What is a Customer Data Platform?
A Customer Data Platform is a marketer-managed system that creates a persistent, unified customer database that is accessible to other systems — David Raab
Before we even start discussing a CDP, what is Customer Data?
Identity Data — Identity data builds the foundation of each customer profile which uniquely identifies each customer (Name, location, account information etc.)
Behavioural Data — Behavioural data allows businesses to understand how each customer has engaged with their organisation, whether through certain actions, reactions, or transactions (Transactional, online activity etc. )
Qualitative Data — This type of data collects any motivations, opinions, or attitudes expressed by a business’s customers.
Now, what is a Customer Data Platform?
The CDP Institute defines a Customer Data Platform as “packaged software that creates a persistent, unified customer database that is accessible to other systems.” It is a system that collects and stores all your customer data, for analysis and use by marketers. A CDP makes it easier for marketers to build and execute targeted, data-driven strategies.
Have you ever wondered what Google, Uber and Amazon have in common?
All 3 companies have the same challenges — Disconnected data (multiple data sources that are not connected) and delayed data (No real time data, on average 54% of the data becomes useless after 2 hours).
The solution for these challenges is building a unified customer data platform. You will be able to build more insights by connecting multiple data sources. Once we build a unified dataset which is more real time/recent, we would be able to act on it quickly to better marketing spend.
More and more organisations across industries are leveraging platform strategies to better serve their customers. With a platform strategy, interactions between external providers and consumers are made easier through the integration of data, analytics and delivery platforms which usually reduces friction and expands potential markets beyond what was achievable in the past.
Some example tools that exist today —
How does a High Level Data Flow look?
4 Steps in the building a Customer Data Platform
On a high level, a Customer Data Platform can be summarised in 4 steps as follow:
Collection
Normally in a company, you probably have multiple datasets or views that relate to a customer. This could be your bookings table, customer profile table, historical channels of the customer etc. This step involves collecting all the individual datasets and preparing them for the unification step.
Unification
Since our goal of building a Customer Data Platform is building a unified dataset that combines all the data points in the collection step, this step involves merging all the datasets into a unified dataset. At this point we have a unified raw dataset which we have combined using all the available datasets in the company. This is also where we build our ETL pipelines (may be aggregating/updating it daily)
Analytics
Next we want to build some metrics using this dataset. An example could be build a CLV(Customer Lifetime Value) of the metric using the different raw datapoints that we have in the raw dataset. It becomes important to build these metrics at this step, since we want this dataset to be the single source of truth for everything customer related. At this step we are precisely able to map a customers journey on our platform and we have a full 360° view of the customer.
Delivery
Now since we have all the metrics related to a customer, we want to be able to use them in real time in our marketing systems. An e:g here could be that may be we want to send out coupons to some of our customers that have a high CLV, building email targeting campaigns or building audience targeting. It is this steps where all the work that we have done in the previous steps comes to life, since this is the step where we can take actions on all the available metrics.
Benefits of building a Customer Data Platform
- Single View of the Customer - Purpose of a CDP is to build and unify all the data sources and have a comprehensive view of a customer.
- Agility — A CDP provides organisations a tool to build and connect a flexible technology stack that adapts to ever-changing consumer behavior and changing technology trends
- Democratization of Data — Different Business Units within the company depend on different facets of a customer to be able to move forward and drive decisions in the company.
- Operational Efficiency — Since we have a central location for a customer, there would be one place to have all the marketing campaigns which means that it would be the most efficient way to build campaigns and have operational efficiency.
More blogs to read —
Some books to read —
https://www.amazon.de/dp/0655404716/ref=sr_1_2?keywords=customer+data+platform&qid=1582455029&sr=8-2
Please let me know your thoughts about your experience of building a CDP and share your learnings!
