With the significant raise in consumer expectations for personalized messaging, convenience, and privacy, brands are rushing to take advantage of unprecedented opportunities while struggling to manage costs and data gaps.
Getting a complete view of the customer and a deeper understanding of customer behavior —and turning that information into value — has become essential in standing apart from the competition. Customer Data Platforms (CDPs) have proven to be a versatile solution, transforming how companies interact with their customers through new insights and opportunities for growth.
The basic function of a CDP is to collect data from different sources, unify it into customer profiles, generate intelligence based on the data, and build and activate audiences for campaigns. But what does it look like in action, beyond the baseline?
This article takes a closer look at the benefits of, and use cases for CDPs. Here's what we'll cover:
IT & analytics use cases
Fully understand your customers
Marketing & customer engagement use cases
Elevate customer experience, boost retention & acquisition
IT & Analytics use cases
Data ingestion and normalization
When data is collected from multiple sources, it tends to be messy and inconsistent. CDPs enable companies to have a single centralized repository of comprehensive data assets by collecting data from sources such as CRM systems, online interactions, web analytics, transaction history, social media, loyalty programs, email marketing tools and in-person engagement.
The process should be seamless and automatic as the CDP standardizes the data, rather than data engineers having to manually reformat to fit any particular schema. It’s critical for building more coherent customer profiles and meaningful, data-driven analytics. This process should be always-on, so that customer profiles can accommodate the freshest data.
Example: A multinational e-commerce company can use a CDP to integrate data from online transactions, customer feedback, and social media engagement. Collecting data and getting it into a workable format is the first step in creating accurate customer profiles, enhancing targeted marketing campaigns, and improving product offerings.
Identity resolution
By identifying and linking customer identifiers across multiple platforms and touchpoints, it’s possible to accurately tell who is who and build rich, actionable profiles—a sharp contrast to having duplicate or incorrect entries.
For companies attempting to build comprehensive customer profiles on their own, the data preparation alone is an arduous and complex process. Without a CDP, they must manually contend with disparate customer data, coming from different systems that were not designed to talk to each other, creating frustrating, inefficient silos. On top of that, there is the sheer scale and complexity of the data, with new data always coming in, so companies are always trying to catch up (but never succeeding).
Identity resolution combines diverse data sets at massive scale, including historical data sets, even from previously impossible-to-connect data sources like in-store transactions, to determine who your customers actually are.
Example: Consider a bank using a CDP to integrate customer data from online banking, mobile apps, and in-branch interactions. With people interacting both digitally and in-person, there’s a high chance that they produce duplicate records. By resolving identities, the bank can begin to tell who is who so they can offer personalized financial advice and product recommendations, enhancing customer satisfaction and loyalty.
Build a unified customer view
The unified customer view presents an accurate, holistic picture of the customer's journey: this encompasses all interactions, transactions, and behaviors, providing insights into their specific preferences and needs. Each customer profile will also have built-in and custom attributes that serve as the basis for generating insights and predictions.
Having a deeper understanding is the essence of a customer-centric strategy: it enhances customer relationships by allowing you to tailor campaigns while reducing irrelevant or redundant marketing. With a unified customer view, brands can identify high-value customers for targeting and segmentation, identify unknown customers, find lookalike audiences, and more. The ultimate benefit of the unified customer view is a stronger customer experience that encourages loyalty and retention.
Example: A luxury hotel chain could use a unified customer view through CDP to track customer preferences, past stays, and feedback across its global properties. The holistic view allows for tailored room recommendations, amenities, and services, elevating the guest experience.
Analytics and insights
Analytics are much more valuable when based on accurate, up-to-date customer profiles. A CDP should offer robust analytics capabilities, allowing companies to dive deep into customer data. This includes understanding purchase patterns, analyzing customer feedback, and tracking engagement across channels. By gaining insights into the customer journey, brands can refine their marketing strategies, improve customer experience, and make data-driven decisions that align with customer needs and behaviors. Marketing tools can be analyzed to see what is working well, and what isn’t, to reduce inefficiencies and use budgets more wisely.
Example: An automotive manufacturer could analyze data from dealership visits, service appointments, and online configuration tools to learn more about customer preferences and help identify key behaviors in high-value customer segments. The collected insights can potentially guide new car designs, improve customer service, and tailor post-purchase follow-up communications.
Manage privacy compliance
With global privacy regulations becoming increasingly strict, brands must work even harder to maintain robust compliance and keep data secure in order to earn customer trust. A CDP should be able to work with consented first-party data so that the brand is always drawing on data that customers have agreed can be used, rather than buying access to audiences from third-party data vendors. Part of this involves having accurate consent tracking, which a unified customer view should be able to monitor.
