Recently, Customer Data Platforms (CDPs) have gained importance as businesses collect more and more data about their customers. This data is often siloed in different systems, making it difficult to get a complete picture of each customer. A CDP helps solve this problem by bringing all customer data together in one place.

However, while many companies see CDPs as a priority (about 66% according to a recent report by Forrester and Zeta), most are not satisfied with their current CDP solution. 

To achieve the desired ROI from your CDP, it's crucial to have a clear process for collecting, managing and governing your customer data. Without a solid governance strategy and process in place, the data feeding your CDP becomes a liability instead of an asset.

What is a CDP

A Customer Data Platform (CDP) is a software solution that collects, unifies, and activates first-party customer data from multiple sources to create a single, comprehensive view of each customer.  

Once the data is centralized, a CDP is used to create unified customer profiles. These profiles contain all known information about each customer such as demographicdata, purchase history, website behavior, or social media activity.

CDPs can also be used to segment customers and activate customer data. Segmentation allows businesses to group customers together based on shared characteristics. Activation enables them to send targeted messages and offers to each customer segment.

What makes CDPs unique

CDPs provide a single source of truth for all customer data, regardless of where it comes from. This data is stored in a central repository, which can then be used for marketing analysis, segmentation, and insight discovery. The main goal of a CDP solution is to increase the speed and effectiveness of omnichannel marketing campaigns.

What are the main benefits of a CDP

CDPs benefit businesses across different key areas: 

• Customer experience: by understanding their customers better, businesses can create more relevant and personalized marketing messages and offers
• Marketing efficiency: by automating marketing tasks and streamlining workflows
• Revenue: by helping companies identify and target high-value customers, as well as revealing upsell and cross-sell opportunities to existing customers 
• Data governance: reduction of data silos by centralizing from multiple sources in one system of records 
• Segmentation and targeting: CDPs enable marketers to segment customers based on specific attributes or behaviors 
• Data transparency: by providing a single view of customer data in one platform
• Compliance and data security: given the sensitive nature of customer data, CDPs typically prioritize data security and compliance with privacy regulations, such as GDPR and CCPA, to protect customer information

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Data collection and CDPs 

Customer Data Platforms (CDPs) mainly operate with first-party customer data, which is data obtained directly from customers with their explicit permission. Naturally, a CDP provides many possible ways to ingest data, from direct on-site data collection to batch API imports.

This type of data is typically acquired through customer interactions with your company's website, points of sale, eCommerce, CRM, social media, contact centers, external databases, and other similar sources.  

First-party data tells you how customers use your products or services, and it helps you create a more personalized customer experience. 

First-party data can be collected from a variety of sources, including: 

• Websites: through website analytics, server-side data collection, and forms
• Apps: through app analytics and user behavior data
• CRM systems: through customer interactions, purchase history, and loyalty program data
• Social media: through social media interactions and customer profiles
• Email: through email subscriptions and engagement data

First-party data can be: 

• Demographic information
• Purchase history
• Website browsing behavior
•  App usage data
• Social media interactions
• Customer feedback
• Loyalty program data

Why you need to have a firm grasp on the data going into your CDP

Customer Data Platforms (CDPs) are not plug-and-play solutions. They are expensive investments because they are complex software solutions that require a team of experts to implement and manage. They also come with a high price tag, which can range from tens of thousands of dollars to millions of dollars per year.

Moreover, CDPs operate in real-time by continuously collecting and analyzing data from a variety of sources, which allows them to provide personalized recommendations to customers based on their individual behaviors and preferences. CDPs can also send data to third-party tools in real time for more in-depth analysis, such as predictive analytics and machine learning. 

With all the different types of first-party data that a CDP collects, the platform’s cost, and its real-time capabilities, it is crucial to have a good grasp on the data feeding your CDP from the beginning.

Your company is probably already collecting first-party data in a multitude of ways. Different departments may be collecting data from different data points. They may be collecting the samedata multiple times or even collect it incorrectly. 

This eventually leads to data overload, duplicate data collection, error-prone and inconsistent data that is fed directly into your CDP. It gives the platform a very unreliable data foundation to work from. And it gives your team a lot of extra working hours spent on fixing data security and management issues.

Without a consistent data governance practice in place, you won’t be able to get the value that you expect from your CDP.

Here are some of the unwanted consequences: 

• The customer journey will be inaccurate
  This means you won't be able to see how customers are actually interacting with your brand, and you'll be making decisions based on faulty data.
• You'll make false assumptions
  This could lead to you launching the wrong products, targeting the wrong customers, or making other critical mistakes.
• You'll provide poor user experiences
  If you don't have a good understanding of your customers, you can't send them the right messages or offer them the right products. This will lead to frustration and churn.
• You'll waste money on your CDP
  CDPs are big investments, and if they're not fueled with accurate data, they will lead to low RO

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Key use cases for CDPs

A critical feature of any Customer Data Platform is to provide segmentation capabilities to target a specific segment of customers and anonymous visitors. On a technical level, this requires a robust practice of providing metadata to the CDP. 

Frederik Werner, Head of Analytics at Accutics, explains:  

"In digital marketing, very little information about our audiences is provided in human-readable format. A good example is device information, like differentiating between mobile and desktop traffic, which is only provided through request headers like a User Agent or Client Hints, both of which need to be processed and aggregated to provide clear device information. 

The same is true for information about the sources of website or app traffic.

A typical use case for a CDP is to identify and segment on traffic that has been in contact with a certain marketing campaign. To be able to identify those visitors and customers, companies need to translate random tracking codes and UTM parameters into clear campaign information. Even before that, marketing teams need a robust and scalable solution to supply the raw campaign information to the websites and apps.

To tackle this challenge, mature companies are using platforms like Accutics Standardize to enable marketing teams and agencies to effortlessly create tracked URLs that provide any type of information that is usable for segmentation and activation.

Once the data is attached to the destination URL, connecting the CDP to Accutics Standardize provides rich lookups and easily identifiable attributes to use in downstream activities. 

With the right processes and global governance in place, it is important to continuously monitor that teams and agencies across the globe follow the standards. This is where an automated monitoring solution like Accutics Validate helps leading companies to ensure traffic follows the required format in all markets and for all brands.

Last, but not least, a data transformation and aggregation tool like Accutics Connect can bridge the gap between a first-party CDP and the offsite platforms that are used to drive traffic. While CDPs are strongly biased towards using first-party data, enriching data sets with offsite events can close the gap between the place where marketing dollars are spent and where revenue is generated.”

In a nutshell

CDPs are powerful tools that can transform the way businesses interact with their customers. However, to fully realize the benefits of CDPs, companies must implement a strong data governance strategy.

CDPs can only deliver their full potential when they are powered by high-quality data. Data governance plays a crucial role in ensuring that data is accurate ,consistent, and compliant with privacy regulations. Without effective data governance, the data feeding into a CDP can be unreliable and misleading, leading to poor customer insights and ineffective marketing campaigns.

Companies that prioritize data governance are well-positioned to reap the rewards of CDPs. By establishing clear data policies, implementing data quality control measures, and educating employees on data management practices, businesses can ensure that their CDPs are fed with accurate and valuable data.