Billy Loizou (main photo) is the VP go to market APAC at Cheetah Digital. In this guest post, Loizou offers expert tips to get the maximum out of your Customer Data Platforms…
In the past decade, first-party data has exploded. Marketers now have more first-party customer data than ever before, and it’s spread across more systems than ever before too. And expectations to deliver highly personalised experiences have also increased exponentially.
To help organisations make the best use of their customer data to drive success, in 2013 David Raab founded the Customer Data Platform (CDP) Institute, a vendor-neutral organisation with over 10,000 members
The original thought leader who coined the now popular term “CDP,” David spoke at the recent Cheetah Digital Signals21 panel, sharing the four key considerations he believes organisations need to make when identifying the role of a CDP to maximise its benefit and optimise privacy best practice.
What is a CDP? An expert definition
According to David, the formal CDP Institute definition of a customer data platform is, “packaged software that builds a persistent unified customer database that’s accessible to other systems.”
‘Packaged’ software means it’s something you ‘buy’, it is not a data warehouse or a data lake that you typically ‘build’ as a custom project.
“Unified persistent customer database has multiple components to it,” David says, “It’s unified as it takes in data from all sources. This means it doesn’t just work with some subset of data.”
A customer relationship management (CRM) system, for example, will work usually with the data the users have entered into the system, without usually importing data from other sources. A data management platform (DMP), traditionally works with cookies that get ‘thrown away’ after 60 or 90 days.
David says CDP has a unique combination of features which makes it the ideal platform.
“No one feature is absolutely unique only to the CDP, it is the combination that makes it different. The combination is there because It is designed to build those persistent, shareable profiles for all the other systems.
“Even though they’re excellent at what they do, they were designed for some other purpose and were therefore optimised for that purpose, which makes them not as good at doing what a CDP does,” David explains.
Getting smart about your CDP
There are two clusters of CDPs to “choose” from, David explains. The first is the CDP systems that focus on profile building and the second is the cluster of CDP systems that are targeted to marketing departments:
- Profile building CDPs: These involve vendors which tend to sell up into the enterprise, where the enterprise wants a unified customer profile that can be shared across the organisation including marketing, sales, service, support and operations.
- Marketing-targeted CDPs:These are the ones that have built-in campaign management and built-in predictive modelling and analytics.
David explains, “The vendors tend to fall in those two big buckets, the ones that are sold to marketing departments and those that are sold to mid-tier companies and big enterprises.
“If you do not understand CDP’s, think of them as two broad segments of the ones that focus on data and are more enterprise level. Versus the ones that are more for the marketing department and have a lot of marketing functions.”
David highly recommends organisations commit to some type of training when it comes to understanding their CDP better, to maximise the benefit of their martech investment.
“It’s important to train the users on the data that the CDP provides, what it’s suitable for and what it’s not suitable for. Predictive modelling scores are a good example of something that might be labelled one thing but often can be misused accidentally if you don’t understand what you are looking at,” David adds.
CDPs, privacy and data safety
With GDPR in Europe and CCPA in California, plus a plethora more privacy legislative instruments being passed globally, organisations increasingly have consumer privacy top of mind.
David says CDPs allow organisations to comply with GDPR, as effective implementation of a CDP in many ways overlaps with compliance requirements of privacy regulations.
“You have to find where all your customer data sits and you need that to deploy a CDP. You also have to do that to comply with privacy regulations, you have to be able to pull that data together and give someone a look at it,” he explains.
“For example, you have to be able to track all the processing that you’ve done. It is easy if you’re doing all your processing by pulling data out of the CDP. There’s a choke point to make sure that data is only pulled out for appropriate reasons, and you have to track consent. You need a place to store that consent, and a CDP is a perfect place to store that consent.”
The work organisations have to do to comply with privacy, essentially becomes the work that’s required to deploy a CDP.
“It makes sense for the CDP to be the system to do that, because beforehand companies typically didn’t have it all in one place,” David adds.
Building or buying a CDP?
Deciding whether to build or buy a CDP, David says that often organisations will actually do both as a ‘balance of two.’
“Even if you bought a package CDP and everything that goes on top of it in terms of what else would get built, the IT team will still need to connect the data to deploy that package CDP. This is effectively building the CDP in-house,” he says.
David says many corporate IT departments don’t have those resources to build a CDP from scratch. This is especially the case if they’re in an industry that does not traditionally work with customer data, and starting with the CDP is really not the ‘natural’ place the internal teams would go to when understanding customer data.
“It’s not black or white, but it’s simply a question of what’s the optimal use of my limited resources? There’s no point in starting to bite off more than you can chew. Departments want to build databases however there is more to it,” David adds.
CDPs are a crucial platform for organisations that help them understand and build a persistent unified customer database accessible to other systems. With two specific types of CDPS, profile building and marketing-targeted, these can ensure organisations get the most out of their data.
