Is Your Data Strategy Falling Behind?

Businesses are producing more data than ever before. In recent years, the rate of data growth has surpassed the previous two decades combined. According to IDC, global data is expected to more than double, reaching 175 zettabytes by 2025.

Data from your website, mobile apps, email, call centers, and support tickets are now just a fraction of what your business needs to track. However, more data doesn’t always lead to more insights. Many businesses are unprepared to handle the overwhelming volume of data, which often sits in silos, isolated from the analytics and marketing tools needed to make data-driven decisions and personalize customer experiences.

As the digital ecosystem evolves, so does the need for robust solutions to consolidate, analyze, and leverage customer information effectively. It’s no surprise that Customer Data Platforms (CDPs) are becoming essential in the modern marketing stack and the foundational data architecture that supports it.

Why Customer Data Platforms (CDPs) Matter

By collecting customer data from multiple channels and unifying it in one central location, CDPs offer all teams across a business—from marketing to analytics—a single, accessible, real-time view of each customer.

The impact of CDPs on business is tangible. A recent study by Forrester found that companies using a CDP achieve 2.5x greater customer lifetime value than those without one.

CDP Growth and Challenges

The rapid growth of CDPs has come with its own set of challenges. According to Gartner’s annual hype cycle, CDPs currently sit in the “trough of disillusionment,” suggesting that many buyers expect more from CDPs than the technology is able to deliver at this stage. This guide aims to clarify the benefits and capabilities of a CDP.

To provide a clearer picture of what a CDP is and who benefits from it, Twilio Segment has created a comprehensive guide: “The Definitive Guide to Customer Data Platforms.”

What is a CDP?

CDPs empower businesses to collect, govern, synthesize, and activate customer data across multiple touchpoints. Here’s a breakdown of each function:

1. Data Collection

• A CDP captures complete customer data from any point of interaction, including:
  • Owned platforms (website, mobile apps)
  • Advertising channels, email, CRM, payment systems, and support tools
• CDPs create a single source of truth, seamlessly connecting data to internal systems.

2. Data Governance

• CDPs apply standardized data rules to ensure accuracy, reliability, and privacy compliance.
• This functionality allows businesses to quickly identify and resolve data quality issues.
• CDPs can automatically correct or transform data to maintain data integrity.

3. Data Synthesis

• A CDP organizes customers into related groups, consolidating their activity across channels in one location.
• CDPs also create “anonymous” profiles for visitors who haven’t identified themselves yet, stitching these profiles together once they become “known.”
• This ensures that no data point is lost, providing a unified customer profile.

4. Data Activation

• CDPs route data to the tools used daily, supporting data-agnostic integration with any tool or channel.
• Some CDPs offer limited campaign execution capabilities, while others serve as “pipes,” connecting clean, unified data to engagement tools to drive retention and lifetime value.

How is a CDP Different from Other Solutions?

Rapid changes in customer behavior and regulatory environments make it increasingly challenging to meet customer demands with outdated technology. Here’s how CDPs differ from traditional solutions:

1. CRMs (e.g., Oracle, Salesforce)

• Primary Function: CRMs help create a single customer record.
• Limitations: They lack the capability to support digital engagement needs, especially with the growth in data sources and applications.

2. Marketing Activations

• Evolution: CRMs evolved into marketing clouds, adding tools like Marketo, ExactTarget, and Pardot for engagement.
• Limitations: Mostly limited to email, marketing clouds struggle with data accuracy and are restricted by CRM’s single-connection model.

3. DMPs and Data Providers

• Function: Initially added to marketing clouds to tap into digital ad opportunities, DMPs rely on third-party data, which lacks personalization and conflicts with privacy demands.
• Limitations: Primarily use generalized, third-party data and can’t provide a unified customer experience, leading to privacy concerns.

4. CDPs

• Advantage: With GDPR and an industry shift to first-party data, CDPs prioritize clean, accurate data across multiple engagement channels beyond email and ads.
• Key Differentiator: CDPs support extensive data integration, personalization, and privacy compliance, filling gaps left by other systems.

Who Benefits from a CDP?

CDPs aim to consolidate customer data in one place, offering benefits across an organization. From marketing and product teams to executives, every team gains faster, data-driven decision-making, enhancing the customer experience. With CDPs, businesses can break down data silos and give everyone the data access they need to make informed decisions.

Customer Data Platforms (CDPs) offer companies a centralized, cohesive view of their customers by consolidating first-party data from various sources. Unlike CRM systems, which focus on direct interactions, and DMPs, which are primarily used for anonymous, short-term advertising data, CDPs capture in-depth, behavior-focused data that enhances customer insights across marketing, product development, and strategic decision-making. By bridging the gaps between different data sources, CDPs empower businesses to create personalized, meaningful customer experiences that drive engagement and loyalty.