The pandemic has condensed a decade of digital transformation into just one year, with online channels becoming the primary way businesses now interact with their customers.
According to recent research, the digital customer experience is now the number one priority for high-performing businesses, and will be a key driver of future revenue growth.
To deliver it, they need customer data. But some businesses are struggling – with the volume and variety of digital touchpoints ballooning, data is becoming more fragmented and harder to manage, distorting businesses’ view of the customer and making it impossible to deliver the personalised, consistent and connected experiences that consumers now expect.
To cope, businesses of all sizes are turning to customer data platforms, or CDPs, to rationalise and consolidate their customer data. But what is a CDP? And how can brands make sure they choose the right one?
The ABC of CDPs
CDPs centralise, clean and unify data from all of your company’s touchpoints, before channelling it to the tools and services where you want to activate it.
They provide a detailed, 360-degree view of your customer interactions, pulling real-time data to a central hub that can be accessed by anyone across your organisation. This avoids silos, and ensures every team gets the same picture of how customers are using your product, service, or website.
CDPs provide a single source of truth that can fuel everything from advanced analytic and behavioural modelling to customer-centric marketing and product development.
A good CDP should help you with:
- Data collection – taking first-party data from every customer touchpoint.
- Data processing and consolidation – combining that data to create unified customer profiles. The best CDPs also clean your data at this point, assuring its reliability by removing erroneous entries, duplicates and other issues.
- Data segmentation – organising your data into meaningful audiences.
- Data activation – deploying this information to other tools, where it can be used to improve customer experiences, fuel business decisions and inform product decisions.
CDPs differ from the advertising-centric DMP (data management platform), used to collect and manage large, anonymised data sets of audiences (usually from third parties) – and the CRM (customer relationship management) platform, optimised for sales teams to capture customer information during sales conversations. Both take a more static approach to data and are ill-equipped to deal with the vast amount of customer touchpoints that now exist across a digital-age business.
Some 73% of companies recently surveyed said that a CDP was critical for their CX efforts. It’s no wonder, then, that 47% of brands said they were planning on increasing their CDP budget by over 25% in the next 5 years.
But no two businesses are the same, and neither are two CDPs – so ensuring you’re actually getting the most out of a CDP starts by picking the right one for you.
6 steps for choosing the right CDP
With dozens of CDPs now on the market, here are six steps to help choose the best one for your business:
1. Identify your use cases
First, identify why your company needs a CDP. What are your business goals? As with any planning, it will be important to think about your long-term goals as much as what you need a CDP for in the short-term. The best CDPs are inherently flexible, sitting at the heart of your data stack and allowing you to switch up integrations as your business needs evolve.
2. Think about who will be using the CDP, and involve them in the process
Before you compare various CDPs, it’s important to bring all internal stakeholders into the process. It’s useful to ask yourself: who collects the data that the CDP will process? The likes of finance, sales, customer service and marketing may all benefit from a CDP, so their input could be invaluable from the beginning.
3. Determine what tools you will need
Your customer data is only as powerful as the ways you use it. You’ll likely want to consider analytics, advertising, customer success and business intelligence tools. Look for a CDP that allows you to integrate your own choice of best-in-class tools, and that doesn’t lock you into its own suite of products.
4. Consider other features and requirements
Once considered a tool for marketers, CDPs are now recognised for their value to the entire business. Look for a provider that offers a wide range of extra features, from GDPR compliance tools to state-of-the-art data storage. Deciding which features are most important to you should be a key part of the procurement process.
5. Compare vendors directly
Once you’ve narrowed down your list, you’ll want to directly compare CDPs head-to-head. It’s worth considering, for example, whether certain CDPs suit your industry better than others. Everything from customer case studies to how well a CDP provider’s customer service is rated should inform your decision. Sites like G2 can be a great source of user reviews.
6. Consider the return on investment
Finally, make sure to calculate the price associated with adopting a CDP. Compare this with the cost of building and maintaining a similar solution internally, looking at how long your engineers would have to spend developing integrations for each different tool you want to utilise. Different vendors have different pricing plans based on usage, so you also need to think about how much a CDP will cost you as your company scales.
Jumping on the CDP revolution
Pre-pandemic, it was already clear that CDPs – with all of their functionality – were an essential tool for a customer-centric business.
But the sudden shift to online as a result of the pandemic has increased this need, and in 2021, we will see businesses of all sizes turning to CDPs as the foundation for their customer relationships. Choosing the right solution can set up a business for long-term success, but missing the boat can mean lost revenue as businesses face the continued pressures of a prolonged pandemic.
About the Author
Tido Carriero is Chief Product Development Officer at Twilio Segment. He leads our engineering, security, product and design teams. Prior to his current role, he led the Product Engineering team at Dropbox and was an early member of the Facebook ads team before that.
Featured image: ©Wavebreak Media