How to choose the right customer data platform

As marketers are trying to overcome a chaotic sea of data, originating from various sources within the organization, customer data platforms are here to remedy their data-related headaches.

As the pandemic raged on for another year, digital business boomed in 2021. As a result, we have noticed an increase in demand for customer data platforms (CDPs). Unsurprising, since they agregate data from a variety of sources, drive real-time personalization regardless of the platform, and help you deal with complex privacy regulations.

Look up the term CDP on Google and you’ll find the following definition defined by The CDP Institute:

A CDP or customer data platform, is a marketer-managed system designed to collect, clean, and connect data from multiple sources to create a single customer profile. This structured data can then be send to multiple marketing systems.

Let's make it a bit more concrete with an example. Let's say you want to boost your business by increasing the conversion rate of your booking funnel. Simultaneously, you want to upsell to your existing customers via personalised actions and offers.

To do this properly, you’ll have to collect the data from the booking flow on your website and link it with the other first party data you have stored within your organization, like an ERP, or CRM.

The CDP will be able to merge the history of each customer or prospect into a single profile. Based on those previous interactions, you’re able to categorize certain interests or behaviors into specific audiences with which you can match products, services, and promotions.

The same CDP will then allow you to trigger personalized actions and offers on several touchpoints, based on the matching audience.

It’s just one example on how a CDP could help you activate customer data effectively. However, with over a hundred of suppliers on the market, the search for the right solution can be daunting. So how to choose the one that’s right for you?

The first question kind of speaks for itself: is the technology architecture you’re working with fairly simple or rather very complex? If you are working with commonly used and established technologies, you probably won’t need a CDP with a set list of +150 APIs to connect it with a plethora of exotic tools and programs.

On the other hand, if the architecture of your organization is quite complex, with lots of existing technologies and tailor-made solutions, you might want a CDP that’s easily integrated. These CDPs typically have many ready-to-use APIs, which often also offers the advantage of connecting with technologies you’ll introduce at a later point as well.

Do we need support in terms of GDPR and data governance?

Even though privacy is top of mind at the moment, and there’s a large sense of urgency for companies to comply to regulations like GDPR, many businesses are still struggling on this front. It’s no easy task to transform your organization and marketing activities according to the ever-evolving privacy standards of today and tomorrow.

There are many ways to approach this. One way could be to collect less data. A difficult choice, since you need a minimum of relevant data to offer your customers the personalized treatment they’ve come to expect both online and offline.

The alternative is to develop a processes that manages the data in a GDPR-compliant way. While you could opt for a complex custom-built solution, or even outsource the issue entirely, you might as well leverage the capabilities of a CDP for the task. The core function of such a platform is to collect and link all data related to an individual, that's exactly what you need to manage your data in a GDPR-compliant way.

What do you want to do with the data?

In the end, everything comes down to what your plans are with the data you’ll collect in your CDP. There are a wide variety of options: should it be sent to your BI-team, for example? Or do you want to use the CDP like a marketing automation tool. A CDP can let you blend data, set up segments, and connect to your publishing and advertising tools. Long story short: there are a lot of use cases for a CDP. Depending on these capabilities, you might prefer certain solutions over others. In the end, it’s what you want to achieve with the tool that dictates what it should be able to do.

With these questions answered and a budget in mind you, you can start a more focused search for the right CDP for your business.

At The Reference, we remain platform-agnostic to offer our clients the right solutions for their business needs. If you are looking for a partner in your search for the right CDP, feel free to reach out.