In addition to opted-in first-party data, privacy compliance means having access controls so only authorized teams are able to access PII (personally identifiable information). Different teams need different levels of data visibility to do their job, so team-specific views keep everyone at the correct level of access.
Example: A global online retailer can use a CDP to manage and track customer consent for different regions, ensuring adherence to GDPR, CCPA, and other privacy laws — all while maintaining customer trust and avoiding legal penalties.
Marketing & customer engagement use cases
Personalization
Personalization is at the heart of customer experience, and CDPs are the key to unlocking its potential. By having robust and always up-to-date data from across touchpoints both digital and in-person, CDPs enable companies to provide customized product recommendations, services, content, and communications no matter where the customer is engaging.
Customer expectations are that brands will meet individual preferences and behaviors at just the right time. This level of personalization fosters deeper customer engagement, creating memorable moments throughout the entire customer lifecycle and building satisfaction and loyalty over time.
Example: An apparel company sends a promotion to a high-value segment of customers who have purchased recently, tailored with offers to complement their recent purchases and messaging that reflects an understanding of the relationship with them.
Loyalty cultivation
Any strong customer loyalty program begins with a clear and current picture of customer preferences, enabling companies to offer the right perks, products, and discounts on the right channels. Turning customers into superfans is one of the vital applications of CDPs.
By tracking customer interactions and preferences, companies can effectively design targeted loyalty programs that resonate with their particular customer base. That includes personalized rewards, exclusive offers, and customized experiences that will encourage customers to come back again as well as recommend the brand to others, Plus, CDPs help companies build lookalike audiences based on the best loyalty members and then serve campaigns to customers most likely to join.
Example: A grocery store chain could analyze purchase history and preferences of high-value customers who are not part of the loyalty program, then offer personalized incentives to get them to join the program.
Churn prevention
Acquiring new customers is up to five times costlier than retaining existing customers. But knowing when you’re about to lose a customer isn’t always easy or straightforward. With an effective churn prevention model that includes historical transaction data, CDPs can help identify customers who are at risk of churning by analyzing their interaction patterns and purchase history. This insight allows businesses to reach out with targeted offers or communications on the best channels to re-engage customers; the key is knowing when, where, and how to contact customers to keep them coming back.
Example: A beverage delivery service could track user engagement levels and mobile-app feature usage to identify users likely to churn based on falling off of activity, then use targeted in-app messages and offers to re-engage users.
Enhanced customer care
The best kind of customer support makes every customer feel like a VIP. Teams can benefit from CDPs to improve the quality of every interaction. With CDPs providing service platforms with a holistic view of each customer, support teams gain access to real-time, comprehensive, accurate customer data, including a customer’s entire history with the brand, and can then personalize service by loyalty status or recent purchases.
Customer support teams can offer more informed and efficient support—answering customer questions and resolving issues in a timely way, and improving customer satisfaction, trust, and loyalty. This is essential, given the fact that consumers are taking a critical look at the brands they interact with and buy from, and demanding better and more personalized service every time.
Example: An electronics manufacturer can equip its customer service team with detailed product usage data and customer history, enabling them to provide more accurate and timely troubleshooting and support.
Paid media activation
The old method of running paid media campaigns relied on renting third-party audiences to reach customers and measure performance. As these methods become less effective and more expensive with the deprecation of third-party cookies and the increase in privacy regulations, brands must turn to first-party data in order to reach the right audiences with advertising. With CDPs, brands can re-orient their paid media strategies around unified first-party data, making them more effective, efficient, and agile. Not only are they actually able to reach high-value audiences (which is getting tougher with third-party audiences) but they can use rich customer profiles to personalize the approach, leading to better conversion rates and return on ad spend. Plus, with a clear picture of top customers, companies can build lookalike audiences to easily identify valuable new prospects.
Use case: A fashion brand can use customer profiles based on accurate first-party data to activate audiences directly in leading ad environments with personalized campaigns, resulting in higher conversion rates and a more effective use of the advertising budget.
Cross-selling and upselling
How, when, and where is the best moment to cross-sell or upsell? This can seem like a mysterious art to many companies always on the lookout for the right chance. Siloed data is a key reason that many companies fail to convert cross-sell and upsell opportunities. They are unable to reach a customer in a way that seems unforced, personalized, useful. With a CDP, companies can identify more (and better) cross-sell and upsell opportunities, driving greater conversion by analyzing customer purchase history and preferences.
This insight allows companies to offer their customers relevant products or upgrades, enhancing the customer experience and potentially increasing average order value.
Example: An insurance company could use policyholder data to identify customers eligible for premium health plans or additional coverage options, thus increasing revenue per customer.
Find out how the right CDP can help
From creating a rich, unified customer view to navigating the complexities of data management and privacy regulations, a CDP should provide brands with the tools they need to thrive in a data-driven world.