The challenges brands face in making the most of their customer data aren’t new, but the category of next-gen tools known as Customer Data Platforms (CDPs) is relatively fresh on the scene. That means there are competing claims and varying tech offerings, which can lead to confusion and hesitation on the part of would-be buyers. Brands who want to harness the power of their customer data see a still-coalescing category and often feel uncertain about the investment. Maybe it’s more trouble than it’s worth? Or maybe they can build it themselves? But if a CDP does the things it should do, it pays off in three distinct ways: increasing revenue, cutting down on current costs, and enhancing existing investments in other tech tools.
Designed to help brands achieve their customer-centric goals, the right CDP will gather customer data from disparate sources, resolve identities, build customer profiles, power analytics and marketing, and more. The platform should address a range of use cases, from reducing churn and acquiring high-value customers to unlocking personalization at scale, allowing companies to find and prioritize opportunities to grow their business and keep customers coming back.
Using data to find and cater to high-value customers
Customers are the lifeblood of a company, and CDPs are uniquely designed to nurture the relationship between brand and consumer. The goal is to cultivate more high-value customers — the top 5% of a brand’s customers often account for up to 50% of their revenue. Using data to personalize and improve the customer experience is a powerful way to increase the size of the high-value segment.
Effective ID resolution as the basis for personalization
Customer data is fundamentally uncertain because humans go through so many changes in their lives — one customer can have multiple addresses, several emails, and perhaps even a different name. Quality identity resolution solves this by identifying the same individual across all data sources, providing brands with a clear identity of each customer. Brands can then build an in-depth profile of a customer’s preferred products, services, types of messaging, and more. By speaking to their customers at an individual level, brands boost customer loyalty and increase lifetime value.
Monitoring real-time consumer behavior and market trends
By providing brands with a complete and up-to-date customer view that reflects new information as it comes in, CDPs help them cater to their customers in real-time. The ability to make quick changes to brand strategy as needed means that customers receive relevant messaging at every turn.
High-value customer acquisition
All customers are not created equal — a high-value customer represents a big chunk of business and their profitability will rise the longer they stay with you. Given the cost of acquiring new ones, it’s in a brand’s best interest to identify and take care of their current best customers. With the help of identity resolution, brands can use a range of data including product preference and lifetime value to locate high-value customers, and then make lookalike audiences in order to find similar customers.
If data is the new oil, then CDP is like a refinery and a supply chain all in one, getting the data ready to use and getting it where it needs to go.
Increase efficiency and effectiveness
If data is the new oil, then CDP is like a refinery and a supply chain all in one, getting the data ready to use and getting it where it needs to go.
Unification of siloed data and more efficient data management
Customer data is typically spread across a vast amount of tools and systems that don’t communicate with each other. With legacy tools and systems, teams spend their time hunting data (or waiting for others to collect it) rather than examining and pulling impactful insights from it. By combining data from various tools and systems, a CDP creates a unified database of your customers — a single source of truth that all systems draw from to power analytics, personalization in marketing and service, and financial forecasting, among other initiatives.
Cost savings and improved performance with marketing communications
Better knowledge of the customer base allows for more precise targeting, which lets marketers hone in on their intended audience and only spend money on ads and offers that are more likely to be successful. And once they identify the right audience, they can draw from rich data to better personalize ads and experiences, yielding a better return on marketing spend.
Amplify existing technology investments
Brands today already have investments in an array of technology to power their business. A key part of a CDP’s success lies in its ability to integrate and work smoothly with any existing tech tools. By feeding downstream tools with the most accurate and up-to-date customer profiles, brands can dramatically increase performance.
For example, a good CDP will help brands power up personalization tools like Braze and Persado to formulate and deliver the best messages to the right customers, or feed Business Intelligence tools like Tableau and Looker with more accurate customer profiles, resulting in better information. It can also hydrate big marketing clouds like Salesforce, Adobe, or Oracle with more reliable profiles so that you have solid data going in and solid results coming out. A fully flexible and interoperable CDP lets brands keep going with what they’ve got and not interrupt any existing workflows while improving the impact of these tools.
An engine for customer-centricity
The right CDP will place customers at the center of your business, allowing you to set strategies and tactics based on customer behavior and speak to customers like the individuals they are. When done right, the outcome is happy, loyal customers and an advantage over your competitors. And on the way to increasing revenues by cultivating faithful customers, a good CDP also cuts down on current costs around data management and marketing and protects the tech investments you already have. Not a bad deal at all.
Interested in learning more about what a CDP might look like in action? Check out our guide to using customer data across the enterprise.