Customer data is the foundation of the personalized experiences customers expect. To anticipate customers’ needs and guide them to the right action, you must understand their past behaviors, habits and preferences. Doing so requires examining customers’ purchases, product usage, appointment and payment histories, customer service interactions and communication channel preferences. That is no small feat. According to a 2022 survey of 484 global CX leaders, 24% indicated that the inability to access customer data is one of the biggest challenges to delivering a successful customer experience (CX).
Customer data platforms (CDPs) gather and consolidate data across departments and systems. But after you centralize the data, you must decide what to do with it. A CDP alone isn’t enough to deliver the right personalized messages, at the right time, in the right channels. That requires a customer journey orchestration solution to provide intelligent and contextual decisions.
What Is a CDP?
A CDP is a software platform that collects, integrates and manages customer data from various sources. These sources can include customer relationship management (CRM), contact center systems, billing, browsing history and electronic medical records. CDPs consolidate this customer data to create a unified profile for every customer that updates in real time. This real-time customer profile provides insights into customer behavior, preferences and needs — all of which are essential for personalizing communications and experiences.
A customer data platform helps you understand your customers better so you can deliver targeted messages, offers and experiences and enhance customer satisfaction and loyalty. The purpose of a CDP is to improve customer engagement and drive your business’s bottom line by providing a comprehensive, unified understanding of your customer base. A CDP works in conjunction with customer journey management (CJM) — the CDP centralizes the data and CJM makes it actionable.
What Does a CDP Do?
A good way to illustrate the purpose of a CDP is by example. Say your organization wants to understand your clients better. Your CDP will collect data from multiple sources, like your website, emails, social media and other touch points. The platform combines this data to create a unified customer profile and enable different systems to use the information.
Once you have accurate profiles established, you can better segment your audience, personalize marketing messages and understand your customers’ behavior. Plus, you can easily segment users according to which page they visited on your site or view details about those who’ve abandoned their carts.
A sophisticated CDP that incorporates customer journey management will:
- Unify identities: The platform combines each user’s history across devices and channels, providing you with a unified customer profile. The identity resolution verifies customers and removes duplicate profiles.
- Segment audience: CDPs filter information into audiences and characteristics, enabling you to view users by intent and determine how this relates to overall account activity. The customer profiles are enriched with first-, second- and third-party sources, completing missing attributes and updating the profile with the most recent information.
- Engage customers: The CDP and CJM software helps you activate users and direct them into stacks. The stacks and ordering of information provide real-time and personalized outbound messaging capabilities. Your marketing team can also analyze customer interactions to improve messaging, timing and delivery.
How Does a CDP Work?
Customer data platforms focus on collecting, unifying and activating data and compiling data insights per the following process:
1. Collecting Your Data
The CDP is your centralized hub for all your customer data, making it all available in one convenient place. The platform compiles profiles by collecting and stitching information from your CRM and various data sources. The centralization of each customer profile is known as customer resolution.
2. Unifying Your Data
Following collection, the data is harmonized. The CDP identifies information from customers with unknown data, like those associated with anonymous cookies from before they became a customer. The purpose is to understand the entire customer journey. You can then identify their initial touch point, what they engaged with, and which was the last touch point or campaign they interacted with before they converted.
3. Activating Your Data
By activating your data, your team can personalize customer experiences in real time and connect all your platforms and technologies. The CDP connects your email send engine, automated workflows, content management systems, analytics and demand-side platforms.
4. Pulling Insights From Your Data
A unified overview of your customers makes tracking customer journeys easier. You can pick up trends and gain valuable customer insights by segmenting them into groups. You can also build lookalike audiences and personas to reach new customers.
The more your CDP collects and organizes data, the richer your insights and the greater the opportunity to boost revenue, expand your reach and improve your return on investment.
What Are the Benefits of a CDP?
Besides having a comprehensive overview of your customers, a CDP enables you to:
- Organize your customer data: These platforms streamline how you receive, organize and use customer information. After initial setup, the system will require minimal maintenance. The CDP improves your ability to cross-sell and personalize communication.
- Maximize your customer analytics: Customer analytics are key to understanding what drives their behavior. By understanding your audience better, you can improve retention rates and loyalty. Analytics enables multitouch attribution and identifying which initiatives are driving the most conversions. Analytics can also identify and mitigate churn risks, improving your customer experience.
- Enhance your data protection and privacy: Data privacy laws guide businesses on respecting consumer privacy. The CDP helps you protect customer data by limiting the amount you’re collecting. The General Data Protection Regulation (GDPR) will impact you differently depending on how your business collects data. Once you know your classification under GDPR, your CDP can assist in ensuring you collect and manage data appropriately.
Why Do You Need a CDP and What Problems Can It Help You Solve?
There are many problems a CDP can resolve for your business. Consider a few reasons you may want to invest in one:
CDP for Your Business
A few of the ways a CDP can benefit your business include the following:
- Customization: A CDP equips you to personalize your content to fit your users, offering them the products or services they want through their preferred channels. As of 2021, 71% of customers now expect personalization, and customers who receive personalized offers are five times more likely to engage.
- Suppression: Knowing who you shouldn’t target is vital. With a capable platform for sorting data, you can suppress customers who have already made a purchase or filter out content no longer relevant to them, enabling you to maximize your targeting budget on new ads.
