CDP: A band-aid solution?

Step into the world of Customer Data Platforms (CDPs) with our captivating blog, designed to guide you through every angle. Discover the origin story of CDPs – why they stepped into the spotlight. Uncover their true essence and explore the four common categories they belong to. Delve into real-life scenarios with eight compelling use cases that are revolutionizing businesses today. Tackle the question: are CDPs a quick fix or a sustainable solution? And don\'t shy away from addressing the challenges that come with CDP territory. Wrapping it all up, you\'ll find key takeaways that provide fresh insights into this dynamic technology.

Data is exploding! There’s a ton of it out there for Marketers & Sales professionals to make sense of.

Customer Data Platforms, also known as CDPs are the talk of the town with businesses focusing on their ability to “unify customer data” and “personalize marketing at scale”.

Explained simply, CDP is a software solution that collects and unifies customer data from multiple sources to create a single view of each customer.

With CDPs on board, businesses can craft tailor-made marketing efforts and provide customers with truly memorable experiences. Here’s a glance at some noteworthy players

There are several companies across various sectors that are leveraging CDPs to their advantage.

  • Retail: Think of giants like Amazon, Target, Nike, and Sephora.
  • Media and Entertainment: From Netflix and Hulu to Spotify Financial Services: Leading names like Wells Fargo, and Fidelity Investments. Technology: We’re talking about the likes of Google, Facebook, and Salesforce.
  • Travel and Hospitality: You’ve got Airbnb,, and TripAdvisor.
  • Financial Services: Leading names like Wells Fargo, and Fidelity Investments.
  • Technology: We’re talking about the likes of Google, Facebook, and Salesforce.

So while CDP’s are still relatively new on the bandwagon and deemed as an essential investment for marketers, Forrester has termed it as a “Band-Aid solution to a much larger problem”.

Why a Band-Aid solution? Complexities like Data Privacy & Security, the proliferation of customer touchpoints, and finding actionable insights from data are a few genuine challenges on the horizon.

So with all the promise, do Customer Data Platforms over promise and underdeliver?

What you’ll learn:

1) Genesis of CDP: Why did CDP come into existence?
2) CDP in essence
3) Four Common CDP Categories
4) CDP Adoption: 8 Key Use Cases of CDPs for Businesses Today
5) CDP: A Band-Aid Solution?
6) Overcoming Challenges in CDPs
8) Key Takeaways

Genesis of CDP: Why the need of CDPs in the first place?

Before the era of CDPs, marketers relied on tech stacks like CRM systems, Marketing Automation Platforms, and Web analytics tools

(Source: Salesforce)

It was all going great, till they stumbled upon the following 3 challenges:

Data silos: The proliferation of data sources resulted in data coming from different sources. This saw businesses capture data into different systems which were not easily accessible.

Manual Data integration: As strenuous as it sounds, businesses even today manually integrate data into systems. (It hasn’t changed much since those earlier days)

Limited Data Analysis: Driving a car with your windshield painted black. Scary right?
Having data residing in one of the data lakes but not being able to make sense of it feels the same. It is very limiting for a lot of business stakeholders.

Understandably, this became an impediment to data-driven decision-making.

CDP first came into the fray in 2010 with the promise of digitally transforming businesses by unifying customer data from different sources into a single platform.

It promised to address all 3 challenges mentioned above by enabling marketers to get a complete view of their customers. Thus improving customer relationships, marketing campaign effectiveness, and business decisions.

CDP in essence:

“A CDP centralizes customer data from multiple sources and makes it available to systems of insight and engagement”

In essence, a Customer Data Platform (CDP) is a platform that collects data from multiple sources, such as CRM, marketing automation platforms, and website analytics tools, to create a single, unified view of each customer. 

This Unified Customer Data then creates a comprehensive and centralized view of each individual customer to drive personalized and targeted marketing campaigns.

