP such as Spotler Activate are:

  • Real-time local weather information
  • Local traffic intensity
  • Location data
  • Technology

The algorithm that integrates this external data is constantly learning from the results. This leads to even more effective targeting over time.

The most important feature that Spotler Activate’s customer data platform offers is the ability to create customer journeys. A customer journey is divided into different phases that your customer goes through in the purchase process of a product or service. Based on the segments we explained earlier, each customer is assigned to one of the following phases. And depending on this phase, you can show them different content in line with the specific phase.

By combining the 360-degree profile function with that of the customer journey, Spotler Activate enables you to show specific individual content at times when your customer wants to see it.

Dynamic personalised content can make a difference within an individual customer journey. For example, highlighting recommended products based on past behaviour can encourage your customer to go ahead with another purchase. Many CDPs offer tools to show dynamic content in email campaigns and on your website. To use this feature, however, programming skills are often required that most marketers do not have. To solve this problem, Spotler Activate has a drag & drop feature that makes showing dynamic content incredibly easy. This makes applying this killer feature accessible to every marketer.

6. CDP benefits

It’s nice to know what a CDP is. But what you really want to know, of course, is how it can help your business grow. A CDP, if used correctly, offers many benefits.

Less programming skills required

Marketers love what they do, as long as they can focus on growth. Unfortunately, using the enormous amount of customer data from many different data sources requires a lot of programming skills. A CDP eliminates this disadvantage by bundling all data and making it accessible and easy to use. A good CDP is so user-friendly that no programming knowledge is required. This eliminates the dependency on IT, saves development costs, and a lot of time for your marketing teams.

Increased revenue and conversion rates

A CDP offers personalised customer journeys based on individual 360-degree profiles. By showing customers what they want to see at the right time, the chances of them buying your product are greatly increased. This leads not only to more revenue, but also to more customer satisfaction.

Finding new business

All customer data in one place makes it easier to create customer segments. By learning from the results that these segments generate, you can create segments that are even more targeted. For example, the data shows that it would be valuable to create a segment specifically targeting male bargain hunters aged 18-22 in Berlin. The chances of a higher than usual conversion rate from such a specific target group are high. With a CDP, you can work with the data you have to offer targeted marketing. Which also makes it easier to find new business.

Compliance with regulations

Governments around the world are increasingly cracking down on the collection of third-party data, making it more difficult to collect and share individual customer data. With a CDP, you can collect customer data from your own sources and you are the owner of the data. And it therefore enables you to become and remain GDPR compliant.

Ownership of your data

The popularity of selling products on large platforms such as Amazon is increasing, but this strategy has one major disadvantage: you are not the owner of your data. In today’s world, customer data is one of the most valuable resources. Not being the owner of your data not only significantly reduces the value of your business, but also makes you heavily dependent on these large platforms and their rules. You want to be the owner of your data so you can use it effectively. A CDP makes this possible.

360-degree customer profiles

By having a CDP create unique customer profiles for each individual customer, you gain insight into every part of the customer journey. When a customer contacts you, using a CDP ensures that you know immediately who you are talking to. Purchase behaviour, preferences, orders, and other relevant information is displayed directly during communication with your customer. Moreover, the information you have about each individual customer allows you to offer personalised marketing.

Optimise marketing campaigns

With a CDP, you gain insights into how different campaigns are performing. By understanding the effectiveness of your last campaign, it becomes easier to set up your next campaign more effectively. With a CDP, you can learn from the data generated by each individual campaign, which increases the return on investment in marketing campaigns in the long term.

Omnichannel and a CDP go hand in hand

The future of commerce is not only digital. It combines physical sales with online sales to offer seamless customer experiences through all your sales channels. By the 360-degree customer profiles and all data stored on one platform, a CDP makes this transition a lot easier. It allows you to offer a complete brand experience on every channel, while also keeping the experience unique to meet the needs of each individual customer.

7. Selecting the right CDP

Hopefully, you now understand what a CDP is and how it can potentially benefit your business. While many CDPs offer several of the features mentioned earlier, there are strong differences between providers. Your business is unique and needs a CDP that fits your specific needs. Therefore, we recommend that you think about what you expect from a CDP and which features may benefit you before choosing a CDP provider.

How will you use a CDP? Do you want the CDP to have a self-service proposition, so that you don’t need any additional programmers or consultants to use it effectively? Or do you want a high degree of customization to meet your business needs?

With the answers to these questions, you can align your specific requirements with the offerings of potential providers. When you reach a shortlist of potential CDP companies, you could ask them to demonstrate their platform. You might even ask them how they would address a specific challenge that you want to solve with the help of a CDP. By seeing a specific solution to your problem, you will get a sense of the company’s CDP potential.

After this initial selection, you can make your choice. You are now ready to give your business a boost by taking advantage of everything a CDP has to offer.

8. About Spotler Activate

Spotler Activate is a customer data platform for medium-sized B2B and B2C marketing teams that want to provide their customers with personalised experiences without having to invest a lot of time and resources.

Our platform is user-friendly and offers a self-service feature that ensures you can use our CDP effectively while minimizing the dependence and need for external help. By offering marketers unique drag-and-drop functionality for presenting dynamic personalised content, we have made using CDPs for marketers without programming skills a lot easier.

We offer the power of complex and advanced marketing technologies in an accessible and user-friendly customer data platform that any marketer can work with. Even without programming knowledge or external advisors.

9. Frequently asked questions about a CDP platform

A CDP platform is software that brings all your data together in one place. From this vast amount of data, a CDP creates individual customer profiles. This means that all known behavioural patterns, properties, and sales information of each individual customer is bundled into a 360-degree profile. This allows you to understand your customer inside out and offer personalised marketing that suits their individual needs.

A CDP not only effectively combines your data, it also gives you the tools to use the data effectively with the help of smart algorithmic software. With this, you can create personalised customer journeys that are designed around the individual preferences of your customer.

Spotler Activate is an example of a CDP platform. It is extremely user-friendly and therefore suitable for companies that want to start with personalization in a simple way. Thanks to Spotler Activate’s drag & drop features and smart AI, you do not need programming knowledge to fully exploit the potential.

The implementation brings several benefits with it. It eliminates data silos by bringing all data together on one platform. By converting this data into individual customer profiles, you can then display relevant content to your customers, which greatly increases the chance of conversion. And because the customer journey is so relevant to your customer, they feel understood more easily. This can lead to long-term customer loyalty.

Curious whether a CDP is also something for you?

Our consultants are ready to show you the capabilities of our CDP Spotler Activate. This way, you can quickly determine if it suits your organisation.

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