What are the Advantages of a Customer Data Platform?

Posted by Marc Gasser | 22-May-2020 11:52:46

In a time when we generate more information in one day than in a whole century, companies that are able to handle customer data have a huge market advantage.

However, for most companies, customer data is wasting away in isolated data silos. The secret weapon for breaking down data silos and redefining customer relationships is called the customer data hub or customer data platform (CDP).


What are data silos and why are they created?

A data silo is an isolated group of data that remains under the control of one department and is isolated from the rest of the organization. Comparable to grain in an agricultural silo, which is encapsulated from external influences.

Data silos are created for various reasons. However, a common denominator is the organisational structure. Once a company has reached a certain size, specialized teams are set up to accelerate work processes.

This slows down the flow of information between the teams. As soon as data is collected without a strategy to make it available to other departments, data silos inevitably arise.

While data silos may appear harmless on the surface, there is an increased risk that the company will be unable to act.

Data silos are created when raw data is not consistently processed or stored in a way that is unreadable for other applications. While data silos may appear harmless on the surface, there is an increased risk that the company will become incapacitated.

The Customer Data Platform promises to provide the key to comprehensive data-driven marketing. By centrally managing and orchestrating customer data, sophisticated marketing concepts can be implemented.

Innovative companies therefore not only rely on a customer relationship management (CRM) program with good reason, but also use a customer data platform.

What is a Customer Data Hub?

Until now, there was no platform type that had the potential to bring all data together and at the same time make it accessible to the marketer. While a CRM provides a comprehensive view of individual customers, the data is often only as good as the person who is serving the CRM. It is therefore not unusual to find outdated data records in many CRMs.

A customer data platform, in turn, is to be understood as a hub that combines all customer data and interactions of the customer journey into uniform customer profiles.

The customer data is easily accessible and usable for the marketer. The software serves as a hub and central contact point for customer data. The single customer view or the 360 degree customer profile thus becomes reality.

How does a customer data platform differ from a CRM?

CRM systems are designed for cooperation with customers. The data records are made up of historical and often manual customer data to create a permanent customer profile. CRM systems are not designed to accept large amounts of data from other sources.

A customer data platform, on the other hand, is capable of linking all types and sources of customer data, whether internal or external, structured or unstructured, batch or streaming. This allows you to take a much more comprehensive view and better understand and respond to your customers in real-time.

The data sources of CDPs

  • Transaction and order data: E-commerce, administration and service systems, and thus data on purchases, orders, customer and product value, shopping baskets, vouchers, returns and service requests.
  • Behavioral data: Products and categories, clicks, interaction data, newsletter click rates and visited pages.
  • Profile data: Contact information, opt-in, psychographic data points such as legible style, context, preferences and personality. This data can be enriched by the customer himself.
  • ERP and PIM data: Inventory and prices. Rather transaction data than customer data but necessary for collaboration. Typically this data comes from PIM or ERP systems. Larger companies have standardized exchange formats (EDI) with their suppliers to increase efficiency.
The above examples are only the tip of the iceberg - the CDP is designed for any type and category of data (currently known).

Specific characteristics of a customer data platform

The ability to flexibly add and modify new types of sources makes the customer data platform more future-proof in its function as a central repository (managed directory for storing and describing digital objects).

CDPs are not only databases, they also standardize and bundle modules. These modules contain preconfigured plugs or connectors to marketing databases and supplied tools, making it easier to integrate external databases into the operation. Additional modules help to standardize data processing and cleanse data.

Some CDPs have additional functionalities such as forms manager, BI, analytics, reporting, personalization, marketing automation or artificial intelligence.

The customer data platform can not only obtain data from a CRM system. Other external systems, so-called channels (or delivery platforms and engagement platforms), can also be connected to the CDP. These include applications such as social media channels, websites or e-mail marketing.

These systems interact with the customer data platform to display news and share engagement and campaign data with the customer data platform to keep data up-to-date.

These applications are not part of the customer data platform, but some CDPs have tight integration with the delivery platforms and allow you to plan campaigns and even send messages directly from a CDP.



Advantages of a Customer Data Platform 

  • 360° customer profiles: Integration of all contact points, autonomous orchestration of customer and interaction data. The behaviour of the customers is guided in one place.
  • Segmentation & personalization: Merging of customers and appropriate content.
  • Agility and sustainable infrastructure: Central node for connecting data sources and fast provision of data for third-party systems developed.
  • Democratization of data: Simplified access to customer data for marketing, customer service and business intelligence.

Topics: Marketing Automation, Customer Journey

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