• by Joshua Neckes , Columnist, February 28, 2018

A customer data platform (CDP) is essentially a revolutionary new data engine for the modern marketing stack. Think of it like a Tesla, but for your marketing efforts. 

The modern enterprise has thousands upon thousands of data points on customers. This new category was born out of a need to smartly and “scalably” use that data to create marketing campaigns that are personalized and optimized for each consumer. 

As with Tesla’s revolutionary electric engine, CDPs are disrupting an industry that has continually failed to innovate around the core infrastructure powering its larger chassis. 

Where Tesla has an engine that can make a production line sedan faster than a souped-up Lamborghini, CDPs are facilitating a massive advancement in the speed and accuracy of marketing personalization vs. existing marketing clouds.

What is a CDP? 

CDPs are built on a fundamentally different and new set of technologies that are highly disruptive to incumbents. Tactically, the right CDP can:

• Get all of your disparate customer data in one place

• Run marketing campaigns in any channel (e.g., email, ads, push, SMS)

• Handle massive data volume/scale of customers 

• Predictively optimize campaigns and segmentation

• Provide deep reporting and customer insights via non-SQL dashboards

• Integrate with the systems (e.g., ESP) you’re already using 

What problem is the CDP solving?

Historically, using data for personalization has been incredibly painful for marketers. Creating a single view of the customer and achieving the dream of 1:1 customer journeys at scale has been close to impossible, even for the biggest companies. 

Why? Because the incumbent marketing clouds simply aren’t built with data as a first-class citizen. 

Existing solutions simply aren’t able to hold the amount of data a modern marketing operation throws off. And that amount of data is increasing considerably with connected devices/IoT, multi-device purchase patterns, and an ever-diversifying set of marketing channels.

The CDP’s rich data environment enables 1:1 targeting predicated upon cutting-edge data science, along with a great foundation for reporting. As with Tesla, the scale and scope of these problems required a fundamental re-envisioning of the engine itself; a bolt-on solution was never going to cut it.  

Why do CDPs matter?

Digital marketing’s ascension in the last decade has come squarely on the back of acquisition efficiency. Marketers found that they could be more efficient, dollar-for-dollar, acquiring new customers on channels like Facebook and Google. 

Sophistication here has increased dramatically in the last three to five years, with most companies now employing “growth marketers” who are highly adept at optimizing campaigns in these channels. 

The result is an oversaturated acquisition landscape characterized by diminishing returns.

Consequently, driving incremental customer lifetime value (CLV) now represents a far more efficient growth path for the modern marketing operation. Increasing CLV also has the added bonus of letting acquisition marketers justify higher cost of acquisition (CAC), while still maintaining a favorable CAC:LTV ratio (usually 1:3 or better).

The CDP is the pathway to that LTV extension, enabling retention and product teams to create highly-relevant experiences for every customer. Personalization and multi-channel consistency drive more repeat purchases, better engagement, and more brand affinity — it’s that simple. 

Who should buy a CDP?

The short answer: most companies. Retailers, subscription companies, loyalty-based businesses (e.g., airlines, credit card companies), apps, financial institutions, and healthcare all represent data-rich, direct-to-consumer verticals that benefit from the power and scale of these solutions. 

These businesses differentiate and win by aspiring towards the same level of sophistication in managing the customer lifecycle as a leading tech company like Netflix or Uber. And with CDPs, they’ll get it.