What are Customer Data Platforms?

By Megan Wells

Customer data platforms (CDPs) are more popular than ever, and continue to grow. In 2021, the CDP industry brought in over 1.6 billion dollars in revenue, and by 2022, that figure is expected to rise by another 15% to 1.9 billion.

 

With so many different data platforms on the market, what’s fueling the CDP industry’s stratospheric growth? It’s simple: the most competitive companies are constantly looking for ways to improve their marketing, product, and customer experience–and CDPs help them do that.

 

With around 160 CDPs to choose from, there are a plethora of options for companies looking to elevate their customer data and analytics. 

 

Read on to learn how CDPs work, the types of data CDPs collect, and how CDPs can help optimize your organization.

What exactly is a CDP?

The CDP Institute defines a customer data platform (CDP) as a collection of software that creates a persistent, unified customer database that is accessible to other systems. Data is pulled from multiple sources, cleaned, and combined to create a single customer profile.

 

The sheer amount of customer data to sift through is staggering: In 2020, internet users generated 1.7 megabytes of data per second. In today’s competitive market, the challenge for business leaders isn’t getting enough data, but making sense of it. With so many data siloes–externally and internally–CDPs allow businesses to do just that.

 

CDPs accomplish this through the following components and processes:

 

  1. 1. Data Collection

First, CDPs collect data from a range of sources. The data is collected via application programming interfaces (APIs), event trackers (e.g javascript tags and SDKs), server-to-server integrations, and manual imports. Some of the sources CDPs pull data from include:

    • Web 
    • Mobile apps
    • Digital products and purchases
    • IoT devices
    • Social media platforms
    • Call centers and live chat data
    • NPS scores

 

  1. 2. Data Normalization and Implementation

Next, the data normalization process organizes data into a common format and removes redundancies. This step often requires data to be converted and encrypted into one format, oftentimes through the process of ETL.  

 

  1. 3. Enrichment

Once the data is normalized, the enrichment process makes the data more accessible to businesses. This includes actions such as changing IP addresses into geolocation, extracting IDs and data from cookies, or taking the device type from the user agent string.

 

  1. 4. Analytics Reports

Using enriched data, CDPs can produce analytic reports that provide insights into consumer behavior and the customer journey. These reports can help optimize business functions, such as improving advertising campaigns, increasing web engagement, or tracking daily active users (DAU).

 

  1. 5. Profiles, Audiences, and Segments

CDPs create new user profiles or update existing ones upon receiving new data. These profiles keep businesses informed about individual users, including device usage, engagement history, location, and more. Once user profiles are created, businesses can organize profiles into segments. These can be organized by common attributes, like location or behavior. Segmenting customer profiles and data enables brands to better personalize customer experiences and preferences–which can drive profits. 

 

  1. 6. Single Customer View 

Finally, CDPs can aggregate user profiles into a Single Customer View (SCV). This is often a single page and a holistic representation of customer data. Businesses can leverage SCVs to learn how to better interact with customers or tailor marketing messages.

 

By gaining better insight into a customer’s journey, businesses can improve the performance of their advertising and marketing activities, leading to overall greater audience activation and honing in on specific customer touchpoints.

Types of data CDPs collect

  • Identity Data 

This is personal data about the customer–such as their name, birth date, and address–and is usually sourced from direct customer interactions such as purchasing a service or product. It is often the most unique element of a data set since it includes details that are different for each profile created.

 

  • Descriptive Data
    This data type expands upon identity data to create a fuller picture of the customer. This could include customer career information such as previous employers, or lifestyle information, like company annual revenue, or job title.

 

  • Behavioral Data

This data is information collected from customer interactions or activities with an organization, including the steps they took to reach you. Behavioral data can help businesses better understand varied customer touchpoints while interacting with your business. For example, tracking when an email is opened, when a product is purchased, or cart abandonment. 

 

  • Qualitative Data

This data utilizes customer reviews and feedback on products and services. This is often a “catch-all” data type–any information that cannot be directly explained by hard numbers falls into this category.

What’s what: CDPs vs CRMS vs DMPs

CDPs are not the only tool businesses use to collect, organize, and analyze data. In fact, there are several other platforms leveraged by brands, including customer relationship management platforms and data management platforms. Although these systems are often mistaken for each other, each is different and can be utilized for specific functions within an organization.

 

  • Customer Relationship Management Systems (CRMs)

CRMs log interacting data with customers. These are primarily utilized by customer-facing interactions with your team, including sales and customer service representatives. In short, CRMs are used to manage customer relationships, whereas CDPs are used to manage customer data.

 

  • Data Management Platforms (DMPs) 

DMPs are software technologies that allow businesses to collect, analyze, and present data. As opposed to the comprehensive analysis CDPs offer, DMPs' primary usage is limited to packaging and repackaging data. Still, DMPs have their uses, such as collecting data for targeted advertisements, and often work in tandem with CDPs.

Benefits of CDPs

In addition to collecting, organizing, and analyzing data, there are other benefits to utilizing CDPs.

 

  • Unify all data and break down silos: A data silo occurs when data is available to one department but not another, or when data is collected across multiple tools and apps. CDPs mitigate the challenge of siloed data by unifying data, adding missing data to customer profiles, or parsing and connecting anonymous data into profiles.

 

  • Collect and optimize first-party data: First-party data is one of the most powerful types of data brands can collect because it comes directly from your audience. CDPs focus primarily on collecting first-party data, so businesses that utilize CDPs can be confident they’re accessing and leveraging the most accurate and raw audience data.

 

  • Understand customers better: The better the customer experience, the more valuable the product–86% of buyers are willing to pay more for enhanced customer service–making informed behavioral analysis a key component of any marketing effort.

 

  • Improve personalization: CDP customer profiles give businesses the tools to dynamically engage their audience. By implementing segmentation, brands can personalize the service, product, or ad campaign customers receive. And, as mentioned above, customers want a personalized experience–and CDPs can make that possible.

 

  • Support omnichannel marketing: Continuous intelligence streamlines omnichannel marketing efforts by supplying consolidated data, saving businesses from the headache of communicating disparate data across various channels.

Scuba’s Continuous Intelligence Elevates CDPs

CDPs are a powerful tool for brands to drive their customer experience, but without features like real-time analytics and data visualizations, CDPs can’t do it all alone. But, continuous intelligence platforms, like Scuba, can make them even better. 

 

Scuba Analytics works in tandem with CDPs, and gives brands a competitive edge by elevating CDPs in the following ways:

 

  • Real-time analytics: With Scuba’s real-time analytics platform, brands can leverage customer journey analytics, access the most up-to-date insights, and quickly leverage them to make more informed business decisions.

 

  • Data democratization: From engineers and analysts to sales and customer experience, Scuba’s continuous intelligence platform is designed to be used by everyone in the company. Democratized data gives team members the autonomy to ask queries and pull reports for whatever they need. 

 

  • No-code queries: Scuba’s no-code query system empowers brands by making it easier for them to access cross-department insights in real-time whenever they need to.

 

  • Robust data privacy and security, and compliance needs: Scuba protects CDP data while in transit and at rest, ensures compliance with ever-changing data regulations, and manages data entirely behind a company’s firewalls. Not to mention, Scuba boasts SOC 2 Type 2 Certification, GDPR compliance, ISO 27018 certification, and Privacy Shield Certified. 


Want to learn more about how to get the most out of your CDP? Request a demo today or talk to a Scuba expert.

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