Must-Have Customer Data Platform Features
To truly connect to consumers, CPG firms need a Customer Data Platform (CDP) to capture, integrate, and analyze all types of data so they can target the right consumers in the right way. The challenge is finding the right CDP—one that fits your firm’s current needs and is flexible enough to scale and provide deeper, more segmented insights as your needs warrant.Read the Blog
Modern technology enables the collection and storage of vast amounts of data and most consumer-savvy CPG firms have massive volumes of invaluable customer data. Yet few organizations can leverage that data to its full potential.
At the same time, consumer expectations have shifted. In-store, physical interactions have given way to speedy digital interactions. Always-on customer service has intensified the demand for better, more personalized consumer experiences throughout the customer journey or lifecycle. These evolutionary changes in expectations are straining a lot of CPG companies, testing the strength of consumer relationships, and exposing weaknesses in data and analytics usage.
For many, the change is fueling the need for brand investment in ecommerce platforms, data management tools to help collect and unify data, and analytics to help make sense of the data and use it to better meet consumer needs. It’s the goal for any business, and one in which a Customer Data Platform (CDP) plays a critical role.
What is consumer data?
Not so long ago, the consumer data that companies stored was rudimentary, at best, and limited to basic information such as name, address, and transaction history with the company. This was not enough to build a holistic representation of a consumer. Data storage was also limited and quite expensive.
Today, massive volumes of consumer data are available from a plethora of both internal and external sources. And the ability to store virtually unlimited volumes of data is attainable and affordable. CDPs are designed to leverage both — the affordability of data storage, and the massive potential for consumer data gathering.
Each piece of data about a consumer is just part of the consumer’s complete journey. And each data point allows you to develop a better, truer, deeper understanding of your consumers’ needs and wants, and the opportunity to better serve your consumers — but only if you’re able to assemble that data into a realistic and actionable representation of your consumer. That’s what a modern consumer data platform (CDP) can do for your organization.
What is a Customer Data Platform?
Customer or consumer data platforms let you create and maintain a richly descriptive, unified profile of every single consumer — a view made up of all data types and sourced from all data repositories, irrespective of departmental siloes. Quite simply, customer data platforms enable the personalized experiences that are essential to modern CPG firms’ success.
A Forrester survey found that while most organizations have substantially increased the volume of consumer data available, only about half are able to utilize the data effectively to personalize consumer interactions. More than a third (38%) of survey respondents identified siloed data as a barrier in delivering personalized consumer interactions. Similarly, a Gartner survey found that teams that share data externally with other teams stand to gain a threefold economic benefit compared to those that do not.
CDP vs. Customer relationship management (CRM) vs. Data management platform (DMP)
Customer relationship management (CRM) and customer data platform (CDP) systems are both software systems that collect and manage consumer data. But there are differences if you’re managing consumer data and crafting digital experiences. CDPs ingest and integrate behavioral, transactional, structured, and unstructured data from multiple sources so you can build a unified profile around an individual consumer.
CRM systems, on the other hand, contain only first-party data about your consumers—the data that only your organization possesses. A CRM system may have some overlap with a CDP in terms of functionality, but the primary difference is the sources of the data. In addition, CRM systems don’t match and merge data across various sources and aren’t optimized to handle large data sets in real-time, like an enterprise-grade CDP.
To add more potential confusion, how does a CDP differ from a Data Management Platform (DMP)? The two are often confused with each other because they both use data to build audiences for marketers. What separates the two platforms is the kind of data each one uses. Because DMPs are used mostly for targeted digital advertising, they use primarily third-party and cookie data that provide anonymous identifiers. This means they can enable highly targeted segments but lack the complete data set to enable one-to-one engagement. CDPs can optimize the entire customer journey by activating insights throughout all internal and external channels to enable personalization.
How does a CDP work?
CDPs can synchronize all types of data from all systems and sources, including data from CRMs and DMPs. A CDP ingests this first-party data and then standardizes and transforms it by matching individual customer identities from each system (called identity resolution) and combining them into a single consistent and accurate customer profile. Then the profile data is reformatted for a variety of processes and systems, for example, analytics, marketing automation, personalization, and social media outreach.
The CDP continues to ingest new data from various sources, maintaining an evolving, up-to-date history of customer interactions. With the right reporting and analytics, a CDP makes it easier and faster for non-technical people, like marketers, to make all this data actionable.
Here are some of the key benefits of a CDP:
- Provides business users self-service access to data and insights
- Unifies a wide variety of first, second, and third-party consumer data, including anonymous, historical, contextual, demographic, transactional, and behavioral information
- Uses personally identifying information (PII) to perform identity resolution and generate holistic consumer profiles
- Leverages built-in analytics and AI to derive insights that drive informed action, consumer segmentation, and personalized engagement across the customer journey
- Provides a central, accessible, and useful source of consumer data that can be easily consumed by multiple departments
- Ensures data privacy, security, and compliance with GDPR
Orchestrating the journey
Customer journey orchestration begins with a strong data foundation—which is at the heart of a CDP. It’s the real-time coordination of customer touchpoints throughout the customer lifecycle to encourage customers to continue engaging with a company. True orchestration of the customer journey is possible only when you have complete insight into how the consumer moves through the lifecycle of their engagement with your firm.
A CDP can help you bridge the data gap between onsite and online consumer experiences by pulling together those unconnected systems: CRM profiles, website traffic, page visits, and reviews to create a complete end-to-end view of your consumers. With a greater understanding of how and when consumers interact with your brand on a personal level, you can gain better visibility into, and control over, every stage of the customer journey. There is no concept of segments; you can engage with a consumer as an individual because you have a unique profile and the analysis needed to drive personalized interaction.
How to measure ROI
The ROI is the difference between the benefits and the costs of implementing the CDP. Driven by data, a successful CDP solution must always work with the existing marketing stack to maximize ROI based on strategic decision-making and accurate performance measurement. If a CDP is implemented and maintained successfully, you should see cost reductions through more targeted and effective advertising spend and direct-to-consumer segmentation, as well as increased revenues on the sales side.
In addition, many of the benefits of a CDP are difficult to quantify, because they are realized in loyalty and retention over the entire customer journey. More deeply understanding your consumers and providing competitive differentiation and rich consumer experiences, will no doubt translate positively.
More to come
In Part II of this blog series, Must-Have Customer Data Platform Features, we dig deeper into the critical feature considerations for any CDP initiative. By bringing the customer and data together, firms can deliver a consistent and highly integrated experience for all. But there are critical up-front factors to consider, and a clear understanding of those will increase the opportunity for success.
At Hitachi Solutions, we’ve even designed an entire practice around creating memorable consumer experiences that enhance engagement and potential ROI. We earned over 40 Microsoft Partner of the Year Awards in recognition of our unique approach and proven results. If you’d like to discuss CDP potential for your organization, contact us today and we’ll get started!