The extent of customer expectations nowadays has set a new data management standard for marketers. Across industries, we see customer data coming from disparate marketing technology platforms and offline channels crying out to be unified.
Everyone seems to want to tap into the centralised customer record to set the stage for scalable omnichannel personalisation.
The increasing necessity for practical data unification triggered a solution – Customer Data Platform (CDP). While the current market offerings vary, most CDPs are positioned as — a marketer-friendly database that effortlessly integrates with the martech stack to deliver a 360-degree customer view.
The market seems to respond well to this piece of technology – current projections expect the CDP market to grow from USD 2.4 billion in 2020 to USD 10.3 billion by 2025.
While the CDP is a relatively new offering in the martech space, enterprise-level Master Data Management (MDM) platforms have been used for a while now.
However, the distinction between the two lies in the use cases – MDMs are serving the purpose of bringing a trusted master record of business-critical data, including people, internal processes or external business data. The CDP, on the other hand, serves one specific purpose – to make customer-related data actionable for marketers.
So, even the data-savvy enterprises could look into the benefits of adding the CDP layer to their technology stack.
If you’re considering hopping on the CDP train, we are here to help. When choosing the right CDP there are several things you would want to know, and in this post, we will walk you through them.
Three differentiators to consider when choosing a CDP
The most important benefit a CDP brings to the company is data unification. Yet, the marketing value of the CDP lies in the way that marketers apply the data for revenue-generating purposes. Or, in other words — the use case.
So, right off the bat — a good CDP will allow for an effortless integration with your current and future martech stack, as well as easy retrieval of the collected customer data.
1. CDP Use Cases
Use cases or – essential business requirements – should serve as a guideline during the selection process.
For example, are you looking for identity resolution and customer segmentation for better personalisation success? Do you require an AI layer for predictive modeling?
Different platforms specialise in different use cases. The first step is to get clear on the use cases that are most prominent for you. Also, other departments, such as sales or service, could benefit from the CDP, so it’s a good idea to consider their perspective as well.
The most common CDP-related use cases include:
- Data unification (online and offline) for superior personalisation
- A better understanding of the customer journey to scale or upgrade
- Granular segmentation for personalisation/advertising/retargeting
- Omnichannel orchestration
- Real-time data insights
- Predictive modeling
2. CDP Capabilities
Naturally, the use case selection process will filter the CDPs that can serve your case or not. The next step is to investigate the CDP capabilities, and potentially, the vendor’s track record of applying the capabilities with their clients.
The CDP will unify your disparate data, however, make sure to examine: Can it handle data from all of the sources? List down data ingestion sources before the vendor selection process to obtain clear answers when engaging with vendors.
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Also, consider if you will be using probabilistic or deterministic data modeling. Probabilistic modeling is an AI-powered method of building customer profiles with almost no amount of first-party data to grow your database and expand your reach. On the other hand, deterministic modeling focuses on collecting first-party customer data to ensure higher data accuracy. Ask your vendor if it provides support for your chosen data-matching model.
Can the platform process data in real-time? Not all CDPs offer this capability, so if you are looking to leverage real-time data absorbed from various data sources, check for this feature. The real-time data processing allows the platform to update customer profiles in near-real-time so that event-driven campaigns can perform a high level of contextualisation and personalisation.
Will the CDP support data regulatory compliance in your region? Ensure you question the potential risks involved with data retention and factor in the simplification aspect that CDPs offer regarding compliance. Also, check if the CDP has an independent security certification like ISO 27001 or SOC 2. These certifications ensure that the CDP vendor is continuously monitoring and upgrading its security practices.
Question the internal and external integration capacity of the CDP. Consider any tools that you use in your martech stack today or you might use in the future. Also, list down other departments that collect data your CDP will handle. Some of the standard tools that a CDP integrates with include:
- Customer Relationship Management (CRM)
- Business Intelligence and Analytics
- Data warehouses
3. Industry Focus & Scale
The majority of CDP providers are differentiated based on their target market and their intended use cases. For this reason, it’s essential to go over the target clientele of the CDP provider, not just because it meets your needs today but also tomorrow.
Another crucial point to consider is the scale at which the CDP can stretch.
Enterprise-grade CDPs will be built with a scalable architecture to ingest large volumes of data daily. On the other hand, the startup CDPs will be more focused on providing a user-friendly experience. For this reason, it’s essential you question the vendors regarding their customer track record and the supported use cases so far.
CDP is all the rave right now, and we do see it continuing to be so. Vendors have already started offering a CDXP, where X stands for Experience, which adds the extra layer to the CDP.
As with any technology solution, it’s essential to gain a deeper understanding before making a strategic discernment. If you need assistance with choosing or utilising a CDP — reach out to our team of experts.
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