- Insights: CDP brings down silos within your organization, establishing opportunities to share insights across teams and enhance customer experiences and engagement with your business.
Problems CDP Solves for Your Business
CDPs may solve some of the daily frustrations your company faces. These platforms can help:
- Organize your data: Data must be organized and connected to be meaningful to your bottom line. A CDP unifies your data in one convenient place, making it accessible and easy to use.
- Simplify your segmentation: A CDP helps identify trends, traits and behaviors, making segmentation simple and intuitive so you can give your customers superior, personalized experiences.
- Identify your customers: With the capabilities of a data platform, you will be confident that customer identities are linked across all your data streams. The platform solves multiple issues around customer identification.
What Are the Typical Use Cases for CDP?
CDP with customer journey management solutions are typically used to:
- Activate accounts
- Issue fraud alerts
- Purchase products or services
- Pay bills
- Provide targeted offers
- Renew contracts
- Announce service outages
- Send prescription refill reminders
- Push appointment reminders
Why Isn’t a CDP Enough?
A CDP will only take you so far.
1. Data alone isn’t enough to improve CX
Even the best CDP only gathers and stores customer data. It doesn’t inform you how to use that data to personalize customer experiences. Using a CDP by itself is like looking in your rearview mirror: you see what’s behind you, but not what’s going to happen next. The CDP shows you what the customer did recently (bought a smartphone, called to question a billing statement) but doesn’t necessarily predict what that person will do next.
2. CDPs don’t actually deliver personalized experiences
CDPs provide a comprehensive view of customer data, actionable insights and even activation of segments, but they don’t execute action affecting the end customer. For example, a CDP may reveal that Sue is comparing cash-back credit cards because she’s toggled between different credit card pages. While a CDP can signal this moment as an ideal time to send a tailored promotional message, a decisioning engine is required to make that communication happen—in real time on the right channel. The decisioning engine also confirms whether it is indeed the right time: for example, if Sue is having a service issue or gave negative feedback recently in a customer survey, it wouldn’t be the right time for a marketing offer, and the decisioning engine can withhold that communication.
3. CDPs have a delayed activation
If the CDP isn’t tightly integrated with a journey orchestration platform via a unified data layer, it’s impossible to achieve real-time activation of customer profiles. That means delays and missed opportunities. Someone who is completing a credit card application may abandon it to check another bank’s fees and terms. In this scenario, you’d want to send a promotional email reminding the consumer to complete the application, but the delayed activation could result in a 10-hour wait—when it’s probably too late. By now that person has already applied for a card from another financial institution. With a unified data layer bringing together a CDP and journey orchestration platform, you enable the identification of an abandoned application and reach out as quickly as needed, encouraging completion.
Why Do CDPs Need a Decisioning Engine?
While they deliver a unified view of customer interactions with your brand, CDPs don’t provide intelligent, journey-centric decisioning. They can’t arbitrate across the set of actions for customers who are on multiple or differing journeys (e.g., customer support and purchase).
To enhance CX, you’ll need a real-time, centralized decisioning engine that determines the next best action in the moment—considering the context behind all interactions on all channels.
CDP and Journey Orchestration
CDP and customer journey management (CJM) provides:
- Continuous updates: CDP and CJM actively update customer profiles every time the customer interacts with your brand.
- In-depth segmentation: You get real-time dynamic segmentation based on customer interaction or behavioral data.
- Custom triggers: You can define pre-integrated interaction triggers determined by segmentation.
- Appropriate action: The triggers initialize the execution of the next best journey action. For example, sending an email with a discount offer encourages the customer to purchase the item left in the shopping cart.
What does that look like?
A consumer searches for sneakers, finding a pair they like but not at the right price point. They add it to their shopping cart but end up abandoning the site.
Using only a CDP (that has data profiling and segmentation delays), it takes hours to unify the data and send a promotional “10% off your cart item” discount. By then, the consumer has already purchased sneakers from another brand’s website.
Using a CDP plus journey orchestration, the data profile is updated in real time as soon as the customer interacts with the website. The decisioning engine evaluates the interaction to understand the context as well as the segment and value of the customer. This intelligence triggers an action to receive a promotion based on the item of interest and the behavior (cart abandonment). Within minutes, the system sends the promotional offer (via the customer’s preferred communication channel) and reminds the shopper to complete the purchase.
Related eBook: Financial Services and Insurance: Enhancing CX Outcomes With Simplified Customer Journeys
The Real Benefits for Business
Using CSG’s customer data platform and customer journey management solution has positively impacted many organizations’ bottom line:
- A U.S. grocery chain saw $3 million in additional monthly revenue.
- A central bank reduced its cost per call by 46%.
- A significant retail pharmacy chain saw a 627% return on investment.
Combining the best of both worlds helps you understand your customers and what they need, increasing customer loyalty and retention. Customer satisfaction and retention mean increased cross-selling, upselling and positive engagement opportunities.
What Does the Best of Both Worlds Look Like?
Exceptional data management and real-time journey orchestration. These were the two things we had in mind when we brought CSG Xponent to market: a platform built from a best-in-class CDP and best-in-class journey orchestration engine. But understanding the importance of data management, we didn’t stop there. We integrated a unified data layer to enable true real-time customer profile purification, batch data ingestion, segmentation, and activation to drive the best next action, anytime on any channel. The result? True 1:1 personalization, creating better customer experience and loyalty, leading to more sales and greater customer lifetime value.
