Understanding and selecting a Customer Data Platform (CDP)

Collecting data is invaluable. Only on the basis of data are you able to make targeted decisions regarding strategy, business activities and product offerings. Most companies collect data, but fail to make this data transparent and transform it into a clear customer profile, linked to the business activities. And that is the essence of the CDP.

A CDP collects data from your CRM, marketing platforms, websites, ERP and other processes and summarises this data into a clear customer profile, which is enriched at every interaction or data point your customer is involved in. Based on this data, you can divide your customers into segments. Based on the customer profile and segments, you can automate processes and trigger your customer base, which will lead them back to your cross-channel user platforms such as website, app or customer portal.

To make a good choice between CDP platforms, it is a good idea to look at your current IT architecture. Can you fit a CDP into your digital ecosystem so that it is capable of collecting data? Yes? Then you can move on. No? Then a CDP is of no use (yet). In that case, first make sure that data can flow freely within your organisation and is available for other applications.

There are many different CDP platforms on the market, most of which have grown from one of the 4 components described above. These are quasi always SaaS systems, which means your data will be in a cloud environment. Be prepared for this.

To make a specific selection, start from your business goals. It is essential to get the business case right. A CDP project has a large footprint in your organisation and obviously comes with an investment cost. By identifying the opportunities and combining them with your strategic goals, you can draw up targeted KPIs. A CDP should be able to contribute to achieving these KPIs. You can do this by performing a requirements analysis and presenting a FIT-GAP requirements list to candidates.

Also make sure your CDP platform complies with the current rules for data privacy and data exchange within and outside the European Union. Not all CDPs are prepared for this and it is important to find out.

You can opt for a CDP that is standalone

A CDP offers huge benefits if you apply it properly.

1. Because you can communicate in a highly targeted and personalised way, you increase customer lifetime value. Switching to a very personal form of communication can increase customer interaction by as much as 60%.
2. Every department in your organisation also benefits. Marketing and sales as well as product/service and management benefit from better insights into your customer profile.
3. The ability to get insights faster and link actions to them, lowers your time-to-market to communicate better and more to your customer.
4. By consistently collecting and centralising customer data, you will also be prepared for any legislative changes regarding data collection with cookies. At that point, the historical data will help you make better decisions.
5. When you have your CDP data captured at the source, you also work towards a high degree of data integrity. This, in turn, ensures reliable insights and conclusions, with better business as the final result.

We briefly summarise some best practices that you can use when selecting your CDP and fitting it into your existing digital applications:

1. Keep it headless: make sure your existing and future customer facing applications integrate with the CDP and not that the CDP becomes the monolith in your digital ecosystem.
2. Collect data at source so that data is collected centrally as quickly and error-free as possible, preventing data contamination.
3. Choose a CDP tailored to your team capabilities. Look at a 3-5-year horizon and make sure your CDP can grow with your ambitions you have for this time.
4. Ensure your data stays within the EU.
5. Before making the selection: involve and inform the departments that will benefit from customer behaviour insights.

As with all projects, there are also risks and pitfalls to Customer Data Platform projects.

Digital maturity

The first is digital maturity. Since a CDP project touches just about every data source of your business, a high digital maturity of your organisation is a necessity. If you do not capture enough data or your business processes are not in a digital twin, then a CDP project may come too early in your organisation's digital growth.

Volume

Besides maturity, the scale of your operation is also important. After all, you need enough data to form a representative dataset from which to gather insights. Too low a volume in customers and customer interactions will be much slower to lead to useful insights and may make your investment in a CDP platform unprofitable.

Data integrity

Large volumes of data are only useful if they also represent correct data. When data from different data sources contradict each other or data has become contaminated for historical reasons, you will draw wrong conclusions from the CDP profiles. Therefore, it is very important that your level of data integrity is high enough to take on a CDP project. Also, always try to have your CDP collect data first-hand, and not through intermediate stations. Collect data at the source.

Team and business processes

Taking full advantage of a CDP will result in more targeted communication to your customers, improving customer satisfaction, retention levels and conversion. Depending on what (semi)-automated actions you attach to this, your teams should also be prepared to deal with this new way of working. So make sure you look at the implementation of your CDP in the context of a broader view: that of the business process. You can do this through service design methods and more specifically, mapping the service blueprint.