The market for customer data platforms (CDPs) is booming. Since 2016, the number of CDP vendors has shot up from 23 to 96 – evidence that ever more businesses are seeing the importance of collecting, rationalising, and making use of their customer data, and while CDPs have typically been categorised as a marketing tool, businesses are beginning to see their value across the whole organisation.

The reasons for the broadening appeal of CDPs are clear. In a digital-first world, the number of customer touchpoints is expanding rapidly, and businesses need a way to make sense of all this disparate information in order to understand their customers and deliver to them seamless, connected experiences. Additionally, with the coronavirus pandemic accelerating digital transformation in every sector, the quality of the digital customer experience has never been more important.

With so many vendors in the space and so many changes happening all at once, it’s easy to get confused about what a CDP actually is, and how to use one. Here’s what you need to know.

Cutting through the noise

There is no question that CDPs are transforming digital business. However, as with any growing category or boom, a lot of new companies are entering the space and calling themselves CDPs when they are actually not.

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The CDP Resource’s findings show that more than 25% of so-called “CDPs” aren’t really customer data platforms at all. With certain providers looking to capitalise on the category’s popularity, you need to know what a real CDP actually looks like.

A good CDP should enable you to:

• Collect data from all of your brand’s customer touchpoints – everything from your website and mobile apps through to email, push notifications, support tickets, and payment systems.
• Unify this data to create reliable customer profiles.
• Identify and remove potential errors or duplications from your dataset, so you can trust the information you’re working with.
• Funnel and activate this data to the tools where your business can put it to use, whether that’s to improve customer experiences, inform product decisions or fuel commercial decisions.

For example, say that your company is trying to get a better understanding of its customers. Your CDP would be used to collect data from touchpoints like your social media pages, website, email and any other places a customer might interact with your brand. It would then consolidate that information into easily understandable customer profiles before making them usable for other tools. Ultimately, a good CDP should be like a central nervous system for your first-party customer data, fuelling all the data-driven tools your company wants to use.

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Many of the platforms that masquerade as CDPs are actually customer relationship management systems (CRMs) or data management platforms (DMPs), both of which are designed for different uses, and don’t offer the same benefits as a CDP.

Getting the most from a CDP

Once you’ve got the right tool for the job, you need to know how to use it. Most CDPs are easy to get set up and fully-integrated, but the following should help give you a kickstart:

1. Don’t be afraid to experiment. Avoid rushing your research and committing to a single CDP right away. Many CDP providers offer free trials to see how they work for your business, so take advantage of this to see how your options compare. Every CDP is different, and you may find one is particularly well-suited to your needs.
2. Pick a provider that can assist you with data governance. A CDP will only be useful for your business if the information flowing into it is accurate and usable. Some CDPs provide quality assurance and data governance features that help you protect the integrity of your data, so it’s well worth looking for these as part of your research.
3. Think about the customer journey from end to end. Remember that your customers aren’t just clicking around on your website or tapping away at your apps. Their typical journey could include everything from email to chatbot and customer help conversations. To get a complete understanding of your customer, leave no stone unturned.
4. Be wary of ‘vanity metrics’. Just because customer data exists doesn’t mean that it’s all valuable. Be focused with the metrics you monitor, and only pay attention to those that are bringing value to your business by informing strategic decisions and helping you to improve products and services. Businesses too often focus on vanity metrics such as page views or total users – it can feel great when these are growing, but to achieve success, you need to understand whether users are actually converting interest to action, and helping to grow your revenues.

A powerful tool for uncertain times

A CDP is a powerful tool for any company’s tech stack, but it’s especially valuable in these times of rapid transformation, as many brands are forced to prioritise their digital offer.

CDPs provide a flexible, scalable foundation for connected customer experiences, so no matter what the future looks like, they should help companies emerge stronger and better able to engage with their users.