When we shop online, it’s common to do some research: starting with a simple Google search for the best products out there, your journey most likely takes a series of twists and turns through review sites, product pages, YouTube tutorials, and forum threads before you’ve decided which item is best for you.
This research pathway is nothing new – people have done it since before the internet – but the world wide web certainly complicates things. Now that you’re no longer a “regular” at a brick-and-mortar store, how do e-commerce sites ensure you have a streamlined, personalized shopping experience?
What is a customer data platform?
Customer data platforms, or CDPs, are software programs that compile customer data from multiple sources whenever they interact with your brand. At each point in their journey to find the perfect product, they’ll likely come across mentions of your brand on Facebook, a Reddit thread, or directly cited in a product review blog. CDPs collect data from these touchpoints to create a customer profile for a consumer.
What do CDPs do?
By collecting and storing data from various sources, CDPs effectively create specific customer profiles for consumers. First-party sources, collected directly from the customer, are the ideal source of information when collecting data of any kind. However, most data collection software relies on second and third-party data, which isn’t as accurate.
With the use of first-party data, the CDP can create a more accurate customer profile to provide targeted marketing to the consumer. Unlike other marketing assistance tools, CDPs rely on consumer profiles to create a shopping experience that is 100% centered around the individual.
Third-party data isn’t as useless as it seems, though. In CDP marketing, third-party data is great for attracting potential customers who haven’t interacted with your digital storefront yet. Once a customer does interact with your shop, the CDP collects their first-party data through cookies and transaction information.
Benefits of CDPs in marketing
Although they only organize and store data, the level of detail at which CDPs collect data can seriously affect how your business markets to potential customers. The biggest sell of customer data platforms is their granularity, and the benefits of this type of data collection can further fine-tune an individual’s shopping experience. On the business side of things, CDPs can:
Organize and share customer data
The ability of a CDP to organize highly specific customer data and share it with the rest of your e-commerce platform is essential to keeping your business’ marketing department running smoothly. While setting up your CDP’s organization methods takes a bit of time initially, it is relatively easy to maintain, like any other e-commerce software. Many CDPs are compatible with major e-commerce platforms, so you won’t have to worry about constantly transferring information manually.
Collect data directly from customers
CDPs remove the middleman from data collection and rely solely on customer interactions to form profiles. This means that all information, including a consumer’s interaction with social media posts, comes directly from them. The use of first-party data collection reduces the need for data collection companies to sell customer data, as well as provide highly accurate analysis directly from your target audience.
Protect customer data
Nobody wants their information stolen, and a CDP’s ability to rely solely on first-party sources makes the need for shady third-party collection groups obsolete. Other than that, CDPs protect consumer data by
- Only collecting data relevant to your marketing efforts. It will not collect any additional or unnecessary information.
- Allowing businesses to manage customer data in compliance with Data Protection laws easily.
Defining customer data
There are four main functions of a CDP:
- Collect customer data
- Store customer data
- Sort customer data
- Analyze customer data
What constitutes customer data, though? Generally speaking, we can split consumer data into four categories:
Demographic data refers to general information about your customer. Their age range, sexuality, race, income level, gender, political affiliation, and ethnicity are all demographic statistics. These are the things that customers see most often in advertisements.
There’s a little overlap between demographic data and personal data since some aspects of an individual’s demographic also define them as a person. Generally speaking, personal data includes the stuff you wouldn’t share outside of a store: your shipping address, phone number, email, and preferred social media sites all constitute personal data.
Behavioral data covers anything that refers to how a customer interacts with your business. Although it’s not particularly noticeable in advertising, it still plays a major role. Behavioral data includes general transaction information, like the number of items purchased, average order size, and returns. It also includes business-related correspondence, like the number of times a user has clicked through your email promotions, contacted customer service, or interact with your business’s social media page.
Qualitative data is what provides context to your customers’ actions. This data typically consists of customer motivations, opinions, and general attitudes about a product or business. You’ll usually get qualitative data through product reviews and voluntary surveys. While this information is a bit more scarce than other data types, it’s still very important in gauging how your customers react to new products or ad campaigns.
Which data does a CDP collect?
CDPs collect all four types of customer data and compile them to create individualized profiles. Typically, this means a customer’s data (like their location or phone number) is tied to related behavioral data, qualitative data, and demographic data. Consumer data platforms organize the different types of data collected from consumer interactions and associate them with a specific shopper. Then, they organize various customers based on overlapping data patterns.
For example, a CDP may notice that three consumers are all from the New England area and spend a lot of time walking. The software would then make a note of this overlap and recommend umbrellas to help make their walks easier during inclement weather.
What are data silos, and how do they relate to a CDP?
The term data silo has become quite popular among e-commerce professionals since we live in such a rapidly changing digital world. In layman’s terms, a data silo occurs when one group has access to specific customer data while another does not. Since only one department has full access to a specific data set, other departments will need to request someone to send over information manually. While many e-commerce platforms specialize in organizing data and keeping it all in one place, this doesn’t apply to broad swaths of information like consumer data collected via multiple sources. Data silos often occur when companies grow rapidly, and the technology that previously connected everything just can’t keep up.
CDPs come into the picture as a potential solution for the data silo since they keep all kinds of customer information in one place. Their ability to store and manage large amounts of highly-specific information makes them ideal for expanding companies looking to keep all their customer information in one place.
CDPs vs. CRMs and DMPs
CDPs share similarities with other consumer marketing and data collection platforms, like CRMs and DMPs. However, each type of software has key features that separate them from each other.
For example, customer relationship management software collects consumer data, just like a CDP. However, a CRM only tracks customer interactions, while the CDP creates profiles based on consumer interactions. CDPs and CRMs work well together since they both collect data; the CRM can then send information to the CDP to organize as needed. In addition, CDPs collect data differently from CRMs. Data from a CDP is
- Anonymous (in addition to known customers)
- Tracked both offline and online
- From multiple touchpoints and sources
Data management platforms, or DMPs, specialize in anonymous information like cookies, devices, and IP addresses. On the other hand, CDPs cover anonymous and known entities, collecting and storing data related to a customer’s personally identifiable information alongside anonymous data. CDPs and DMPs synergize nicely as well since the DMP can send and store anonymous data to the CDP.
CDPs also differ from DMPs in how they market. A CDP will:
- Influence all types of marketing, not just targeted ads.
- Rely primarily on first-party data.
- Hold customer data for a longer period of time
- Build personalized customer profiles for marketing purposes
Do I need all three?
Ultimately, your business won’t need a CDP, CRM, and DMP. CDPs are a hybrid of CRM and DMP since they can track and analyze anonymous and established customer data. CDPs take this data collection a step further by incorporating data sharing and analysis tools in the software. While all three software formats are great additions to your e-commerce marketing plan, a customer data platform is ultimately the best choice if you need to settle for just one.
If you’re looking for a new CDP for your business, check out our resources! Amasty offers tons of Magento-compatible software extensions that can keep your business running at its smoothest without installing completely new, complicated software to make it work. If you’re looking for any assistance with product installation or advice on which of our products work best for your business, contact us for a consultation!