Real-time Customer Data Platform (CDP) Explained

Imagine you are a birder visiting a sanctuary for the first time. You are armed with the best camera, lenses, filters, and binoculars. But can all these tools help you get the best sightings from the ground?

Certainly not. You need to be in a watchtower to spot, zoom in, and observe or click that majestic Hornbill or that elusive Ruddy Kingfisher.

A Real-time Customer Data Platform (CDP) is to businesses what a watchtower is to a bird sanctuary. And the customer is that elusive bird. To get a panoramic 360-degree view, stitch together the best snapshots of the customer landscape, and then seize the perfect moment to click the subject, B2C players need to be at the top of the game, in the watchtower.

This article explains the technology and tradecraft of a Real-time CDP and how it offers businesses actionable consumer insights that enable smart decisioning.

81% of retail shoppers search online before they buy, and 73% use multiple channels across their shopping journey. However, 31% of the retailers are unable to track them, and 38% are able to do so only occasionally. Moreover, 35% of marketers say that poor data quality affects their consumer targeting. The outcome – 10% in lost revenue due to the inability to deliver omnichannel customer experiences.

Every time a consumer shops online, they leave behind trails across their journey. These are the non-linear and often crisscrossing interactions that conjure holistic behavioral and transactional profiles of consumers.

They occur across devices, demographics, consumer cultures, and socio-economic trusses. Marketers would simply get overwhelmed if such colossal data streams were presented to them on an “as is, where is” basis.

Marketers need data to come to them as a unified, seamless, cohesive, and collaborative flow. It is like the confluence of several tributaries into a larger river. Zettabytes of data emerging from various channels and touchpoints must integrate into a singular, hybrid current such that stakeholders can make sense of it.

However, retail marketers often miss the bus due to the lack of a reliable data management solution.

This is where CDPs come into the picture. CDPs are software that perform this transformational job of converting data into deep insights, which are then used by cross-functional teams to design and deploy lean, dynamic, and smart marketing strategies.

In short, CDPs are the tailwinds of growth for digital-first marketplaces. They are essentially AI and ML-powered algorithmic engines, requiring no manual stitching of data. Real-time CDPs can be activated in the “here-and-now” buying moments.

They integrate seamlessly with existing architectures and update consumer profiles in real-time, enabling marketers to drive contextual messaging across engagement channels – be it the web or mobile commerce, email, physical stores, or contact center interactions.

Today, CDPs have become indispensable to data-driven personalization. Businesses with agile CDPs have realized up to 800% ROI on marketing budgets. Not surprisingly, the global CDP topline is expected to touch $10.3 billion by 2025, growing at a CAGR of 34% during the forecast period 2020-2025.

Welcome to the platinum age of CDP-enabled, hyper-personalized customer targeting.

CDP, customer relationship management (CRM) systems, and data management platforms (DMP) are marketing arsenal, albeit with different roles and capabilities.

As discussed earlier, a CDP’s defining features are multi-source data gathering, collation, analyses, and use of it for hyper-personalized customer interactions across channels.

Data in a CDP system is collected from all types of sources – first, second, and third-party sources, as well as from different activation methods such as social campaigns, one-on-one interactions, in-device communication such as SMS and push notifications, and so on. CDP data is stored in systems forever unless a CTO or CISO deletes it.

A DMP also carries out similar functions of gathering, collating, and classifying data. However, it does not analyze it; it is merely a repository of data. DMPs are primarily marketing data centers; their data safe is not as broad-based as that of a CDP. Also, data is stored for short terms – typically, for the lifespans of individual campaigns or marketing activities.

Lastly, DMPs store mostly third-party data and data emanating from anonymous sources like cookies and device IDs. This last attribute accounts for a DMP’s main shortcoming – that of not being able to manage identifiable data. Hence, left to themselves, DMPs are redundant in this age of hyper-personalized customer experiences.

CRMs collect data mainly from direct interactions between customers and brands’ touchpoints. Good examples are one-on-one communications such as a sales call, an email campaign, or assisted chat. Such data is typified by personal information, contact details, survey responses, and more.

As such, CRMs are primarily the go-to data resource for customer-facing service executives, field sales staff, call centers, and the like. However, CRMs seem like dwarfs when juxtaposed with the cutting-edge capabilities of CDPs.

As for data warehouses, they are largely systems of data records, while real-time CDPs are live systems of full-funnel data processing and activation of segments for campaign orchestrations. This implies that the former are used mostly by IT teams, while the latter, by marketers.

The above differences and similarities make it clear that neither DMPs or CRMs, nor data warehouses are as fully armed as CDPs, to handle the volatile dynamics of data-driven marketplaces. Rather, their roles are confined to fulfilling niche or narrow requirements.

Data drives the world today, and data does not lie.

CDPs are resident at the intersection of data storage, processing, and analyzing technologies, and businesses that are increasingly governed by those processes. A cut above DMPs, CRMs, and data warehouses, CDPs have emerged as lead enablers of hyper-personalized buyer experiences.

As research indicates, there is no looking back for CDPs. They are not magic, but they work like magic, for marketers and customers alike. This binary capability of enhancing both CXs and backend processes across full-funnel enterprise functions makes a CDP a valuable strategic investment.

CDPs are helping retailers evolve their perception of good CX – from just meeting consumers’ expectations to truly delighting customers by exceeding their expectations consistently. This mindset is paramount to winning the loyalty of the increasingly discerning customer cohorts.

That said, we must understand that CDPs are after all tools, or a means to an end. Proper selection, proper deployment, proper integration, and proper ‘culturing’ of CDPs are prerequisites for data-driven success stories. Without a guided CDP agenda, the entire mission may fall apart.

Lastly, zettabytes of data processing in the ‘CDP shop floors’ on a 24/7/365 basis have created a need for an ethical-legal code of conduct that ensures data privacy and safety. With growing awareness about individual rights on personal data, and progressive laws such as the GDPR and CCPA put in place, CDPs and compliance are now closely aligned.

Going a step further, responsible CDP vendors are now volunteering to create an ideal compliance regime. Smart companies have sensed an opportunity in this challenge to create sustainable long-term customer relationships by winning their trust and confidence.

Revisiting the bird sanctuary analogy at the start of this article – as the CDP landscape becomes lush, with more customer ‘species’ finding hospitable habitats in it, the watchtower will need to be expanded and elevated higher, so that more birders can have more panoramic views.

Algonomy created the world’s only real-time CDP, revolutionizing retail customer insights and offering AI and analytics-powered actionable solutions across marketing, eCommerce, supply chain, and merchandising functions. Custom-built for retail, it helps businesses catch their customers in real-time, in the ‘here-and-now’ moment.

Algonomy has helped more than 400 retailers and brands across the world usher in the platinum age of smart algorithmic decisioning.

Seeing is believing. Request a personalized CDP demo here.