What is a customer data platform (CDP)? Your complete guide 

What do you know about your customers?

Scratch that, here’s a better question: what do you know you know about your customers? The fact is, you have access to loads of customer data: who they are, what they like, how they behave. But if that info isn’t unified, coherent, and easily accessible across your organization, it’s not much use to you. And you might not even know how much you could know!

If you want to make all that data more actionable, you might want to look into a customer data platform (CDP).

A customer data platform (CDP) is software that pulls in data about your customers from multiple sources to create a complete profile of each individual. It gathers information from every place a customer interacts with your brand—like your website, app, social media pages, emails, and SMS messages—and by integrating with other tools in your martech stack. This comprehensive database allows you to create ultra-personalized experiences for your customers.

Imagine you’re in the market for a new smart thermostat. If you’re like most people, your shopping journey will take you to a wide range of channels and platforms: searching Google for recommendations and reviews, visiting several company websites and their social media pages, clicking on ads that show up as you’re browsing. Along the way, you’re likely to interact directly with some of the brands you’re considering buying from. You might email them or use their live chat to ask questions, follow or message them on social media, or sign up for their email list. You may even put an item in your cart, but hold off on making the purchase while you’re still weighing options.

If those brands are using a customer data platform, your shopping experience will likely feel more and more personalized over time. Online ads will be relevant to what you’re looking for, brands’ websites will highlight products you’ve viewed when you visit them again, and email messages will reflect the features and benefits that matter to you. And once you make a purchase, subsequent interactions with the brand will be even more tailored. Ultimately, your experience will be easier and more pleasant because it’s tailored to your needs.

How does a CDP make all that happen? It’s about tying together user-level data, making data activation possible, and integrating with other martech tools to derive insights and deliver targeted content.

In short: CDPs enable hyper-personalization at scale.

When you integrate your CDP into the various components of your martech stack, it gathers up all the info about each customer to create a cohesive profile. To make all that magic happen, a CDP performs four primary tasks.

1. Collect data. By connecting various pieces of your martech stack to your CDP — like your customer relationship management (CRM) tool, marketing automation platform (MAP), web analytics tools, and more — you feed information into the CDP automatically, in real time. A CDP ingests data from all those sources by using APIs, event trackers (like SDKs and JavaScript tags), webhooks, and server-to-server integrations.

2. Unify data. To build a customer profile, the CDP links data across devices and channels, putting together the puzzle pieces of a customer’s journey. This process of identity resolution includes merging data from a customer’s various devices and browsers, plus tying in any anonymous data they’ve provided (like anonymous website cookies) to their known identity. Voilà, an end-to-end picture of the customer’s journey, from first touch to the present.

3. Protect data. Complying with privacy laws like GDPR and CCPA is fundamental from both a business and a customer-experience perspective. Your CDP can control the flow of data among different internal systems and manage customer consent. By leveraging your CDP to support your data governance strategy, you ensure your collection, storage, and sharing practices remain compliant.

4. Makes data activation possible. Comprehensive customer profiles are only useful if you can do something with them. Your CDP makes it possible by integrating with the other tools in your martech stack so you can pull insights and take action. Once your CDP is connected to your messaging platform, you can easily segment your audience and send personalized campaigns, optimize in-app and on-site experiences, and personalize customer service interactions. The unified data also gives you valuable metrics for building personas to drive campaigns that reach new customers.

Customer data platforms primarily rely on two data sources:

• Zero-party data. This is information customers proactively share with you, often by filling out a form or contacting you.
• First-party data. This info comes from the trail of data people leave while interacting with your brand online.

Zero- and first-party data is your best source of reliable information about customers, as you can verify that it’s valid and was collected with consent. It’s also more effective than third-party data when personalizing content, because it makes people feel authentically recognized instead of stalked.

The specific information you gather about your customers will depend on your industry and business model, but it generally falls into four primary types of data: identity, descriptive, behavioral, and qualitative.

1. Identity data. This is the foundation of each customer profile because it allows you to uniquely identify each individual. Examples of data you might need in your CDP include:

• Names: first and last name, salutation, nickname
• Location: county, state, zip code, city, address
• Contact: email address, phone numbers
• Social: Twitter handle, Instagram handle, LinkedIn URL
• Account: user IDs and account numbers you assign to customers

2. Descriptive data. You can build a richer description of customers by learning more detailed info about their lives. Depending on your brand’s industry, there are a wide variety of things you could ask customers to tell you about themselves, including:

• Demographics: age, gender identity, race/ethnicity
• Career: industry, company, job title
• Family/household: marital/relationship status, number of adults/children in the home
• Lifestyle: type of residence, vehicles, pets
• Interests: hobbies, magazine/media subscriptions
• Socioeconomic: income, savings/investing habits

Behavioral data. One of the most powerful tools for personalization is knowing the actual actions customers take. You can collate that data in your CDP through integrations with the other tools in your stack that track customer interactions with your brand:

• Transactions: number and type of purchases, returns, abandoned carts, RFM analysis
• Message (email, SMS, push, in-app) engagement: opens, click-throughs, conversions
• In-app activity: activity frequency, session length, features used, exit points
• Website activity: visits, visit duration, click-throughs, pages per session, product views
• Customer service/sales: inbound and outbound communications, dates, query details, satisfaction scores

Qualitative data. You can learn a lot by asking people about their motivations and opinions. Enriching customer profiles with this kind of intel can help you segment and personalize with even greater detail. Examples of questions you might ask:

• Motivation: How did you hear about us? Why did you purchase this product?
• Opinion: How likely are you to recommend us? How would you rate this product?
• Attitude: What’s your favorite food / color / animal? What are your hobbies?

