Intro:

Have you ever felt overwhelmed with data when needing to make a decision? In theory, it was supposed to help you, but in practice, it made the task way more difficult because there was way too much? You probably stared at the data for so long that it looked like ants walking through your screen, or even like the Matrix code?

According to Forrester research, 61% of specialists experience what you experienced.

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In this episode, I’m going to  tell you more about the 5 most important things you just need to know about a Customer Data Platform before starting to work on a daily basis with it. 

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Let’s rewind a little - What is a Customer Data Platform and how does it work? A CDP is the central repository of user data. It collects not only any attributes like customer features, but also any number of unlimited types of events and maintains relationships with other objects in other ERP / Ecommerce / accounting systems or any other systems in which we store information about such "objects" as orders or invoices.

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As you probably already know, and if not, this is what you’re going to find out right now - I am a huge supporter of taking it down to the simplest possible definition. So let's start again.

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A CDP is a system in which you store information about your current potential and sometimes former clients. To put it plainly, It is kind of a warehouse for your data.

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Sounds simple, right?

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So what should you know before using a CDP as part of your daily work?

(these are features that the system should have)

First, what are the functional requirements of the tool in order to qualify as a CDP at all?

The Customer Data Platform Institute, an independent organization whose mission is to support marketers around the world in the effective use of data, indicates that a CDP-type tool should:

- obtain data from a specific source,

- store the obtained data indefinitely (of course, subject to privacy restrictions).

- create unified profiles of identified people

- share data with any system

- respond in real time to new data requests

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These features distinguish CDPs from other systems that work primarily with their own data (such as Customer Relationship Management), store only limited details for limited periods and include large volumes of externally-owned data (Data Management Platform), do not maintain a permanent database (Integration Platform), and interact directly with customers (Email, Mobile App, and Web Content Management)

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(CDP, CRM and DMP)

When choosing a CDP, you will certainly find additional shortcuts such as a CRM or a DMP. 

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What exactly is the difference between a Customer Data Platform and these other tools?

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A Customer Data Platform creates customer profiles by combining data from various secondary and external sources. This includes CRM and DMP, transactional systems, web forms, e-mail, and social media activity, behavioral data, such as user behavior data on the website and a mobile application, and much, much more.

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What are the key differences between a CDP and a CRM?

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A CDP collects and stores data from anonymous website visitors, while a CRM holds data from known customers or potential customers.

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A CDP analyzes customer behavior throughout the life cycle, both in the initial "pre-purchase" and "post-purchase" while CRM systems primarily analyze the sales funnel.

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A CDP tracks both online and offline customer data while a CRM is typically unable to receive offline data unless it’s something entered manually.

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A CRM is used to manage the company's relationships and interactions with all its current and potential customers.

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A CDP collects and unifies customer data, and then makes it available to marketers, but also sometimes to people responsible for building loyalty or retention, in order to create targeted and personalized marketing campaigns or communication.

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What are the differences between a CDP and a DMP?

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A DMP, or a Data Management Platform, was created for advertising purposes and is aimed at serving advertisements displayed on the Internet.

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A CDP collects its own data, the so-called 0 and 1st party data (directly from the source), while a DMP mainly collect 3rd party data via data providers, managers and services which is often extracted from DSP, a Demand Side Platforms, or a SSP, a Supply Side Platform. 

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Lots of 3-letter acronyms here. Let’s not complicate it more now. Should I record another episode about all the other 3-letter acronyms in AdTech? Let me know in the comments! 

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CDPs reflect specific personal identifiers of customers (such as first and last name, email address, and customer ID), while DMP platforms reflect anonymous customer identifiers (such as cookies, etc.)

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CDPs store data for a long time to build accurate customer profiles and nurture relationships, 

while DMP platforms store data for a short time to target ads and build similar audiences.

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(still 3 letter stuff until here?)

(what data is stored)

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As you have already noticed, one of the tasks of a CDP is data collection. The question is, what data? 

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For the sake of this episode I’m going to distinguish between the three main types of customer data:

• Behavioral: Basically, this is all data about a customer's "behavior" on a website, app, or other "touchpoint". This is something that is generated on the basis of the customer's interaction with the company using devices connected to the Internet. Behavioral data can also provide detailed information on the occurrences, frequency, and duration of customer interactions.

