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    CDPs, their close kin and how to choose between them

    CDPs, their close kin and how to choose between them

    From time to time, you’ll see a story about what is and what is not a customer data platform (CDP). It’s a legit question. If I buy something that’s labeled as soap, I want it to do what I expect soap to do. 

    In the same way, the label “customer data platform” should include some things and exclude others. Companies shouldn’t call their product a CDP if it doesn’t fit the requirements. 

    Having said that, excluding solutions from consideration because they don’t meet the definition of a CDP is not wise. It’s possible you need something that’s like — but not quite —  a CDP. 

    Gartner recently published a report on what is and what is not a CDP. Apparently somebody at Gartner has been following me, because this sounds like something I might have said: 

    “Choose technologies and resources based on key use cases that solve business problems, rather than attempt to achieve a 360-degree view of the customer for its own sake.” 

    Gartner

    Exactly!  

    The report has some other solid recommendations, but I want to stick to this topic: “What is a CDP, what are its near relations and how do I choose between them?” 

    MarTech defines a CDP as follows. 

    “Customer data platforms (CDP) are marketer-managed systems designed to collect customer data from all sources, normalize it and build unique, unified profiles of each individual customer. The result is a persistent, unified customer database that shares data with other marketing technology systems.” 

    MarTech

    Dig deeper: Beyond the tech: Mastering customer data with a modern approach

    The growing list of CDP-like technologies

    Not everyone who thinks he needs a CDP really needs one. Sometimes an “almost CDP” will do, and sometimes these other technologies need to be used in conjunction with a CDP. Here’s a partial list of platforms and services that overlap to some extent with the CDP landscape.  

    • Customer Relationship Management (CRM) systems manage interactions with current and potential customers, focusing on sales, customer service and relationship management. 
    • Enterprise Data Warehouses (EDWs) centralize and store large volumes of structured data for long-term analysis and reporting. 
    • Data Lakes store vast amounts of data in its native format. The data can then be processed and ingested by other systems for use in a wide variety of use cases. 
    • Data Clean Rooms provide a secure environment for multiple parties to collaborate on data analysis without sharing raw data. 
    • Identity Resolution platforms merge and reconcile customer identities across different data sources to create accurate and consistent profiles. 
    • Access Management Platforms determine who has the right to view or use data and systems. 
    • Multichannel Marketing Hubs centralize and coordinate marketing activities across various channels. 

    How do you know which solution(s) you need? 

    As you work your way through this confusing landscape, keep these key questions in mind. 

    Are you more concerned with first-party or third-party data? 

    If you want to create audiences of people with similar interests and behaviors, and if you rely on third-party data for audience segmentation, but don’t particularly care about identifying individuals, you might be better served with a Data Management Platform. 

    Is your focus on customer interactions or customer data? 

    If your primary need is managing a sales process, or customer service, Customer Relationship Management might be your best choice. 

    Do you need overall analytics, or customer segmentation? 

    If your main requirement is to store and analyze large volumes of data on web traffic, an analytics package might be all you need. If you’re storing customer data to monitor long-term trends (rather than to act on customer actions), an Enterprise Data Warehouse might be best. 

    Do you need a way to automate marketing campaigns based on user behavior? 

    If your focus is on creating rules to orchestrate and automate marketing campaigns, you might just need a Marketing Automation Platform. 

    Do your use cases require analyzing big data in its original, unstructured format?

    A Data Lake might be the most appropriate solution. 

    Do you need to identify anonymous web visitors or maintain accurate customer identities across multiple data sources?

    An Identity Resolution Platform might suffice. 

    Do you need real-time data processing and personalization? 

    If so, you need a CDP. If not, other data management tools like EDWs or CRMs might fit the need. 

    Is your primary focus online advertising?

    A DMP might serve you better than a CDP. 

    Do you already have your customer information in a structured database? 

    You might only need connections to external activation platforms. 

    Dig deeper: Why first-party data alone won’t solve marketers’ challenges

    You might need a CDP if… 

    • You need a holistic customer view. While the “single customer record” is a bit of a myth (see: “For CDPs, the ‘single customer record’ can be a distraction”), the CDP is the tool that gets you the closest. CDPs integrate various data sources to provide a comprehensive, unified view of each customer. 
    • First-party data is crucial. Some services, like a DMP or most analytic tools, intentionally do not link data to particular individuals. If your use cases require first-party data, you need a CDP. 
    • Real-time processing is key. “Real time” can be a tricky concept (see: “The limitations of ‘real-time’ CDP use cases”) but if you need to adapt to customer actions and behavior as close to “real time” as you can get, you need a CDP. 
    • You need advanced segmentation and targeting. CDPs offer sophisticated segmentation capabilities that can orchestrate targeted marketing campaigns and personalized experiences across multiple different platforms. 
    • Personalization to the individual is required. If you need to customize the user’s experience based on that particular user’s data, you need a CDP. Other technologies can customer an experience based on group affiliation, but a CDP is key for personalizing based on first-party data. 
    • You need a hub from which to coordinate activities across channels. CDPs can activate customer data across multiple channels, ensuring consistent and coordinated messaging. Closely aligned with this is the need to integrate your customer data with other marketing and customer-facing tools, which is a key CDP function. 
    • You want to build customer journey maps that span several activation engines. If your marketing department wants to coordinate activities across multiple properties and campaigns, you may need a CDP. With a CDP, you can create rules such as “if a user visits this part of the website, send this email: if they click on that email, schedule a sales call. If they don’t click, send a follow-up email in five business days.” 
    • Data privacy and compliance is important. CDPs can manage customer consent and ensure data privacy or regulatory compliance across multiple platforms. 

    Summary 

    CDPs are popular for a reason. They help marketers and others collect customer data to create better marketing campaigns and user experiences. As you investigate whether a CDP is right for your organization, don’t neglect their near kin –  that is, other platforms that are like, but not quite CDPs. Sometimes they can meet your use cases with a smaller investment. 

    The post CDPs, their close kin and how to choose between them appeared first on MarTech.

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