  • Provide a 360-degree view of the customer
  • Gather data from multiple sources into one platform, including first-party, second-party, and third-party data from online and offline sources
  • Unify customer profiles across systems
  • Connect with other systems to allow marketers to execute campaigns
  • Improve targeting for marketing campaigns

Source: AWS

Four Common CDP Categories:

CDP can be categorized into 4 different buckets and the best type of CDP for a business depends on the specific needs of the business.

Data-pipes-oriented CDPOrchestration-oriented CDP Automation-oriented CDP Measurement-oriented CDP
Designed to collect and store data from different sources. They are a good choice for businesses that need to centralize their customer data, but they do not have the need for advanced features such as orchestration or automation. Designed to build customer profiles and segments that can be used to target marketing campaigns. They are a good choice for businesses that want to personalize their marketing campaigns, but they do not need the advanced features of automation or measurement. Designed to automate the development and execution of marketing campaigns. They are a good choice for businesses that want to save time and resources by automating their marketing campaigns. Designed to track the performance of marketing campaigns and analyze customer behavior. They are a good choice for businesses that want to understand how their marketing campaigns are performing and how they are affecting customer behavior.

(Source: Forrester)

It is important to note that these categories are not mutually exclusive. A CDP can fall into multiple categories, depending on its features and capabilities. For example, a CDP could be both data-pipes-oriented and orchestration-oriented.

CDP Adoption: 8 Key Use Cases of CDPs for Businesses Today
  1. Data Collection (Identifying the customers): Collect first-party and third-party data to create a more accurate view of each customer & enrich the customer profile.
  2. Data unification: Ingesting & uniting the data from different sources into a single view of each customer. This allows marketers to see a complete picture of each customer.
  3. Personalization: Creating personalized marketing campaigns and experiences for customers to improve their marketing, customer experience, and customer retention.
  4. Improved customer experience: Tracking a customer’s progress through the checkout process and identifying any potential problems. The CDP could then send an alert to the customer service team so that they can intervene and help the customer complete the purchase.
  5. Customer retention: Identifying customers who are at risk of churning and sending them targeted offers or messages. The CDP could also be used to track customer satisfaction and identify areas where the company can improve.
  6. ID resolution: Linking together different customer identities across different channels and touchpoints. This is essential for creating a single view of the customer, which is necessary for personalization and orchestration.
  7. Omnichannel. Deliver consistent and relevant experiences to customers across all channels, including online, offline, and mobile. This is essential for providing a seamless customer experience.
  8. Data privacy compliance. Complying with data privacy regulations, such as the General Data Protection Regulation (GDPR). This is essential for building trust with customers and avoiding legal penalties.

It’s imperative to ask the question; with CDPs promising so much, what are the disconnects and struggles?

CDP: A Band-Aid Solution?

In a survey done by Forrester, data security challenges, lack of analytics & reporting capabilities, inability to show ROI, technical support issues, and data centralization (proliferation of data sources) were a few of the top concerns put forward by the users.

The struggle indeed seems to be real and CDP is far from a silver bullet. They don’t offer solutions to some of the most pressing issues of marketers. Here are a few of them:

Unfocused market

There are over 100 different CDP vendors on the market, and each one offers a different set of features. This can make it difficult for marketers to choose the right CDP for their needs.

For example, some CDPs are designed for small businesses, while others are designed for large enterprises. Some CDPs focus on customer data unification, while others focus on marketing automation.

This lack of focus can make it difficult for marketers to know which CDP is right for them.

Lack of critical data capabilities

One of the key challenges that have shown up is “Identity Resolution”, which is the process of linking together different pieces of data about the same customer.

A quick example:
Data silos: Many businesses have data scattered across different systems. This can make it difficult to collect and integrate all of this data into a single platform.

Data quality: Even when data is collected from different systems, it is often not of high quality. This can be due to errors in data entry, duplicate records, and missing data.

Data privacy: Businesses need to be careful about how they collect and use customer data. They need to comply with data privacy regulations, such as the General Data Protection Regulation (GDPR).

This lack of data capabilities can make it difficult to create accurate and complete customer profiles, which can make it difficult to target marketing campaigns effectively.

Missing marketer’s expectations

CDPs are still a relatively new technology, and many of them do not have all of the features that marketers need.

