By Anastasiia Lushyna
In the world of digital advertising, whether programmatic or not, personalization is a key to success – ads tailored to users’ behavior and preferences have much higher chances of driving the desired results. For marketers, using CDP solutions is a way to ensure personalization in an effective manner.
However, what does a CDP in marketing mean? What are the benefits of leveraging it? How does it work?
Relying on our vast experience in AdTech, we have prepared an ultimate guide on CDP advertising, so keep reading to discover how you can enhance your strategy and ensure higher income.
What Is a Customer Data Platform (CDP)?
A customer data platform (CDP) is a solution that allows you to gather, organize, and store data in order to create a unified customer profile. Such software combines data from multiple systems and streams and contains information about all touchpoints and interactions with your service or product. The main purpose of a CDP is to create a centralized database and, as a result, enable you to deliver personalized experiences to your existing and potential customers.
How Does a CDP Work?
Now that the definition is clarified, let’s explore the key tasks a customer data management system is responsible for.
Data Collection
Obviously, the first task of a CDP system is collecting data from all your available sources: marketing systems, CRM platforms, and others. Then, the solution combines the data and creates customer identities to identify each individual customer.
Data Unification
Then, the created identities must be resolved across devices and sources. This implies linking the data from your known customers (for instance, phone numbers or email addresses) with anonymous information they could have shared before they became your customers. This data may include, for example, mobile device IDs.
The main mission of cross-device identity resolution is to provide you with a deeper understanding of the customer journey. Let’s say, you may discover that their first interaction with your brand took place when they received a promotional email. After this, they proceeded to your website, shared additional data, and purchased your product. Using such insights, you will be able to fine-tune your strategy.
Data Activation
After this, the data in a CDP gets connected to all the systems you leverage for driving customer engagement: demand-side platforms (DSPs), content management systems, email marketing software, and so on. The data becomes available to the entire team and enables them to ensure personalization.
Insights Collection
Having well-organized data collected in one place makes it easy to gain insights and make data-driven decisions. For example, you may want to segment your customers into groups, create lookalike audiences, etc. Leveraging the data from your CDP for marketing, you can not only personalize the experience but also reach new customer groups in an effective way. As a result, you will increase brand awareness.
Key Benefits of a CDP
Enhanced personalization is not the only advantage you can count on – customer data platform solutions offer multiple benefits to marketers. Let’s summarize the most significant ones:
Marketing personalization. Ads tailored to customers’ preferences and interests are much more likely to lead to conversion, and CDP is the tool that enables you to ensure personalization. Imagine the following scenario: a user visits your website, takes a look at a couple of pages, and then leaves. After the CDP adds this visit to a unified profile, you can target that user with personalized messages via their favorite channels.
Actionable insights. When all the data is collected in one place and organized properly, it becomes much easier for the entire team to analyze it, detect patterns and opportunities, and make data-driven decisions. Having a view of every interaction with your brand allows you to understand your audience better and drive engagement more effectively.
Effective suppression. In marketing, suppression implies excluding certain individuals or even customer groups from campaigns. The goal of this activity is to deliver a more relevant experience to customers. For instance, those who have already purchased specific products are not likely to get interested in the ads promoting these goods. Therefore, with a CDP, you can suppress such advertisements to them and focus your effort on new audience groups.
Organized data management. Customer data platforms keep data well-structured. After everything is set up, the solution requires pretty little maintenance, which means that your customer information will remain organized and easy to use.
Data protection and compliance with privacy standards. Since international privacy regulations keep getting stricter, being compliant with them becomes the top priority for marketers. A customer data platform (CDP) can help you with this task. For instance, the solution can limit the amount of data you gather or help you prepare and manage the data according to specific regulations.
Use Cases: How Marketers Use CDPs
The benefits of customer data platform are now clarified, so let’s explore more specific use cases. So, here are some examples of what tasks a CDP can be leveraged for.
Effective Audience Segmentation
Having your data organized and unified enables you to segment your target audience correctly. Thus, a CDP can identify similar traits among different customers and, as a result, group them into specific segments. You can then target these segments with personalized messages.
Driving Sales
Thanks to CDP’s ability to collect qualitative and transactional data, you can apply upselling and cross-selling techniques and, therefore, increase your sales. For example, knowing customers’ interests, you can recommend specific products or even offer individual discounts. In addition, such a personalized approach can help you increase loyalty.
Reducing the Churn Rate
A CDP can also help you identify the customers who have a weaker connection with your brand and are likely to switch to your competitors. To prevent the loss of such customers, you can target them with highly personalized messages that will strengthen the connection and bring them back. It is always easier to retain an already existing customer than to acquire a new one, and CDPs allow you to do this in a quick and effective manner.
