Customer Data Platforms: The Power of CDPs in Five Exciting Use Cases

1. What is a CDP and what are its core functions?
2. How does a CDP work?
3. Who uses a CDP?
4. Use Cases: Practical Applications of CDPs
5. Recommendations for selecting the right CDP
6. Conclusion

Customer Data Platforms (CDPs) are an important tool for businesses in a time when data-driven decisions can make the difference between success and failure in marketing and customer relationship management. CDPs can make a significant contribution to the solution for rising costs and the complex requirements of modern marketing strategies. Companies face growing challenges resulting, for example, from increasing fragmentation of advertising channels, increased customer expectations for personalization, and stricter legal interpretations of data protection regulations. Typical metrics such as the ROAS are under pressure as the costs in the online channel continue to rise and increasingly appear unprofitable compared to the revenue that can be achieved. In addition, there is more uncertainty due to the introduction of the EU Data Protection Regulation and the impending "Post-Cookie-Era".

In this changing landscape, businesses face the task of optimizing customer relationship management to comply with data protection regulations while simultaneously meeting the rising expectations of customers to handle their data responsibly. This is where the Customer Data Platform comes into play.

Our goal in this article is to take a closer look at possible use cases of a Customer Data Platform and to illuminate its growing importance for a future-proof business environment. Over the course of this article, we will present five exciting use cases that illustrate how CDPs can help businesses to master these challenges.

What is a CDP and what are its core functions?

A Customer Data Platform (CDP) is the core of a modern Customer Relationship Management (CRM) and is more than just a software tool. It collects, combines, standardizes, and manages customer data from a variety of sources. These include marketing and sales systems as well as tools used in daily business, such as email systems, ordering systems, and websites. In other words, the CDP acts as a central location for all first-party customer data and continuously creates a consolidated view of the 'one customer'.

The main functions of a CDP:

Customer Identity Management

This brings together all important data about the customer's identity. This allows companies to develop a deep understanding of customer identity, preferences, behavior as well as contact channel and frequency preferences.

Consent & Permission

In a world where data processing consent (consent), data protection and permission for advertising contact (permission) are becoming more important, a CDP offers the opportunity to centralize this information and comply with data protection regulations.

360⁰ Customer Profiles and Insights

By integrating data from different sources, a CDP creates 360⁰ customer profiles. These profiles not only provide comprehensive information about customers, but also valuable insights into their behavior, all customer touchpoints and their preferences.

Personalization & Channel Orchestration

Some CDPs also enable the orchestration of personalized content and offers across different channels. This allows customers to play out offers and customer experiences tailored to their individual preferences.

The use of a CDP opens up numerous advantages, including:

• In-depth analysis of your customers: CDPs enable customer behavior to be analyzed in depth.
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• Creation of customer profiles and consolidation of duplicates: Through the consolidation of data sources, comprehensive customer profiles are created and duplicate records are cleaned.
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• Segmentation of target groups: CDPs help companies to segment existing and new target groups in a reasonable manner.
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• Management of consent decisions: The CDP acts as a repository for GDPR consent decisions in order to comply with data protection regulations.
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• Better customer support: Companies can offer improved customer support through better data insights and personalisation.

The CDP is not just a possible answer to current trends and challenges in the field of marketing and CRM, but also a tool that facilitates marketing and sales. The main goal for most marketers in using CDPs is to optimize media campaigns, send relevant and automated emails, carry out high-quality retargeting campaigns, improve the targeting of search advertising campaigns and use predictive content personalization. This combination of features and benefits makes the Customer Data Platform a key instrument in the modern CRM ecosystem.

How does a CDP work?

The operation of a Customer Data Platform (CDP) is impressive and efficient without having to understand the technical details. Here is a simple explanation:

The CDP serves as a central collection point for data from various sources, be it from sales or marketing tools. These data can include both device-related information such as cookie IDs, device IDs and IP addresses, as well as personal data such as names, addresses, email addresses and telephone numbers.

In the world of CDPs, different types of data are brought together:

• Identity data: This includes information such as name, demographic data, location and contact details.
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• Descriptive data: This includes aspects like career data, lifestyle information, hobbies and more.
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• Quantitative data: This includes the number of purchased products, order data and many other quantitative factors.
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• Behavioral data: This includes activities such as website visits, social media engagement and the use of various devices.
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• Qualitative data: This includes personal preferences such as favorite colors and customer service customer reviews.

Another key feature of a CDP is the ability to analyze data. This process enables various data to be converted into reports, Single Customer Views (SCVs) and segments.

The process is divided into several steps:

1. Data acquisition: Here the CDP integrates a variety of data sources at one central location.
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2. Standardization of data formats: The CDP ensures that data is presented in standardized formats.
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3. Creation of reports and dashboards: This enables marketing campaigns and goals to be monitored and optimized.
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4. Data Activation: The collected information is used to improve and optimize marketing campaigns and other activities.