An example:
Some CDPs do not have the ability to track customer lifetime value, which is a key metric for many businesses.

Some CDPs customers use two different platforms to segment their customers: a CDP and an email solution. It’s because email solutions may have features or capabilities that the CDP does not have.

In the case of some CDPs, customers require another vendor beyond their existing implemented CDPs because of irrelevant product recommendation capabilities.

The lack of features can make it difficult for marketers to get the most out of their CDPs.

Overbloated tech stacks

Marketers are already using a lot of different marketing technology solutions. Adding a CDP to the mix can make it even more difficult.

For example, marketers may need to integrate their CDP with their CRM system, marketing automation platform, email marketing platform, and other marketing technology solutions.

Complexity, Time, and additional cost can result in chaos, dismay, and pessimism.

Too many expectations from the end users

Many CDPs are designed to be self-service, which means that marketers are responsible for setting up and managing the platform. However, many marketers do not have the technical skills to do this effectively.

For example, marketers may need to know how to write SQL queries, how to configure data pipelines, and how to use the CDP’s API.

This lack of technical skills can make it difficult for marketers to get the most out of their CDPs

It’s evident that CDPs certainly have the potential to be a valuable tool in the marketer’s armory but they have a long way to go.

Overcoming Challenges in CDPs: Valuable Insights for Companies:

Navigating the challenges of Customer Data Platforms (CDPs) can be a complex journey. Let’s shed some light on how you can tackle these hurdles:

Expertise Matters:

Smart Selection: Choosing the right CDP is pivotal. Ensure you thoroughly evaluate options available, aligning them with your unique needs and goals. Seeking external expertise, like analytics professionals, can provide a balanced perspective.

Data Harmony: Managing disparate data sources demands precision. Focus on integrating the right data to maintain accuracy. Rely on solutions that foster clean, consistent data to enhance customer profiles.

Unlock Support: Technical proficiency is crucial, but not everyone has it in-house. Leverage vendors or consultants who offer robust technical support to maximize the potential of your CDP.

Scalability Strategies:

Holistic Growth: As your business expands, consider the influx of new data sources. Prepare to integrate data from emerging channels like IoT devices, ensuring your CDP’s scalability matches your growth.

Seamless Integration: Incorporating new marketing technologies can be intricate. Prioritize integration that offers a smooth transition, and if needed, consult with professionals to ensure cohesive implementation.

Campaign Excellence: Implementing sophisticated marketing campaigns requires well-structured data and analytics. Seek assistance to design and execute campaigns that truly harness your CDP’s capabilities.

Optimizing Costs:

Strategic Resources: Hiring specialized staff for CDP management can incur costs. Instead, explore consulting with technology or analytics experts who can offer tailored guidance without the overhead.

Data-Driven Decisions: Leverage technology consultants to craft data strategies that align with your business objectives. Their insights can empower you to drive impactful marketing campaigns, maximizing your CDP investment.

In your journey to conquer the challenges poised by CDPs, remember that collaboration and outside expertise can be your most valuable allies. With the right approach and guidance, your business can harness the true potential of CDPs and navigate this intricate landscape effectively.

What are the Key takeaways?

Customer Data Platforms (CDPs) have the potential to be a powerful tool for businesses. However, there are some challenges associated with using them. Businesses need to carefully consider their needs and their resources before deciding whether or not to implement a CDP.

Read a recent case study of a Retailer’s Journey to Accelerated Data Processing and Improved Accuracy

Here are things you should keep in mind:
  1. CDPs can be avoided. Companies can use their existing Martech and make the most out of it.  Evaluate before going for it.

  2. CDPs are still short of solving marketers’ most pressing problems

  3. The current CDP market offers a multitude of choices. Don’t get lost- let your marketing challenges & use cases guide you forward.

  4. As the CDP market matures, we will see offerings with a wider range of features and capabilities making it easier for businesses to choose the right CDP for their needs.

If you are serious about customer data, then a CDP is worth considering. However, it is important to carefully weigh the pros and cons before deciding.


Forrester CDP PDF

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