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Customer data platforms (CDPs) are
applications that support the analysis of
customer data for a company’s promotional

What is a CDP?
A CDP is a specialized software application for gathering and storing customer data. The software collects customer information from multiple sources, such as websites, social media platforms and e-commerce sites. CDPs help companies aggregate and maintain customer data for use in marketing campaigns, database systems and other software. The information businesses store in CDPs includes consumer data like:

Behavioral patterns and online interactions
Transactions like product and service purchases
Demographics, including names, contact details, birth dates and email addresses
Related: What Is Customer Data?

Benefits of CDPs
Besides supporting collaboration between teams and departments, a CDP can also provide several more benefits:

Improves data accessibility
Because customer data platforms integrate and unify data in a central location, teams across multiple departments can access information more easily and efficiently. Increased accessibility means teams can collaborate more effectively when using data for customer relations, marketing and sales planning and strategy development. Improvements to data accessibility and usability also support team productivity, as professionals can gather the information they need for supporting digital marketing efforts.

Collects more accurate data
CDPs also ensure more accurate data from first-party customers who visit websites, social media platforms and other digital channels. The ability of CDP software to gather data points directly from customers means more accurate information that marketers can use to target promotions and communication materials. As customers interact with digital applications repeatedly, the data in CDP software updates to reflect changes to the previously collected information.

Enhances customer engagement
Using CDPs also helps businesses enhance customer engagements through marketing activities. This is because individual customer profiles show professionals what types of interactions have the most influence on sales. Understanding what motivates customers to purchase is crucial for marketing teams, as they can better target efforts on these channels.

Related: What Is Customer Engagement? Definition and 4 Engagement Strategies To Implement Today

Differences between CDPs and CRMs
Customer relations management (CRM) software is similar to a CDP, as both technologies help professionals collect customer data. Although the two technologies share this similarity, there are also several differences between them, including:

Data collection
CDP collects data automatically and derives information from first-party sources that give deeper insight into customer behaviors and online interactions. CRMs require manual data entry, and professionals typically collect information from point-of-sale (POS) systems and e-commerce transactions. Another difference in the data collection process between CDPs and CRMs is that a CDP has a much larger data capacity, giving sales and marketing professionals more personalized information about their customers. CRMs, though, only collect data from the customers who make purchases and leave businesses with records of their transactions.

Data cleansing
CDPs also provide tools and features that cleanse data automatically, ensuring greater accuracy and detail about customer profiles. CRMs often require teams to clean data before importing it into databases, and customer service and sales teams typically collect this information prior to integrating the data into a CRM. New data that CDPs collect update in real-time, as customers interact with businesses online and across multiple digital channels. This differs from the way a CRM updates new information, as professionals make updates manually when customers’ information or transaction data changes.

CRM is more suitable for professionals in customer-facing roles, as these individuals often manage and use the data CRM software stores to track metrics like customer retention and turnover. CDPs, though, are often more suitable for marketing applications, where advertising and promotional teams access and use customer data to target campaigns and marketing messages. Because of this difference, CRMs are more applicable to maintaining relationships with current customers, whereas CDPs support building brand awareness and interest through multiple channels.

Related: What Is a CRM Database? Definition and Guide

Are you looking for a job now?
5 tips for choosing a CDP
When evaluating different customer data platforms, consider the following tips:

  1. Collaborate with key teams
    Collaborate with others who are also likely to collect and use the data a CDP stores. For instance, managers, sales and marketing professionals are often the individuals who rely most on customer data. Gaining input from these teams can help you evaluate different products and find the most suitable CDP solutions.
  2. Determine your goals
    Identify the purposes for which you want the CDP to fulfill. Understanding what the goals are for implementing a CDP can help you better determine which resources are the most effective in meeting your objectives. For example, many businesses integrate CDPs to optimize data collection, personalize customer experiences and make improvements in advertising efforts.
  3. Identify additional resources
    Determine the tools and resources that teams need alongside a CDP. This can help you better evaluate the features of your choice of platform, as many CDPs integrate with other tools that support interactions with customers. For instance, email platforms, customer support systems, payment systems and CRM databases are several tools that businesses often use to interact with customers. This makes it essential to evaluate which products have the functionality you need if you plan to integrate a CDP with current marketing tools.

Related: How To Implement Cross-Channel Marketing (Plus Tips)

  1. Compare different products
    Compare various products to determine which platform best suits your needs. Some of these products may also offer free trials, which allow professionals to assess the tools before purchasing. Consider the features and elements between different products to find the solutions that fit teams’ needs. Consider others’ input as you compare various platforms to better evaluate product choices.
  2. Consider budget and product price
    The prices for CDPs can vary between different brands and can differ based on features, tools and functions. It’s important to consider budget constraints, too, so you have a better understanding of an ideal price range. Many businesses also consider the return on investment with CDPs, as the future benefit of sales and marketing success can outweigh the initial cost.