5 Ways a CDP Explains Your Customer Better

Posted on April 20, 2024 | Updated on April 24, 2024

Succeeding in business starts with understanding your customers. The more you know about them, the better you can address their specific needs, leading to stronger relationships and increased sales. That’s where a Customer Data Platform (CDP) comes in. This software system pulls customer data from different sources onto a central database and analyzes them for useful insights to improve business growth.

What Is a Customer Data Platform?

It’s exactly as the name describes — a platform aggregating and analyzing relevant customer data. Businesses engage with buyers across multiple touchpoints and channels. For example, they might find a brand through an online ad, purchase a product via the company’s website, and make inquiries through social media. If the business is tracking all these interactions (and it should), it now has information about the same customer from three different sources. 

These touchpoints represent valuable information about the user. However, analyzing each disparate source separately is highly inefficient and unlikely to provide a wholesome view. This prompts the need for a centralized database to extract first-party data from various platforms and channels to create a more complete customer profile. 

What Does a CDP Tell You About Your Customers? 

A CDP helps you understand your customers better by providing unified and up-to-date information about their behavior and activities. In particular, it can offer the following insights: 

1. Who They Are

Creating accurate customer identities is the first step to building a buyer profile. These include name, location, education level, age, gender, etc. Knowing these details is crucial for targeted sales campaigns. For instance, Baby Boomers have different purchasing habits than Gen Z, so you’ll need a different approach when marketing to either. 

You can leverage a CDP to pull demographic data from a variety of sources and present it in a cohesive format. More importantly, it can help you update information quickly so all relevant teams — marketing, sales, and customer service — have the same info. 

2. Their Likes and Dislikes

Real-time customer information aggregated on a single platform provides a more comprehensive understanding of what they like and dislike. For example, a CDP can analyze product data, such as what items they’ve bought, items they’ve stopped using, and browsing behavior. 

A deeper understanding of customer preferences also provides valuable insights for tailored product recommendations, a key factor in business success. According to McKinsey, recommending relevant products to your customers can improve engagement, deliver a more convenient shopping experience, and generate up to 40% more revenue.

3. How They Prefer to Communicate 

Most businesses offer multiple ways for customers to connect with them, such as phone calls, contact forms, social media chats, etc. A centralized view of past customer interactions can help you identify how they prefer to communicate with your brand. Conversing with them through their preferred channels can help strengthen relationships, avoid misunderstandings,  and adapt your approach to suit their needs.

Furthermore, today’s buyers don’t expect the interaction with their favorite brands to be confined to their purchases alone. They expect brands to be preemptive in their outreach, knowing what they like and conversing with them accordingly. Understanding how they prefer to communicate is one of the best ways to demonstrate to customers that you respect their time and value their feedback. 

4. What Challenges They’re Facing 

A CDP can store customer complaints and concerns from various sources, providing a more holistic view of their challenges over time. This helps customer service teams address them quickly and seamlessly follow up. Research shows a positive customer experience can result in a 10 – 15% increase in conversions.

It also ensures customers don’t have to report the same issue to multiple representatives. Hubspot reports over 33% of consumers find it super frustrating to explain the same problem to different customer support agents. 

Moreover, knowing your customers’ issues makes it easier to develop tailored solutions and upgrades. For instance, if a shopper has repeatedly asked about a particular feature, you could check your CDP to see how many other customers have a similar request. Then, you integrate that solution into newer product iterations or as an add-on. 

5. Their Attitude to Your Brand 

Many companies frequently solicit attitudinal data — intent, interests, and opinions — through surveys and usability tests. Compiling the results on a single platform provides a more wholesome picture of how your customers actually feel about your product or service. 

Through a CDP, you can uncover the behavioral traits of customers who are more likely to buy again and those likely to churn. These insights enable you to take data-driven next steps. For instance, identifying at-risk customers from a central database makes it easier to sort them into a section for highly targeted retention strategies like excluding discounts and personalized offers. 

The Role of a CDP in the Buyer Journey 

From the first point of contact to conversion and beyond, the customer journey provides countless data points to track across multiple channels. Using your CDP to quickly consolidate information from various sources can give a clearer understanding of where prospects are and what you can do to move them to the next stage. 

The analysis can uncover trends and correlations you may not have seen if you were tracking customer data from only one touchpoint. For instance, prospective customers might be more likely to open your marketing email after seeing your brand on social media. Customers may also be less likely to abandon their cart after interacting with your online store chatbot. 

A CDP lets you follow every interaction across the customer journey to create smarter marketing triggers to move prospects to buyers. Imagine if a new customer received a follow-up email with a detailed guide on using the product they bought rather than a generic promotional offer. 

These minor tweaks let you optimize each journey stage regardless of the interaction platform and lead to deeper relationships beyond the first purchase. 

Choosing the Right CDP

According to the CDP Institute, 72 CDP software vendors are in the U.S. alone. That’s a lot of options to sort through. Here are some helpful tips to narrow things down and choose the right solution for your business. 

  • Identify stakeholders early: Determine all internal teams that will benefit from the insights produced by the CDP. This will establish the level of need for such data within the company. 
  • Define use cases: It’s great to consolidate your customer data into one unified database, but what exactly do you hope to achieve from using the tool? Outlining expected use cases and benefits from the start makes it easier to track ROI. 
  • Outline needed tools: Create a list of all the platforms and software you want to integrate into your CDP. This is important for assessing compatibility when evaluating vendors. 
  • Compare platforms: Factors such as features, price, and scalability are the usual considerations. However, evaluating vendors based on their track record in your industry and whether they’re data-compliant is also essential. CDPs deal with customer data, so your chosen platform must comply with current security regulations. 

Leverage CDP for Business Growth 

Having a single source of data truth for your customers makes it easy to extract more useful information to serve them better. With a CDP, your business can bridge potential information gaps and enhance data integrity across departments. Additionally, it provides practical insights to drive decision-making and stay competitive in the market. 

About The Author

Leave a Comment

Related Posts