CDP is more than an acronym, it’s a company assetMay 04 , 2020
Reprinted from South Florida Business Journal.
Just when we’re all getting comfortable with using CRM (customer relationship management), is it really time to start learning CDPs (customer data platforms)? Well, you might already know more about it than you think.
One of a company’s most valuable assets has always been its customer list. And, in essence, a CDP is simply a way to make your customer list much more robust and useful.
Why is a customer data platform important?
With the advent of online privacy laws and Google again threatening to disallow third-party cookies as soon as 2022, it’s time to re-examine the health of your customer records and the useful data you maintain about what, how, how often and from whom your customers buy.
That’s what a CDP is all about. It’s a way to house, manage and use your customer list and data set to make them far more valuable and be less dependent on third-party data sources. It’s more than a good direct mail or email list; a CDP can contain all the data that fully describes your relationship with your customer and your customer’s 360-degree experience with your company.
To promote CDP adoption, there is an organization called the Customer Data Platform Institute, and major tech companies such as Oracle, SAP, Adobe, Microsoft and Salesforce are jumping on the bandwagon with CDP product offerings that are already on the market or will be in the coming months. One expert called the decision to invest in a CDP perhaps the most important decision companies will make in the next decade. And venture capital is said to have come up with over $2 billion in funding for CDPs.
In essence, once fully developed, a CDP can be a company’s own proprietary marketing tool — a goldmine of information that can be used to increase marketing and advertising performance, as well as a secure storage platform for all firsthand data and personal information on customers. It will also hold other third-party information on customers that a company may already have the right to use. Being able to also store relevant “small data” about why and how a customer uses or feels about specific characteristics of a product or service along with critical “big data” can be very powerful.
Have there been tangible results of CDPs?
CDPs have been around for only a few years, and the number of companies that reported having one is still under 200, but growing rapidly. Some are already reporting double-digit sales increases by using CDP data in their marketing. They also have the ability to verify outcome data from their advertising on the large online platforms with the data stored in the CDP.
Still, the CDP is only as good as its data. And, to be clear, the CDP is the receptacle for data that needs to be extracted for use in additional marketing software. How you access the data from the CDP becomes a critical factor in its performance success, and one that should be asked of any CDP vendor.
How to plan ahead for a future CDP
Many companies will not be ready to make the investment to move forward immediately with a CDP, but they can start gathering relevant data now. The hard data and sales interactions may already be in your data set from your CRM, but companies that are beginning to see results from more involvement with their data are doing additional surveys of their customers on an ongoing basis to augment their small data.
The importance of continuously enhancing your data cannot be overstated. Having the data be able to evolve your product or service offerings to stay ahead of your customers’ wants and needs is critical to your future. Starting your CDP journey now is an excellent first step toward a major competitive advantage.