The CDP forms the central element of a sophisticated system that enables companies to effectively use data for the development of personalized marketing strategies.

Who uses a CDP?

The users of a Customer Data Platform (CDP) are diverse. Typical users include marketers, who are aiming to understand customer needs and develop tailor-made marketing strategies. In addition, CRM teams, online managers, analytics experts and many other professionals use CDPs to make data-driven decisions and fulfill their tasks more effectively. CDPs offer a wide range of applications and support different departments and functions in companies to gain valuable insights from customer data and implement personalized strategies. Users who need advanced analytics capabilities can gain deeper insights with CDPs and perform extensive data analyses. The CDP offers advanced analytics tools and data, enabling analysts and data scientists to create complex data models, thus gaining even more precise insights for data-based decisions. With these advanced analytics capabilities, companies can further optimize their strategies and achieve a crucial competitive advantage in a data-driven business world.

In a broader context, a Customer Data Platform is a valuable solution for companies using programmatic advertising and digital marketing. It is also relevant for enterprise-level companies, agencies and e-commerce companies. In fact, any organization working with various data sources and data silos can benefit from a CDP.

The CDP is therefore a tool that not only offers significant added value to marketers, but also to everyone who wants to make data-driven decisions. A CDP can be used in various areas of a company to increase the efficiency and effectiveness of business processes. In marketing, it enables more targeted customer approach, while in sales the identification and approach of potential customers can be optimized. In customer service, customer data can be used in real time to provide personalized support.

But CDPs are not restricted to a customer focus. They can also be used as a basis for product development to better understand customer needs and develop innovative products. They are also useful in the finance department to analyze payment behavior and conduct fraud prevention.

The potential of CDPs extends across the entire company and enables a holistic view of customers and business processes. The integration of a CDP into various departments can promote collaboration and result in better results. In a time when data is the driving force behind business decisions, a CDP can make the crucial difference.

Use Cases: Practical Applications of CDPs

So far we have explored the basics of Customer Data Platforms (CDPs). But how does their potential manifest in the real world? Let's take a look at some exemplary CDP use cases, which illustrate how CDPs can actually be used.

In the coming sections concise insights into concrete application scenarios will be offered. These examples illustrate how CDPs enhance the effectiveness of marketing strategies, optimize customer approach, and make business processes smoother. 

Use Case 1: Effective Programmatic Advertising without 3rd Party Cookies

Challenge: The personalization and effectiveness of Programmatic Advertising are impaired by the disappearance of 3rd Party Cookies and the stricter data protection regulations. These developments make it more difficult to serve precision-fit ads to the desired target groups.

Solution via CDP: The CDP offers an innovative solution to this challenge. It integrates a universal ID that makes conventional 3rd party cookie tracking obsolete. With this universal ID, companies can deliver personalized ads to existing customers and potential new customers, without relying on third-party cookies. The CDP creates comprehensive user profiles based on interactions and behavioral data. This means that targeted ads can be served to individuals who have not yet been customers, but who have been identified as a promising target group based on their behavior and preferences. This approach allows for more precise and effective targeting of users and opens up new opportunities for a broader customer approach. At the same time, the CDP ensures compliance with strict data protection regulations.

Use Case 2: Optimized Identity Management for Targeted Customer Approach

Challenge: Precise customer approach requires optimized identity management. It is crucial to ensure that customers receive the right messages at the right time.

Solution via CDP The CDP offers a solution to create and manage customer profiles accurately. This allows targeted customer approach and optimized return on advertising spend (ROAS). The CDP links the various bits of data from a customer to form a complete picture, enabling personalized marketing campaigns tailored to individual needs and preferences.

Use Case 3: Creating Lookalikes to Optimize Targeting

Challenge: Identifying the "best" customers and transferring their behavior to other target groups is complex. Companies are looking for ways to target their marketing campaigns at people who have already shown similar interests or buying behavior.

Solution via CDP: Through a CDP, companies can create so-called "Lookalike" target groups. These are generated based on the behavior of the "best" customers. This means that if loyal customers prefer certain products or visit certain pages on the company website, the CDP identifies people with a similar behavior pattern. This increases the likelihood that ads will be served to people who have already shown similar interests or buying behavior, thus increasing the conversion rate.

However, it is important to differentiate between the application of the CDP for existing customers and for acquiring new customers. For existing customer campaigns, the CDP optimizes the search for people who exhibit similar behavior to the best customers, e.g., those who accepted the last upsell offer. In terms of customer acquisition, the CDP identifies leads with an overall profile that is similar to that of the best customers, in order to attract potential new customers.

Use Case 4: Single Customer View for All Teams

Challenge: Companies have difficulty providing a unified customer view for various teams. Sales, marketing, customer service and other departments often have different information about the same customer.

