What Is A Customer Data Platform (CDP) & Why Do You Need One?
Why you need a customer data platform (CDP)
Any business's success depends on how well it can meet its customers' demands and how it treats its customers. Customers who feel welcome and understood are the customers who stay engaged with your brand. How can a business learn how to keep a diverse customer base happy, especially in today’s digital-heavy environment? Is it genuinely possible to get a single customer view?
The answer lies with the emergence of customer data platforms (CDP). Customer data platforms enable businesses to gain and track knowledge about customer expectations. They also allow a better understanding of their different customer segments and create personalized experiences for each.
What is a customer data platform?
A customer data platform (CDP) unifies and integrates customer data from various touchpoints and channels. CDPs then use this data to create centralized customer profiles for data analysis and marketing segmentation.
Benefits of a CDP
Customer data is the most valuable currency available to any business today. A good customer data platform helps improve advertising ROI, simplify customer data analysis, improve product strategy, offer customer insights, and provide real-time personalization.
Prevent data silos
Having siloed data in any context means that data is not easily shareable across different applications, departments, or organizations. Data silos of customer data prevent businesses from creating accurate and reliable customer databases and cast doubt on customer profile accuracy.
For example, suppose a company uses marketing automation software that isn't connected to a CRM. In that case, sales reps can miss out on valuable data to learn how a lead has previously interacted with their website or product. By integrating different customer touchpoints, CDPs create a unified customer database with accurate and reliable insights about customer behavior and solve the silo problem.
Collect data directly from your audience
Outside of CDPs, the first step to collecting useful and accurate data begins at collection. The best and the most precise kind of data is first-party data. First-party data is collected directly from the customers on your website or product by using tracking tools.
This data can be analyzed in a product analytics tool like Mixpanel or Amplitude and can be used to activate a marketing tool. Access to this kind of data helps better understand user behavior, improve the customer experience, and enable marketing campaigns with accurate targeting. Be sure to practice good data hygiene and best practices for data collection methods to maximize value from your CDP.
CDPs help you understand your customers
CDPs can prove extremely helpful in customer relationship management, as they provide businesses with a 360-degree view of the customer. From increasing the frequency of customer interactions to achieving customer loyalty, first-hand data in CDPs can prove valuable for your business.
For example, ecommerce businesses benefit from a CDP because they can look at common behaviors in their customers to increase conversion rates, increase average order value (AOV), and personalize product offers to get more repeat customers. Software businesses benefit from a CDP because they can visualize actions their users take across the entire user journey, ship improved experiences, personalize onboarding, and retain more customers.
CDPs unify cross-channel marketing efforts
A CDP provides data that can drive successful marketing campaigns. It also unifies the information acquired through multiple marketing channels. Whether you are using Facebook, Google Ads, Pinterest, or LinkedIn to advertise your product, with a CDP, you can set up tracking and integrating those tools in one place.
This is valuable for many businesses because most ad platforms require the same data, just in different formats. By having all the data flow from only one integration, marketers can focus their efforts on segmenting their audience and which combination of ad channels are driving performance.
Customer data platform use cases
The benefits of customer data platforms are countless, and there is more than one way to use the information provided by the CDP to your advantage. Below are some ways to do so:
Product teams get better product analytics
CDPs are more than just a platform to provide unified customer databases. With its integrations with various analytics and marketing tools, a CDP also helps product teams understand the user's relationship with the product better. Instead of making product teams rely on third-party data or anecdotal customer feedback about the users, CDP provides first-party data and offers customer identity resolution.
Using this user event data, product teams can get a clearer picture of the user's interaction with the product and understand how different users interact differently with the product. User data identifies usage and adoption problems within the product. Product teams can gain a deeper understanding of how customers experience their digital products. They can then take that behavioral user data and start making decisions to improve product experiences. Product analytics empowers teams to ship faster, measure impact, and visualize user journeys.
Engineering teams cut down on time-consuming work
The availability of technical resources is a common bottleneck for teams. The degree of efficiency and automation provided by CDPs has freed the engineers from performing repetitive and tiresome tasks.
By freeing up time, software engineers can focus their capabilities on more impactful tasks such as building products and shipping features that can add value to customer experiences.
Marketing teams improve campaign engagement
By using CDP data, marketers can drive customer acquisition efforts by targeting more personalized messaging to prospects. CDP data also offers customers relevant product suggestions based on their search and buying history.
Real-time CDP data allows marketing experts to send timely and personalized messages to customers, thus creating 1:1 engagement. Marketing teams can also utilize predictive models to detect customers that are likely to churn. Then they can design special reach-out programs to bolster customer retention.
Use CDPs to improve your company's strategy
With a unified customer database and comprehensive insights about customers from the CDP, you can use it to improve your company's strategy through segmentation. Using segmentation, you can group customers that are similar in some aspects and target them specifically.