Understanding Customers’ Offline Behavior
Having actionable insights about your customers’ online behavior enables you to get a better understanding of how they behave in your brick-and-mortar stores (if relevant). This way, you get a comprehensive view of your audience and can enhance both online and offline marketing strategies.
Omnichannel Communication
CDP solutions allow you to understand what channels customers actually use to interact with your brand. Considering these insights, you get an opportunity to strengthen your omnichannel strategy, automate communication, schedule your content, and so on. Remember, nowadays, omnichannel marketing is a must, so this is one of the most important tasks a CDP can help you deal with effectively.
Forecasting Customer Behavior
Relying on the centralized data, you can predict some aspects of customer behavior – for instance, the probability of making a purchase. Then, you can leverage such forecasts to enhance your messaging and the overall strategy.
How to Choose the Right CDP for Your Business
To access the above-mentioned benefits and be able to apply your CDP effectively, you need to choose the right platform. Here are the key factors to pay attention to:
Ease of implementation. While some CDPs are more or less intuitive to use, others require significant technical experience. Choosing a more user-friendly solution is always a better option, but you still need to consider the skills of your team.
Ease of integration and connection. A CDP collects data from a wide range of sources. Make sure that it can be easily integrated into all of your existing systems. The same applies to the channels you use to reach your customers: your website, social networks, email, and so on. You should be able to connect the platform to them with ease.
Resolving customer identities. That is one of the main tasks of CDP solutions, and your CDP should be able to perform it across a variety of devices and platforms.
Compliance with privacy regulations. First of all, your platform should follow all the relevant regulations like GDPR, CCPA, and others. Secondly, it should be able to adapt to any updates or future regulations.
Analytics capabilities. The right CDP should be equipped with advanced analytics and reporting functionalities to make it easy for you to collect insights and make data-driven decisions.
Note that it would also be useful to look for feedback on trusted resources. Doing this can help you make the final decision, especially in case there are several options that you consider appropriate.
Besides, you may want to build your unique customer data platform (CDP) that will meet all your needs in full, including ease of integration, compliance with data privacy standards, etc. This will be a more time-consuming process than choosing a ready-to-use option, but you will get a platform tailored to all your requirements.
Real-World Examples of CDPs in Action
Here are some examples of customer data platforms in action to provide you with an even better understanding of what benefits you can get by integrating such a solution into your marketing strategy.
Breather used Twilio Segment to get a comprehensive view of attribution and ROI. By analyzing the customer’s time to first booking after clicking an ad, Breather found out that, depending on the platform, the time essential for conversion varied significantly. These insights helped Breather fine-tune the strategy and increase return on ad spend.
Glossier used a customer data platform to discover how customers move from their community website to the e-commerce website. By tracking identities and customer behavior, Glossier managed to increase revenue.
Collectors leveraged a CDP to build audiences directly from the data warehouse. Thanks to enhanced personalization, Collectors managed to increase customer engagement, gain loyalty, and drive revenue.
With a CDP, PetSmart ensured more personalized marketing, improved audience targeting, and unlocked new opportunities (for instance, offering product recommendations for different pets). This led to significant business growth.
Consider Attekmi Your Trusted Partner
At Attekmi, we offer a wide range of ad exchange solutions: from an entry-level option with basic functionalities to a fully customizable marketplace. However, that is not all.
In addition, we provide a range of AdTech services:
Custom AdTech development. We are ready to bring your AdTech project to life. Therefore, if you are going to build your own CDP, we would be happy to help you.
Ad Ops outstaffing. Need an expert trained specifically for your business? Entrust us with this task – instead of doing everything on your own, you will be able to focus on your core processes while your operations will run smoothly.
AdTech and Ad Ops training. Mastering all the aspects of digital advertising can be challenging, but we are here to help. We are ready to share our experience and knowledge to help you gain new skills or enhance those you already have.
Thus, with our outstaffing services, Toucan Ads managed to achieve 372% ROI and 576% revenue growth.
Ready to reach new heights? Just contact us and discover how we can help your business grow!
FAQ
What’s the difference between a CDP, CRM, and DMP?
A CDP integrates and unifies data to create accurate customer profiles. It primarily collects first-party data. A DMP (data management platform) focuses on third-party data and stores it temporarily. A CRM (customer relationship management) aims to make the sales process more effective and typically offers limited data integration.
Does a small business need a customer data platform?
Everything depends on your needs and capabilities; however, using the right CDP is virtually a must for companies of any size. This is a way to activate customer data, ensure personalization, and drive engagement, which is crucial in the modern competitive environment.
What types of data do customer data platform solutions collect?
These can be billing information, social media comments, chat transcripts, online orders and transactions, products viewed, returns, website and mobile behavior, average session duration, pages visited per session, etc.
