What is a Customer Data Platform: The “Simple” Explanation

Collecting customer data is necessary to run a business today. To answer this business need and its complexities, a new category of solution took shape: Customer Data Platforms. What exactly are they? No need for software jargon and technical terms: here is the simple explanation to Customer Data Platforms. 

1. What are Customer Data Platforms?

A Customer Data Platform is a packaged software that consolidates customer data from multiple sources and creates a persistent, unified and real-time customer database easily accessible by other systems.

Combining online and offline data is often a struggle for marketers. A Customer Data Platform addresses this issue. It will help put all pieces together by integrating data from a variety of channels (including online transactions, demographics, online behavior) into one complete customer data profile.

To help us understand, here is a business scenario you might be familiar with.

Helen is 24 years old and lives in Singapore. She is looking for new shoes and has been searching online through different channels such as Google, Shopping, and Shopee to find the right pair. Finally, she visits Navy’s website. After checking different types of high heels, she finds a pair that matches her style. However, she’s afraid they will not fit so she decides to visit one of Navy’s physical stores instead of completing the checkout online.
After a few days, she completes her purchase at a Navy’s store.
A few months later, she buys a new pair of socks from Navy’s website.

For Navy’s, a few questions naturally arise from this customer journey:

  1. How can we identify Helen as a return customer when she purchases from different platforms?
  2. How can we store her data and track her on-site behavior?
  3. If Navy’s runs a special promotion, how should the brand approach her?

A customer data platform helps you answer these questions.

2. How does customer data platform work?

A CDP collects data across multiple channels

A Customer Data Platform collects and organizes data across a variety of sources such as websites, mobile activities, social media, and offline channels.

A CDP creates unified customer profiles

Customer Data Platforms are able to unify data across channels to create a 360-degree view of each customer. There are four kinds of data that a CDP collects and organizes:

  • Identity Data (e.g. Personal Demographic)
  • On-site Behaviour Data (e.g. Email Open Rate, Website Click, Product View)
  • Descriptive Data (e.g. Lifestyle. Interest, Marital Status)
  • Quality Data (e.g. How do you know about us? How would you rate our services?)

A CDP tracks and analyzes customer behavior and customer journeys

Customer Data Platforms can help marketers visualize customer behavior and identity. It can thus offer appropriate recommendations and reliable predictions to enrich your customers’ experiences.

A CDP leverages data insights to enhance customer experiences

Leveraging data insights from a Customer Data Platform makes it possible to run powerful acquisition campaigns. Let’s go back to Helen from our previous example.

  1. How do you identify Helen as a return customer when she purchases from different platforms?

A CDP would help Navy’s to identify Helen as a unique customer wherever she shops by merging online and offline activities. 

  1. How do you store her data and track her on-site behavior?

A CDP enables Navy’s to track Helen’s cookies and her behavior since her first visit on the website. For instance, the CDP system will record the type of products that Helen views on your website. Thanks to AI algorithms, Navy’s could identify the abandoned cart behavior and set up an auto-send email with a “10% High Heel Discount” Promotion Code for Helen to use either online or offline and encourage her to complete the purchase.

  1. If you run a special promotion, how do you approach her?

The system already recorded Helen’s interest in “high heels” so Navy’s could attract Helen’s attention by following up on the promotion email which is related to high heels. Navy’s could approach Helen outside the website by proactively running an online advertising campaign with useful data to deliver its message at the right time and increase the conversion rate.

So how do businesses benefit from such customer data platforms? This is what we will answer in the next part of this article.

3. How does a CDP benefit your business?

  • One-place. All data ⇒ Boost Your Productivity

Collecting and organizing data from multiple sources to evaluate marketing results is taking up time and money. This is where a CDP comes into play. A CDP primarily focuses on integrating data in one place, which helps to simplify your workflow and boost your productivity.

  • 360-degree-customer view ⇒ Understand Your Customer Better

The most effective way to foster customer loyalty is to give your customers what they are looking for. A CDP equips your marketing team with powerful customer insights and real-time data. That way, you can easily understand your target audience’s behavior, which allows you to deliver relevant messages and appropriate product recommendations.

  • Data Privacy ⇒ Gain Trust From Your Customers

As customers are expressing growing concerns about data privacy, it’s crucial to have a compliant customer data platform with secure data storage. According to Forbes, 75% of customers are more willing to share personal data with a brand they trust. A CDP enhances privacy safety with the ability to store data in sensitive fields. This means customer data is hidden from any data exports or campaign outputs. It can not be accidentally used but is still available for analysis.

  • Data-Driven Marketing & Sales ⇒ Generate the right insights to drive your business growth

A CDP drives your business to the next level by shortening the gap between your customers and your business. High-quality interactions and effective marketing increasingly depend on the data you have at your disposal. By consolidating and analyzing customer profiles, a customer data platform helps you be more strategic with your marketing approaches.
Navy’s is planning to run a promotion targeting “high heels” interest customers. How to target the right customers? Sending the same promotion for each and every customer would lead to a high unsubscribe rate from customers not interested in these products. Instead, Navy’s could leverage data from CDP to target exactly the right audience.

4. How to use a Customer Data Platform?

We’ve collected what we believe to be some of the most important use cases that become easily achievable with a CDP.

1. Online & Offline Activities Combined

Create an accurate customer profile in order to identify customers from online and offline activities.

2. Personalized Customer Experience

Tailor personalized customer experiences throughout the entire journey according to their behavioral data.

3. Smart Behavioral Retargeting & Lookalike Advertising

Strengthen advertising campaigns with behavioral retargeting: personalize the types of ads consumers see based on their browsing history. Address an audience that has characteristics in common with a seed audience you define.

4. Product Recommendations

Create different recommendation models such as “similar products” or “people also buy”. This will drive engagement and increase up-sell or cross-sell on your products or services.

5. Conversion Rate Optimization & A/B Testing

Deploy smart targeting to quickly transform the appearance of your page and test which version performs better.

6Omni-Channel Automation

Guide your customers through their entire lifecycle with personalized and timely messages sent to their preferred channel. This significantly enhances your chances to both acquire and retain a loyal customer.

7. Email Deliverability Enhancement

Increase email open rates. Thanks to powerful data insights and AI-powered algorithm, you can determine the ideal distribution time for each user based on their email opening habits, and reach them at the right hours.
If you are considering CDP as a solution for your business, here are the initial questions you should answer:

  1. How could your business use a customer data platform?
  2. Which features of a CDP would your business benefit from?

Identifying your business use cases will help you to find potential vendors that match your requirements. Request a demo to evaluate shortlisted vendors.

Gain new and loyal customers by securely identifying and engaging them with SAP Customer Data Cloud.

SAI Digital is the largest SAP CX Partner in South-East Asia. We are an eCommerce agency committed to delivering best-in-class digital solutions for our clients to best serve their own clients. We have used our business and implementation expertise to develop a CDP Package that allows for faster deployments with predictable outcomes.
Tailor this package to your needs and implement it with us in as fast as 3 months. Click here to learn more about our Customer Data Cloud package!