Using the data provided by a CDP, businesses can easily create tailor-made customer experiences and take customer engagement to another level. Moreover, CDPs can also help enterprises develop new and innovative marketing strategies that cater to the continuously changing customer landscape. The real-time customer data provided by CDP enables businesses to stay up-to-date about market demand and customer preferences.
Why are customer data platforms so popular?
Today's customer expects digital businesses to understand their preferences and meet their expectations. The user experience is quickly becoming a matter of table stakes. Traditional tools for using data don't provide comprehensive customer profiles. CDPs allow an alternative approach to data collection that has finally enabled businesses to develop reliable customer insight without a massive engineering workload (and the ongoing maintenance).
Collecting data is fractured
With the rise of analytics and marketing tools that run on customer data, data collection has become fractured. With such an overwhelming amount of information available, it is hard for product and marketing teams to decide which data to utilize, which data is just noise, and the most effective way to harness customer data.
This ambiguity can cause teams to overlook essential integrations or resort to the data collection that seems the easiest, resulting in irrelevant data and wasted time, effort, and resources.
Customer relationships have become complex
In a highly competitive world, the company with the most resources is most likely to win over customers. Large enterprises with more resources are sometimes better equipped to build engaging customer experiences. Conversely, smaller businesses that are more resource-constrained can sometimes not offer experiences that meet customer expectations, resulting in customer churn.
A standalone CDP solution can prove to be an excellent resource for such businesses. Providing a unified customer profile can help companies build better product experiences, curate personalized customer engagement, and improve the overall user experience. CDPs can also be a great addition to the marketing stack as they allow marketing teams to create targeted marketing campaigns.
Data privacy is becoming a big issue
As the reliance on data has increased, customers are becoming more aware of their rights and more concerned about their privacy. Customers are less willing to enjoy targeted customer experiences at the expense of their privacy. With this increase in customer privacy awareness, companies are becoming more and more conscious about data privacy compliance.
Customer data platforms help centralize customer data management, control data being sent across multiple different integrations, and decrease the risk of not complying with regulations like GDPR, CCPA, HIPAA, and others.
A shift from customer acquisition to retention and customer lifetime value
Customer engagement is not just about customer acquisition. Customer acquisition is of no long-term value if it doesn't end in customer retention. Among the many stages of a customer's journey are awareness, acquisition, consideration, conversion, retention, and referrals.
- Awareness: Make the customer aware of the product
- Acquisition: Make the customer take a specific action
- Consideration: The customer intends to make purchases
- Conversion: The purchase is made
- Retention: Getting customers to return and make a purchase or keep their subscription
- Referrals: The customer becomes your advocate and promotes your products
A CDP allows businesses to track the customer experience as they move from one stage to another. The information provided by a customer data platform is critical in ensuring that the customer completes their journey, does not abandon the product or the company in the middle of the buying cycle, and keeps coming back as a user or customer.
Set up a CDP with Freshpaint
Traditionally, setting up a CDP takes time and heavy developer work due to the amount of work needed to track events properly, integrate with APIs and determine the proper format that customer data needs to be collected in. Freshpaint is here to make your life easier.
Our customer data platform makes it easy to set everything up! Here's how we do it.
Automatically track user events with Autotrack
Our Autotrack feature automatically instruments your site or app. Without heavy engineering resources, we automatically collect behavioral customer data from your website or app without compromising privacy or security. Whether you need information about Pageviews, Clicks, Form Submissions, Text Field Changes, or any other tracking event, Freshpaint’s Autotrack has you covered.
Standardize data and identity resolution
Our Autotrack technology plus our Precision Tracking APIs ensure clean instrumentation. Freshpaint automatically transforms your data to the destination's required format. Freshpaint is the only customer data platform with a hybrid approach to tracking. Collect clean, robust customer data that you control with code or within Freshpaint.
100’s of integrations with leading tools
With Freshpaint, all you need to do is integrate once, and you can power all your tools with the same data set. Freshpaint can be integrated with more than 130+ marketing, data, and analytics tools, including Google Analytics, Data Warehouses, Mixpanel, Amplitude, Facebook Pixel, Klaviyo, and more.
Setting up a CDP to gain insights into your customer journey and experience can take you a long way. However, you must select the right CDP for your business, and your product, marketing, and data teams are trained to make the best of the plethora of information made available through these platforms.
If you're looking for a data platform that will provide you with the necessary information about your users and allow you to integrate multiple analytics and marketing tools in one place, Freshpaint is the answer. You can use Freshpaint to gain useful information and track events and perform advanced analysis that you can use to increase growth.
Set up a CDP with Freshpaint today by clicking the button below.