What is a CDP
Customer Data Platform is a software that collects, consolidates, and analyzes customer data from all your data sources, and gives you a complete and more accurate picture of exactly who your customers are.
An average B2C company has customer data from 31 different sources – this includes their websites, social media platforms, Google and other customer databases. Each of these systems creates a customer segment based on the data that is accessed.
Since each of these systems has access to a limited amount of data, these 31 different customer segments often look different, and you are therefore still left with the question of who to target your marketing towards.
This is exactly the problem a CDP solves. A CDP collects data from all your data sources, unifies this data and creates a complete understanding of who your customer segments are. This helps you identify exactly who to target your marketing with, in order to reach an optimal ROI and can be a valuable validation tool in your business development.
This blog will take a deep-dive into what a CDP is, what it does, and give you 3 use-cases of how to use Custimy.io’s Customer Data Platform to create value from the very first day of use.
How does a CDP work
The CDP software itself is incredibly complex, but the process of how it works is not. It can be explained in three simple steps, so even your mother will be able to get the gist of it.
A Customer Data Platform collects data from all your data sources such as CMS systems, websites, Facebook, and Google Analytics. Using an API, a CDP can retrieve data from more than 180 different systems easily and simply. It allows users to quickly integrate it into the systems used in the company.
Data from all these different systems work independently and are written in different ‘data languages’ without a CDP. Therefore, the customer data you collect from Facebook possibly will not work with your data from your website or from Google.
One of the core abilities of a CDP is to combine data from all of these sources into one place. Your CDP translates all your data sources into the same language. This way data from different systems can play together and provide insights to your business and customers, allowing you to gain a more precise, holistic view of your business.
The engine and the real value of your CDP is in the data analysis itself. A CDP uses advanced AI and Machine Learning algorithms to process and analyze a large amount of data to identify the right customer segments for your business.
In addition to defining a precise customer segment, the analysis from your CDP gives you access to information about your customer segments’ expected profitability, size, and the probability that they place an order on your particular products.
The software is easy and simple to integrate, and will constantly generate insights and outputs based on your data. This process is ever-continuing with every new data point stored. Your company will have real-time updated insights on your customers, so you can execute and perform better.
Using a Customer Data Platform provides you with the benefit of finally being able to take advantage of having valuable first-party data. First-party data is the future of business and an incredibly powerful competitive advantage – so if you possess it, you should seize the opportunity to get ahead of your competition.
First-party data is the information you collect directly from your audience or customers. It includes data from behaviors, actions, or interests shown on your website, apps, or social data.
With Apple’s iOS14 changes, and Google working to outface 3rd party cookies by 2022, first-party data is becoming even more valuable, as it is own your data, and thus more reliable.
Owned first-party data will be presented and served as accurate customer insights. Empower your marketing department to make smarter data-based decisions, and execute and adjust based on knowledge rather than gut feelings.
First-party data is an outstanding value because of the constant need to be up to date on how your customers’ behavior is changing. The latest report from BCG indicates that the customer lifecycle changes every 3-6 months.
This short customer life cycle implies that a core aspect of marketing and communication strategies requires updated information on customer profiles and behaviors. First-party data from a CDP allows algorithms in the engine to automatically update, in real-time, customer profiles and segments, providing you with the latest knowledge to act on, always.
Having access to and using the first-party data your company has at hand allows you to be GDPR compliant both now and in the future. As it is data that your customers have consented to share with you, having first-party data means that you are not dependent on other parties to ensure you have an overview of your customers’ behaviors. No longer do you have to rely on Facebook or Google to provide you with lists. Instead, you can enrich them with your knowledge and gain even better results from it.
Single Customer View
Companies being able to understand each and every customer on a detailed level is quite a new phenomenon. However, these new tools have already been embraced by customers, meaning that they now expect higher degrees of personalized experiences than ever before. They expect your online business to know them as well as their local hairdresser or grocer, and provide them with a personalized 1:1 experience wherever they interact with you.
Custimy’s CDP can help solve this new challenge in multiple ways with “Single Customer View”.
“Single Customer View” provides you with unique insights on a 1:1 customer level. Use it to find look-a-like personas and enrich your advertisement on Custom Audiences.
- Understand customers on a deeper 1:1 level, and target them based on behavioral insights such as buying patterns, preferences, sizes, designs, preferred communication methods, and attribution functions.
- Improve the Customer Lifetime Value (CLV) by giving your customers exactly what they want. Improve their loyalty through a comfortable, high-quality, and personalized customer experience.
- Identify whether your customer is profitable through insights and KPIs such as total spent, predicted CLV, return rate, propensity to buy, probability of churn, and more.
- Use your insights to understand how your customers prefer to communicate. Identify the best ways, times, channels, and methods for communicating based on the highest engagement rates.
