Why Customer Data Platforms Are Crucial To Your Digital Transformation Journey
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Imagine an up-and-coming director tasked with crafting a dazzling theater performance. Their head is full of creative ideas and staging concepts, but when it comes down to the nitty-gritty details of cast, crew, and feasibility, they have trouble keeping it all straight.
That's where a stage manager comes in, the logical brain behind the creative energy of a show. When a company starts to tackle the question of digital transformation, the same issues can arise. When it comes to your customer interactions, the stage manager in your corner is a strong Customer Data Platform (CDP).
CDPs can help your team collect, analyze, and store data from customer interactions across all channels, giving you the insights you need to craft the greatest show on earth.
What is a Customer Data Platform
At its most basic level, a CDP is a single, unified platform that stores all of your customer data. It collects data from any customer interaction with your brand, be it through e-commerce, mobile, email, social media, or even in-store. Once this data is collected, it’s sorted, organized, and stored in a way that can be easily used and retrieved.
A CDP also helps you analyze the data you’ve collected. It can identify customer trends, behaviors, and preferences, and use the data to create marketing or retention campaigns that are tailored to the individual. It can also provide insights into the effectiveness of those campaigns, so you can adjust them as needed.
Having a CDP provides a comprehensive view of your customers, allowing you to understand their needs and address them in a meaningful way. It also helps you create personalized experiences for customers by segmenting them into different groups based on their demographics, firmographics, behavior, preferences, and interests.
This can be used to create targeted campaigns, messages, and offers that are tailored to each group. A CDP also helps you optimize your customer acquisition and retention strategies. It can be used to track customer lifetime value, provide insights into customer churn, and identify customer segments that are more likely to convert.
It can also be used to identify the most effective channels and campaigns for acquiring new customers.
CDP and Digital Transformation
The ideal stage manager will be able to help with every single aspect of a stage production. This is also the case for a strong CDP, which makes a difference across the board for digital transformation.
Data Driven Analytics
A CDP offers data-driven insights into customer behavior, preferences, and trends. This allows you to get a better understanding of your customers' needs and tailor your strategies to better meet those needs.
For example, if you’re able to track customer preferences across channels, you can create personalized experiences and campaigns that will be more likely to engage them. With a centralized point for all this data, a CDP also helps build a data democracy, getting your entire organization in touch with the information that should help them on a daily basis.
Privacy Compliance
A CDP can also be a major asset when it comes to compliance with privacy regulations like GDPR. It ensures all your customer data is securely stored and can be easily accessed to comply with privacy regulations.
You’re able to identify and delete any personal data that needs to be removed or made anonymous. This kind of control makes a customer data platform essential for data governance.
Data Quality
Data quality is a major priority for digital transformation. A CDP can help ensure that all the data collected on your customers is accurate and up-to-date. It can also help you detect any data gaps or inconsistencies, giving you the opportunity to improve the data collection process and ensure that the data is relevant and actionable.
Cross-team Collaboration
A clear sign of succesful digital transformation is your team's ability to work across departments. A fully integrated digital tool should be able to help many different aspects of your business.
Having a comprehensive picture of the customer helps enable sales, marketing, and customer service teams to strategically promote products to the right people, at the right time.
Customer Classification
CDPs help you create a customer classification system or lead scoring matrix. This allows you to segment customers into categories based on their behaviors, preferences, and other characteristics. When you can target the right customers with the right message and product (at the right time!), you greatly increase the chance they'll engage with your brand.
These optimized personal strategies can help improve customer retention and drive more sales. In fact, personalized ads across platforms have helped over 90% of companies increase conversion rates.
Enhances Customer Data Maturity
Data maturity is a measure of how well you can use customer data to make decisions. With a CDP, you’ll have access to data from a range of sources—including customer profiles, transactions, web visits, and more—to build a 360-degree view of your customers.
Having a centralized platform for customer data gives you the ability to track customer behavior across multiple digital touchpoints. With this information, you can better understand your customers, allowing you to create more personalized experiences.
This data also can be used to automate certain processes in order to speed up customer service, such as automatically responding to customer inquiries or providing personalized product recommendations.
CDP vs CRM: Why your Business Needs Both
A CRM (Customer Relationship Management) system is used to manage customer interactions, such as sales, marketing, and customer service. It helps businesses track customer information, like contact information and purchase history, so they can provide better service.
You’ll notice that these two systems are very similar, but a CDP and a CRM actually fulfill different roles within your company. The biggest difference is that a CDP stores customer data in one place, while a CRM helps businesses manage customer interactions.
To return to our theater analogy, a director will be able to get all the contact information and know what a designer needs by going to the stage manager. However, when it comes to actually meeting with that designer, the director will need to pull out their notes and connect with them, say online or at a local coffee shop. This method of making contact and taking notes is what a CRM encapsulates.
These systems need to be working in tandem to ensure that data is being collected, stored, and utilized both on a macro and micro scale within your company.
Implementing CDP: Best Practices
Once you’ve decided to move forward with a CDP, there are a few best practices that you should keep in mind.
Tip One: Choose The Right Tool
Seeing as digital transformation is such a huge focus for many companies right now, it makes sense that there are lots of options for tools to help you on your journey. Make sure that your team has done the research to choose the perfect CDP for your needs, and that all stakeholders are involved in the process.
Because the ultimate goal is to integrate your CDP into every aspect of your company, getting input from everyone is a must!
Tip Two: Have Extensive Data Governance
With this amount of personal data collected for all your customers, it’s important that you have a data governance framework in place. This will ensure that the information is safe, secure, and accessible only to those who need it.
Tip Three: Ensure Everyone is Fully Trained
Lack of training and skills is the biggest barrier to successful digital transformation. Because a customer data platform is so powerful when used throughout a company, make sure that everyone understands how and when to use the data.
The Bottom Line
The digital transformation journey is a complex but necessary one for any business looking to stay competitive in the age of technology. A Customer Data Platform is the invaluable "stage manager" in this journey, helping to unify customer data and provide key insights into how to best engage customers across multiple channels.
With the right CDP, you can ensure that your digital transformation journey will be successful and lead to a more customer-centric business model. This shift will inevitably help you and your team shape a memorable, powerful show!
About the author:
A programmer by trade, Nick Saraev is a freelance writer and entrepreneur with a penchant for helping people excel in their careers. He's been featured on Popular Mechanics & Apple News, and has founded several successful companies in e-commerce, marketing, and artificial intelligence. When he's not working on his latest project, you can find him hiking or painting.
