What to look for in a Customer Data Platform
What are CDP platforms?
In today’s constantly connected age, businesses have more data flowing into them than ever before. While businesses have greater access to computing power than they had in the past, many struggle to take full advantage of the data flowing into their databases. This is where a CDP platform comes in. CDP platforms act as a means to disseminate, aggregate, and fully utilize that data. A customer data platform (CDP) is a software tool that retailers use to collect demographic data, transactional data, and behavioral data, which when combined can provide a richer view of customer behaviors.
Without a CDP, many businesses host their data in isolated silos. While they’re collecting retail customer data, the disparate nature of this data keeps it from being fully useful. Having a divided database means having an incomplete picture of who your customers are, and how you can reach them. As a result, businesses that keep their data siloed struggle to create meaningful customer experiences. This is where CDP platforms excel, as they break down the walls separating these data silos, and create a data flow across channels and departments.
Furthermore, CDP platforms can help marketers create highly focused customer segments defined by characteristics such as age, gender, purchase history, location, or even specific behaviors. Marketers can then target these customer segments with marketing campaigns, promotions, and other touchpoints that are more likely to result in increased engagement, customer retention, and even revenue.
To learn more about customer segmentation, read our blog about customer segmentation in retail.
CDP platforms can exist beyond just your website and sales teams as well. A wide range of departments can benefit from the data insights provided by a CDP platform. For example, in-store managers can use a customer data platform to monitor purchasing behaviors and foot traffic in their particular store. Additionally, a digital marketer can use a customer data platform to identify the specific products that translate to the highest conversion rates and return purchases.
CDP platforms have a multitude of use cases, and when deployed can result in a deeper understanding of your retail customer data, which you can then use to launch more engaging and impactful campaigns.
CDP platforms serve as an effective means for marketing teams to fully optimize their retail customer data. That being said, there are plenty of customer data platform vendors to choose from, and finding the right fit can make or break your success with them.
How to find the best CDP platforms
There is an abundance of retail data solutions available, but finding the best CDP platform for your business should be of top priority. Not all CDP platforms are created equal with some platforms specializing in specific industries. For example, Lexer’s CDP focuses on helping retailers aggregate their customer data and develop a richer understanding of who their customers are, the content that engages them, and the products that keep them coming back for more.
There are a number of factors to consider when choosing the best CDP platform to onboard for your business. And following these steps will prove useful in determining the best fit for your business.
What to look for in a top CDP platform?
First things first, you want to bring all the internal stakeholders to the table to play a role in the selection process. Ideally, the customer data platform vendor you choose will be incorporating data from a broad range of departments, so it is crucial that all who will be interacting with your potential platform have some weight in the decision making process.
When selecting customer data platform vendors, you want to define specific use cases. Ask your pool of internal stakeholders, ‘why are we in need of a CDP platform?’ or ‘how will your business benefit from having a unified data platform?’ Answering these key questions and identifying specific CDP use cases can ensure that you get the most out of your CDP platform in the future. Some potential CDP use cases include:
- Integrating offline and online retail customer data
- Getting a better understanding of your customer journey
- Creating a more personalized customer experience
- Developing more effective and personalized marketing campaigns
- Enhancing your omnichannel customer experience
Once you’ve defined how you’ll use a CDP platform, you should focus on the software that you’ll integrate into that customer data platform architecture. The best CDP platforms allow for a multitude of software integrations, connecting your customer data across multiple channels so that you can get a deeper understanding of your customers’ wants, needs, and behaviors.
Next, compile the list of customer data platform vendors that would be a good fit for your business based on use cases and potential use cases. Finding the best vendor from what’s available will depend on your business’s specific needs, but there are a few factors worth considering. For instance, you’ll want to ensure that the CDP vendor of choice has a good track record for your pre-defined use cases. Additionally, you’ll want to check that your customer data platform vendor has solutions for data compliance with the GDPR and CCPA.
When selecting a CDP platform you’ll want to consider the potential ROI, especially when stacked against the costs. Onboarding a customer data platform isn’t cheap. However, CDP platforms reduce costs across departments by design. By onboarding a CDP platform you can reduce the hours spent running complicated data analyses, and unloading some of the labor weight from your data and IT teams. Additionally, when effectively deployed the best CDP platforms will provide you with improved marketing performance, which in turn can drive conversions and long-term revenue. By accurately calculating the potential ROI for your business you can ensure that your CDP platform can deliver the best results possible.
Customer data platforms vs CRMs
When selecting customer insight tools many businesses also consider a CRM or customer relationship management systems. While CRM and CDPs may appear similar at first glance, they’re actually quite different forms of customer engagement platforms. Each serves a different purpose, and understanding that difference can go a long way in helping you find the vendor of choice.
Both CDP platforms and CRMs collect customer data, however, how that data is managed differs across each platform. CRMs for instance, organize and manage interactions between your customers and your team. On the other hand, CDPs gather data on complex customer behaviors and interactions with your products and services.
Taking a more focused look at the two, a CRM will provide you with a customer’s name, a record of interactions they’ve had with your team, as well as any support tickets they’ve filed with your business. Meanwhile, a CDP platform will take a deeper approach, and will allow you to hone in on every aspect of the customer journey, from how they discovered your business to the interactions they have with your team and your product.
Which should you choose a CDP or a CRM? Well, the answer to that question will depend on the specific use cases for your business. Some businesses even deploy both, should they need it. A CRM is going to be most effective for customer-facing roles, such as retail staff, sales staff, or customer service representatives. Businesses that interact directly with customers directly find significant use out of a CRM as they’re able to log specific interactions such as support tickets and form fills. A CRM should be used to help customer-facing staff to obtain new customers and retain existing customers by making the process of managing customer relationships easier and more accessible.
Alternatively, CDP platforms act as a tool for non-customer-facing departments such as marketing, product, and leadership. While sales is included as a potential use case, the ultimate goal of a CDP is to help develop a deeper understanding of all customer data which can then be used to inform business decisions. A CDP platform operates by collecting data from all customer touchpoints including website traffic, transactions, in-product user behavior and so much more. This data is then compiled into a single customer view that allows users to develop highly refined segment personas. These detailed customer profiles can enhance marketing tactics, provide feedback to product teams, and assist leadership in understanding the cost acquisitions and lifetime value of their customers.
In some instances, a CDP platform and a CRM may both be necessary to fully improve the processes of your team. When used congruently, they provide a streamlined customer experience and can help you develop a richer connection with your customers which in turn can drive revenue and retention.
Top CDP platforms
Ultimately, top CDP platforms help businesses by getting a better idea of who their customers are, what kind of content engages them, the products that lead to bigger conversions, and the touchpoints that keep them returning to your business. Top CDP platforms act as an incredibly useful retail analytics tool in a marketer’s toolbelt.
Choosing a top CDP platform for your business can help you gather a wealth of insights that you can then use to improve customer experiences, drive conversions, improve customer lifetime value, and grow revenue. However, the CDP platform you choose should be able to adequately meet your specific needs and use cases.
Ideally, your customer data platform of choice should be able to integrate all of your disparate data sources into one platform. A top CDP platform will also make navigating and using this customer data as simple as possible. Additionally, the onboarding process should be simple, effective, and relatively quick. The sooner you deploy your CDP platform, the sooner you can start to realize a significant ROI. With an effective CDP platform, you won’t need the hands-on assistance of an IT or data analytics team to gather an in-depth understanding of your customers. Instead, you can create detailed customer profiles and deploy advanced customer segmentation all in a few clicks.