- Understand the habits and preferred products of your most valuable customers through insights into their behavior and preferences, and segment customers most likely to buy.
Most Valuable Segment
Market segmentation is to break out the natural market boundaries within an aggregate group of current and potential sales. Marketing consultants have done this for years. However, with the introduction of the Customer Data Platform and other data tools, it has become much more efficient in the prediction of the specific segment and their characteristics. Businesses today have an opportunity to understand their customers and the most valuable segment on a deeper level with more details than ever before.
How can Custimy’s CDP improve segmentation?
- Identify unique demographic and geographical insights on who are the most profitable customers.
- Identify specific buying trends, habits, behaviors in customer segments, which can be used in targeting them more precisely.
- Communicate directly to larger segments either based on “most valuable customer segments”, “preferred communication”, “product preferences”, or similar behavioral trends.
- Communicate and test new products to specifically identify customers that have the highest propensity to buy.
- Identify strategic insights to position your sales and marketing more precisely in consideration of whom your most valuable customers are.
Having the data at hand means that you can identify exactly who your best and worst customers are. This means we can do a reverse enrichment of Facebook. Companies typically upload their customer’s data to Facebook and ask to get a lookalike audience based on that.
However, with full insights and understanding of your most valuable segment, you can make a list of only your best customers, and that way creates a lookalike audience of your very best customers only. Basically, your company owns the data, and you are the one sharing the knowledge of your customers, to obtain the best audience possible for your business.
it is not enough to only understand your customers fully. A well-run business also understands its resources, so it can ensure that they perform in the best way possible. One way of ensuring this is through understanding your products, i.e. which products perform the best, which ones are the best sellers, which ones are most profitable, and just as importantly, which ones are not performing on a level where they should be presented to customers with the same frequency as today.
With a CDP you can have a full overview across all your products, and segment them into groups to understand better which products to not only market but also have on storage, as they will be more probable to be sold out.
How can Custimy improve your product insights?
- Identify your most profitable products, so you know which ones are driving the business. It might not be your most selling ones, but the ones that give you a higher profit margin.
- Identify your fastest selling products to understand which products are most attractive to your target market, decide which are worth promoting.
- Identify your luring products. Use the CDP to understand which products draw the most traffic to your webshop. Your luring products might not be the most profitable products or best-selling ones, but they are important as they drive customers to your site.
- Identify your least valuable products to understand which products simply are not worth it for the business.
- Identify products that are bad for your business. Simply put, the CDP can identify which products are influencing your company negatively.
Why a CDP
Getting yet another tool for your business might seem redundant, but the benefits and values of a Customer Data Platform are simply so incredibly important to become a successful business in the era of digitalization, that we can not recommend highly enough to invest in it.
Hubspot says that an average marketing person spends 21 hours a month collecting, organizing, and analyzing their data. With a CDP like Custimy’s doing this automatically for you, this is no longer needed, and those hours can be spent on strategizing and executing instead. No need for doing it manually anymore.
Benefits of a CDP
Simply put, a CDP helps you perform better, work smarter, have data-supported evidence for your decisions, and frees up time and resources to execute your strategies more efficiently. It is that simple. The possibilities and benefits of using first-party data to enhance your business are countless, but we have highlighted a few of them:
- Improve your performance and Increase Customer Lifetime Value.
- It is no-code, meaning that you will have an easy time using the software, even if you do not have technical skills.
- Have a full overview of your customer data in less than 24 hours. Fully automatic data pulls and analyzed data every single day.
- Use data insights to dive deeper into your business and become better at understanding, monitoring, and executing your strategies.
You simply do not have to spend hours upon hours to analyze all your tools for data, it is all in there for you in the CDP – your go-to platform to find your valuable insights.
Value of a CDP
In the end, in order to be successful, you need to create the best, most complete customer experience across your whole organization, and a Customer Data Platform allows you to do exactly that. The CDP ensures you are future-proof when working with data and privacy regulations.
Working with systemic use of data has proved to increase revenue by 10%.
Centralization of data can reduce misspend by 10%
A centralized place for marketing, customer, and product data can increase competitiveness by 20%
The numbers speak for themselves, the benefits do the same. The cost of investing in a CDP has been greatly reduced compared to previous years, and with Custimy’s Customer Data Platform created specifically for SMB’s, it is now possible for every company to afford the benefits of having a CDP regardless of the size, the budget or the resources.
The CDP is no-code and accessible for any company that looks to improve and gain a competitive advantage through having access to what many deem as the future of business, first-party data. You do not have to be a data scientist to use the platform, as it is created for marketers and thus easy to integrate and use.
In addition to this, the use of artificial intelligence and machine learning in the CDP can provide your company with a better understanding of your customers by connecting all your data from all channels and touchpoints. A Customer Data Platform will support you in lead generation, attribution, engagement, and help you consistently reach a high ROI and accurate predictions.