MarTech Basics #5: Understanding Customer Data Platforms (CDPs)
MarTech Basics #5: Understanding Customer Data Platforms (CDPs)
A Beginner's Guide to Unifying Customer Data
A few years ago, I consulted for a company that sold cowboy boots and hats.
The family-owned company was successful because the owners understood what their customers needed and wanted. Company leadership cultivated an in-depth understanding of their customer base.
They knew when to say “Yee Haw” and when to ask “Haw Yee?”
When someone inexperienced in western wear came to the store, the staff walked them through care and wear information. The new customer left happy, well-informed, and with related care products for what they came in for.
When a return buyer came, the staff knew to leave them alone until checkout.
For decades, this strategy worked. Every purchase was in person and people tended to go to the same store repeatedly.
Everything changed when the fire nation attacked
wait, that’s not right….
Everything changed when people started ordering online.
All of a sudden, figuring out who already had what products was much harder.
To make the confusion even worse, they had just acquired another western wear company AND were putting together a loyalty program.
The informal and in-person methods for personalizing customer experiences were not enough to meet all the needs of the growing company.
Understand Modern Buying Habits
The core issue wasn’t that the customers changed as people; the issue is that their buying habits changed.
Customers still wanted personal recommendations.
Customers still wanted to know how to take care of their purchases.
Customers just didn’t have the same journey to purchase that they did in the 20th century.
Somehow, we need to pull together information from ALL possible buying journeys.
Welcome to Customer Data Platforms (CDPs)
Customer Data Platforms (CDPs) are digital tools that combine information from all customer journeys. CDPs unify purchase and behavioral data from all possible purchase paths so that you can get a single view of your customers.
CDPs carry the digital load so that you can keep track of your customers however they prefer to buy.
What could unified data let you do?
If a customer wants to read 500 blog posts about cowboy hat care before purchasing his next hat, keep him in the loop with newsletters.
If a customer wants a one-click complete care package for a pair of boots, recommend that in a single email to her.
If a customer orders one hat on the phone, a pair of jeans online, and goes in store to buy boots, you need to make sure that the customer service can handle a return of any of those products.
You can do this and more by pulling all of your customer data into a single place and combining it1.
Once you have this information collected, you can work to build full customer views and you can personalize and better understand your customers—you can build a new version of the in-person experiences for the digital era.
In short, CDPs give you a better idea of how to talk to your customers.
Check out this article on the basics of customer communication.
Choosing the Right CDP
There are two common approaches to creating CDPs:
Create a CDP by combining various tools and software already in your tech stack so that nothing new has to be integrated
Purchase an off-the-shelf packaged CDP suite that has common functionality
The two options are covered in-depth in this article below at data beats.
Before deciding which approach to take when implementing a CDP, all eventual users should collect their specific future use cases. I don’t mean a general understanding of what they hope for.
All stakeholders need to create report- and dev ticket-level use cases that they expect to have in the final product. Once data starts getting unified and correlated, adding in new information can be much more difficult than if it were added at the start.
A more in-depth conversation about pre-implementation work that can make the overall project 10x easier happens in this webinar at minute 42.
Once all these use cases are defined, a further investigation into packaged vs composable CDPs can happen at the level of depth needed for a successful implementation.
In Summary
We covered:
the journey of a company that grew until it organically needed a way to unify customer data across all of its sales channels
what a CDP is and why it fit the company need
a few use cases the company considered
and what kinds of CDPs are out there
After reading this post, you're up to speed on the basics of CDPs. You’ll be able to tell when someone might need one vs when they are just excited for the hype.
Now that you see how implementing a CDP can help give a better idea of what your customers want to see, you need to make sure you communicate that with them!
We’ll discuss data unification in a future post