CDP vs CRM vs DMP
You’re probably familiar with CRM (Customer Relationship Management) and DMP (Data Management Platform) solutions and have probably used a variety of them over the years. A CDP takes the basic premise of both solutions and moves it firmly into the 21st century.
While a CDP has elements of both DMP and CRM solutions, it has vastly greater potential as a tool for targeting existing and prospective customers.
Click here to find out more about the differences between DMPs, CRMs and CDPs.
So what does a CDP do?
In its purest form a customer data platform collates and sorts data that’s collected from a variety of sources:
- First-party data – data gathered directly from your own data collection efforts. That might be data you’ve gleaned directly from a purchase or from a newsletter sign-up, for example.
- Second-party data – data that’s been sourced from outside of your organisation. That might be an email or customer data list you’ve purchased, for instance.
- Third-party data – anonymised data that’s collected from third-party browser cookies (due to be phased out and replaced by the mysterious Google Privacy Sandbox in 2023), or information from platforms such as Google Analytics.
Primarily, it’s the first-party data that we’re interested in. First-party data is the purest, cleanest and most useful data you can hold, but on its own it will only allow you to target existing customers or people that have interacted with your brand. When it’s combined with second- and third-party data, you can build look-alike audiences that will increase the reach of your marketing efforts and help you uncover potential new customers who have an affinity with your brand.
What sorts of data can a CDP hold?
Unlike CRM solutions, which are primarily manual entry systems without the level of automation of a CDP, or DMPs which hold generic, anonymised data, a CDP can store and sort through a vast array of different data types.
These can include:
- Marital status
- Family size
- Education level
- Location data based on residence
- Location data based on mobile usage
- Opinions, attitudes and beliefs
- Online shopping habits
- Actions taken on a website
- Purchase history
- Loyalty/voucher/discount redemption
Keep it relevant
With all this data collated, you can create strategic campaigns for different groups of customers and avoid sending messages and offers which aren’t relevant to them.
Receiving irrelevant marketing messages from brands can create a disconnect with customers and encourage them to seek out competitors with more appropriate products and services. Having the ability to serve them with products that are right for them at the right time ensures you reinforce the brand connection you’re looking for, or have built up over time. In addition, the ability to adjust your offering in line with their changing needs fosters a long-term relationship with customers.
Given that customer acquisition can cost anywhere between five and 25 times more than retaining existing customers, nurturing these connections is not just good practice, it's good business too.
Data segmented from your CDP also allows you to effectively carry out A/B testing on your campaign creatives, and analyse and refine the marketing communications you send to existing and prospective customers. This helps you learn how effective future campaigns are likely to be.
That personal touch
A CDP will also give you the capability to send personalised communications, something which customers have come to expect in the digital marketing age. Communications that address customers by name and specify details of their account or change of circumstance ensure that they feel valued and seen and are more than just a number in your database.
For example, an energy company may be able to use data to identify a change in a customer’s usage and speak directly to them about any ongoing changes in relation to the energy services they use.
In fact, we did just that for our client Oxxio, using our Conversational AI Cloud solution.
Using a CDP also allows you to identify which marketing channel is most responsive for a group of customers. Depending on age, mobile may or may not be the prime method of contact. Some customers may respond better to email communication. Using a CDP will allow you to create different campaigns and measure the response to each, creating better ROI data and, in the long term, improving open rates for your comms.
Managing your customer data in this way can also offer automation options for certain business activities, leaving your marketing team with more time to focus on the strategic elements of their roles that drive the business forward. The effective automation of data sorting will also facilitate data sharing with different teams and aspects of the business for more cohesive brand activity.