Solution via CDP: A CDP creates a Single Customer View that can be used by different teams. This means that regardless of whether it is sales, marketing or customer service, all departments can access a consistent customer profile. This promotes collaboration and enables personalized interactions. For example, if a customer has a question about the status of his order, the customer service can access the same information as the sales department that placed the order. This results in better customer service and a seamless customer experience.

Use Case 5: Targeted Retargeting with Conversion Increase

Challenge: Efficient retargeting on external portals requires precise segmentation. Companies want to ensure that ads are served to the right people, and scatter loss is minimized.

Solution via CDP: Through automated customer segmentation in the CDP, companies can perform targeted retargeting. The CDP analyzes the behavior of customers on different channels and touchpoints and automatically creates segments. These segments can then be used for retargeting campaigns. At the same time, the CDP excludes existing customers to avoid serving irrelevant customers. The result is a higher conversion and a more efficient use of the advertising budget. Adapting to increased customer expectations for personalization is another advantage that companies can achieve through the use of a CDP.

In conclusion, it should be noted that these use cases represent only a small excerpt. The potential of Customer Data Platforms is far greater and may offer many more innovative applications depending on the industry and business area. Companies that rely on data-driven solutions will be able to adapt flexibly to changes and continuously improve their customer relationships. The world of CDPs is dynamic and full of opportunities waiting to be discovered.

Recommendations for selecting the right CDP

Choosing the right Customer Data Platform (CDP) is critical to a company's success. Given the multitude of CDP providers on the market, however, selection can be a challenge. To help you make the best possible decision, we've put together some recommendations and tips:

• Define clear goals: Before you start looking for a CDP, you should know exactly what goals you want to achieve with it. Do you want to optimize your marketing campaigns, increase customer loyalty, or make business processes more efficient? A clear definition of your goals will help you choose the right CDP.

• Analyze your data: A basic understanding of your data is essential. What kind of data do you collect? Where is it stored? Which data sources need to be integrated? A thorough analysis of your data landscape will help you to choose a CDP that meets your specific requirements.

• Consider data protection and compliance: In a time of strict data protection laws, it is of crucial importance to ensure that your CDP complies with the applicable regulations. Make sure the provider has robust data protection and security measures in place.

• Scalability and flexibility: Your business will grow, and your requirements will change. Make sure the selected CDP is scalable and can adapt to your company's changing needs.

• Integration and interoperability: A CDP should be seamlessly integrated with your existing systems and tools. Check whether the provider offers integrations with platforms you use.

• Ease of use: The CDP will be used by various teams in your company. A user-friendly interface and clear guidance are therefore beneficial to promote acceptance and use in all departments. This is particularly important as the introduction of a CDP can represent a significant change for your marketers. Make sure employees get excited about the topic and understand the benefits of the new platform for their work.

• Support and training: In addition, make sure the CDP provider offers training and support to ensure your team can fully exploit the potential of the platform. This includes change management to facilitate the transition and ensure your team is ready to fully exploit the new opportunities.

• Costs and ROI: Clarify the pricing structure and determine how the investment in the CDP will impact the Return on Investment (ROI). A detailed cost-benefit analysis is crucial.

• References and reviews: Thoroughly research and look for customer reviews and references of the CDP provider. Experiences of other companies can provide valuable insights.

• Pilot project: Before settling for a final decision, consider conducting a pilot project to test the CDP in a real environment.

Selecting the right CDP requires time and care, but with an informed approach you can ensure that your investment achieves desired results and leads your business into a data-driven future. Since there is no 'one-size-fits-all' solution for Customer Data Platforms, it is crucial to carefully evaluate the various providers on the market, each with their own advantages and disadvantages.

At Iskander Business, we work closely with our clients to define their individual needs in choosing tools. This selection process includes up to seven complex steps where we agree on the entry points and individual phases together to ensure the solutions are perfectly tailored to your requirements. Our approach is illustrated in the figure, which shows possible steps and procedures in the selection process.

On OMR Reviews you can find information about a range of Customer Data Platforms that support you in compiling and maintaining your customer data. Based on the verified customer reviews, the following 5 CDPs are particularly popular in our community:

Tealium

Zeotap

Segment

Bloomreach

SAP Customer Data Platform

Conclusion

Customer Data Platforms (CDPs) play a crucial role in today's data-driven business world. They offer a solution to the increasing challenges in the field of customer relationship management, data protection, and marketing optimization. CDPs enable companies to develop a comprehensive view of their customers, conduct personalized marketing campaigns, and increase the efficiency of business processes.

The five use cases presented illustrate how CDPs can be used in practice to tackle specific challenges and achieve positive business results. From the optimization of programmatic advertising to the creation of a unified customer view for all departments, the CDP offers a wide range of applications.

It is important to note that the use of a CDP is a strategic decision that requires careful planning and implementation. Companies that successfully use this technology have the opportunity to increase their competitiveness and exceed the expectations of their customers.

In a world where data is the key to success, CDPs can make the difference between stagnation and growth. Companies who choose this technology are well positioned to succeed in a data-driven future.