• Demographic: This is the socio-economic information such as age, gender, population, race, income, education, interests, and employment. Demographic information may also include personal information such as names, dates of birth, and customer addresses.
• Transactional: This typically has a commercial or legal significance and may include transactions such as purchases, returns, payments, registrations, bookings, and subscriptions. Transaction data documents exchanges, contracts, or transfers between organizations and / or individuals.

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Data such as information about purchases made, location, devices, page views, and the entire communication history in many channels, e-mails, chat, SMS, push, and mobile, are collected automatically, with an embedded script on your website and / or a mobile tracking script. For websites, usually a short JavaScript (widget or pixel) places a cookie in the user's browser. If we are talking about cookies, a new cookie is created for each browser within a given domain, and the internet user will remain the same user within one domain - leaving traces with each activity that your system will collect in detail. 

(how to organize data structure in a CDP)

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What you need to know is that an ideal structure does not exist. Once created, it will evolve so that it can better meet your business needs.

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Right now if you are wondering how to prepare the structure and not go crazy, I recommend writing out individual columns in a spreadsheet.

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With the spreadsheet, you will be able to verify whether a given structure meets your needs, you will be able to modify it many times, and finally scale it further in the CDP system.

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Each business is different and each one requires collecting different information about users in order to fully understand their needs. The features of individual objects are the so-called attributes. The possibilities of their creation are basically unlimited. The important thing is that they will realistically support marketing and sales processes.

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In order to be up to date with the activities performed by the user, these so-called events, it is worth introducing a tag system, that we’ll call labels. 

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Imagine you have an e-book or instruction manual with chapters prepared for you and want to send out one chapter each day. On the first day after sending the message, we’ll add a tag, eg "ch.1". The next day, we remove the previous tag and add a new one, for example, "ch.2", and so on… This allows to easily filter users who are in the campaign in order to send them a message, e.g. requesting a comment or those who have already completed the entire cycle and can be offered the following product. We can tag customers with a medium-sized basket, by the length of a common purchase history, etc.

(cookieless and GDPR)

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How does the collection and processing of data by a CDP relate to GDPR and the blocking of cookies in popular browsers, plus the cookieless future we’re looking at in the world?

Cookieless is a new approach to marketing based to a lesser extent on so-called third-party cookies, containing data identifying consumers.

You think, wait a minute, the data I collect identifies consumers.

The blocking of cookies applies to 3rd party cookies. The data that you collect and have at your digital fingertips and those your customers consciously share with you is the so-called 0 and 1st data party.

"Zero data” is the data that "the customer has purposefully and proactively made available to you.” This is the declarative data that I have already mentioned earlier.

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1st party data is the data of a user’s behavior and actions on a website or application, data from analytical tools, or data from a CRM and CDP systems, including information such as names, e-mail addresses and addresses, and information about past purchases.

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You’ll need to know that as consumers we do not want a complete ban on the use of our data. Research conducted by Dentsu shows that every second person considers it important that the organization obtains consent to collect data in order to provide them with more personalized advertising.

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So you can breathe deeply and still imagine what you can do with all the data you have or are about to get hold of. And even the GDPR will not prevent you from doing so. But of course, I am not a lawyer and would recommend you to consult all this with your DPO, your data protection officer.

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In your CDP, you can keep all information about your users in one place. One central database helps to manage personal data, consent given by users, as well as ability to delete all this information in the blink of an eye if the need arises. Each user has the right to demand the termination of the processing of their data and the deletion in their system, giving them the right to be "forgotten".

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According to the GDPR Act, at the request of the user, the company processing his data is obliged to disclose it to the indicated entity. All information you have about a given user can be exported from your CDP to a file at any time and sent to any place chosen by the user.

What you need to pay attention to in the context of the GDPR is whether the servers storing the personal data of European Union citizens are located, as required by the law, in the European Economic Zone. The providers of CDP class systems make sure that this formality is also completed. Or at least with good CDP vendors.

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As you can see, by using a CDP, you can pin the "GDPR compliant" badge to yourself and your company, although this is a marketing ploy rather than a legal certificate such as CE, and not worry about legal issues.

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If you are interested I would recommend you check out a great case story about how LG was able to follow GDPR compliance with their CDP system. You can find the link to the case study in the video description.

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This is the starting point of the things you need to know before using a CDP. Let me know what else we should add to this list, or maybe when you started yourself there was something that surprised you and would you like to share it with me?