One of the biggest pain points for brands is siloed data; many of the marketing tools brands use don’t easily pass information back and forth. The benefits of a customer data platform involve bringing all that data together, seeing a cohesive picture of each customer, and leveraging insights to support personalized experiences and business intelligence.

• Reduce data silos. Marketing, customer success, ecomm, and sales departments all collect and use customer data. But when information is locked away within one department, you get a lot less value out of it. CDPs enable every department to leverage the full scope of a customer’s data and to collaborate across teams with less manual effort.
• Know your customers. Personalized marketing campaigns depend on a deep understanding of who your customers are, how they behave, and what they want. CDPs build customer profiles that make vital intel accessible and actionable for multiple use cases: targeted campaigns, customer analytics, audience profiles, and more.
• Personalize at scale. Personalized content performs. A CDP makes it easier to target messaging based on attributes and behaviors, create precise segments, and suppress customers from campaigns — all without sifting through multiple data sources.
• Confidently identify customers. People have tons of channels for engaging with your brand, and they do so across a range of devices. In order to provide an amazing customer experience, you need to know for sure who people are. Is the anonymous visitor who read three blog posts yesterday the same Jane Doe who subscribed to your newsletter today? A CDP gives you an answer you can rely on.

Data management platforms (DMPs) collect customer data, but have a different focus than CDPs. The primary difference between a DMP and a CDP is that DMPs focus on third-party data, while CDPs also collect zero- and first-party data.

Your CDP can add more muscle to your DMP by supplying it with more accurate data. Once you identify an audience of your best customers using your CDP, you can export that data to your DMP to zero in on more precise lookalike audiences.

DMPs are designed specifically to optimize digital ad targeting. If you’re focused on acquiring customers who aren’t familiar with your brand, advertising may be a key component of your strategy — and a DMP could be a valuable tool. But don’t assume it will give you the same benefits of a customer data platform. Unless the vast majority of your marketing is online advertising, a DMP may not be a robust enough tool on its own.

Customer relationship management (CRM) tools have a much narrower focus than a CDP. The main difference between a CRM and a CDP is that CRMs only track customers’ direct, intentional interactions with your brand.

A CDP can make your CRM more useful by sending more comprehensive data into the tool. And by collecting data from your CRM, your CDP can support audience segmentation and personalization early in the customer lifecycle.

CRMs are primarily built for customer-facing teams. They require a lot of manual data entry and don’t support much automation. If your brand’s strategy is focused on managing individual customer relationships through one-on-one communications — with little outbound marketing or automation needed — you might find that a CRM is all you need. But many brands find that relying only on a CRM means they miss out on the benefits of a customer data platform that would make a broader business impact.

A marketing automation platform (MAP) is a powerful tool for sending personalized messages. With precise segmentation, you can reach your customers in a wide variety of channels — email, SMS, push, in-app — with targeted content based on who they are and triggered by the actions they take.

But for a MAP to work its magic, it needs data! And your CDP is a treasure trove of valuable information you can use to segment, target, and personalize your campaigns. The richer your customer profiles, the more precise you can be in tailoring both what you send and when you send it.

While all MAPs ingest data, it’s worth noting that they vary widely in the types of sources they integrate with. The benefit of using a CDP with a MAP is that you can easily connect all of your customer data to your MAP through a single integration. And, of course, all the customer behavior related to the messages you send through your MAP is fed right back into the customer profiles in your CDP.

Not every brand needs a separate CDP; if you don’t have many sources of data or if your MAP can easily connect to every other tool in your martech stack, you may find that your MAP alone is sufficient. However, leveraging both tools together can give you more robust capabilities for understanding and connecting with your customers.

Before you start shopping, bring your stakeholders together to think strategically about the purpose your customer data platform should serve. Look beyond the teams you expect to use the CDP; include every team that collects data that will be handled by the CDP. In addition to marketing, you’ll likely want to consult your sales, customer success, and product teams.

You’ll also want to get clear on your use case. Having all your customer data in one place might sound appealing on its own, but what do you want to accomplish from there? Brands may have all kinds of uses for a customer data platform. Examples include:

• better understanding of the complete customer journey
• creating more personalized in-app or web experiences
• targeting segments more effectively across messaging channels
• creating cohesive experiences across marketing, sales, and support
• deriving insights to guide product strategy

As you evaluate possible CDPs, you’ll also want to ensure they have core functionality that supports your needs. Key considerations include:

• Integrations. Does the CDP easily integrate with the other tools in your martech stack? Remember that your CDP can only deliver value if it can pull data from and send data to all your other tools.
• Accessibility. How much technical know-how is required to use the CDP? You’ll get the most value from your CDP if multiple teams can use it, so ensure it’s accessible to everyone’s level of technical skill.
• Identity resolution. Does the CDP resolve customer identities across a wide variety of platforms and devices? This functionality is crucial if you want to create a holistic customer experience.
• Compliance. Does the CDP comply with all necessary privacy laws and regulations? Beyond GDPR and CCPA, consider any industry-specific regulations and considerations relevant to your customers.
• Security. Does the CDP have credible, independent security certification? Anywhere you’re sending data should keep it safe; look for certifications like ISO 27001 or SOC 2.

So what is a customer data platform’s place within your overall martech stack? You might think of it as a central hub that receives data from all your other tools, then returns actionable insights to them. A CDP is more than a central repository — it’s a powerful tool for gaining a deep understanding of your customers. And, most importantly, it translates that intel into easy-to-access insights that drive better customer experiences and business outcomes.

A CDP is especially useful for customer communication when you connect it to an automated messaging platform -- like Customer.io. If we do say so ourselves, with Customer.io hooked up to your CDP, you'll have the power of personalized messages crackling at your fingertips. You can send us data through our RESTful API, webhooks, or any of our almost 200 integrations.

Want to see for yourself? Start a free trial with us today!