This is a guest post by Aparna M. A., a Content Writer for Kings Research.

In the ever-evolving digital landscape, businesses of all sizes are grappling with a new challenge: how to effectively tap into the vast reservoirs of customer data at their disposal. The exponential growth of diverse channels, devices, and touchpoints has triggered an inundation of data, leaving organizations overwhelmed as they strive to unravel this information deluge. Rapid digitalization has brought to light a critical pain point: the need for seamlessly consolidating, analyzing, and leveraging customer data.

This is where a customer data platform (CDP) comes into the picture. By streamlining data collection, a CDP helps organizations sort out the chaos. According to a recent report by Extrapolate, the global customer data platform market is estimated to be worth $7.66 billion by 2030. This article discusses why CDP is important, its benefits, challenges, and more.

What is a Customer Data Platform?

A customer data platform also known as a CDP represents a solution or framework that empowers you to gather store shape and energize your customer data. The ultimate goal of a CDP involves establishing a centralized foundation where you can craft unified customer profiles and forge tailor-made experiences for your clientele.

Customer data platforms aid you in collecting primary data and merging it into a central database. All CDPs provide functionalities for both data and marketing teams addressing two vital functions with ease. Some of the prominent data platforms include Salesforce Data Cloud, Bloomreach, and CleverTap, among others.

Types of Customer Data Platform

Traditional CDPs

A typical CDP is like a one-stop shop tailored for collecting, storing, organizing, and putting into action customer data. So this kind of CDP functions by hosting and managing the data within its own system(s).

Composable CDPs

A Composable Customer Data Platform acts as an unbundled solution that adeptly gathers, structures, and activates customer data from your existing data infrastructure. This particular type of CDP does not store any data but seamlessly integrates with present data assets, allowing it to evade lengthy implementation periods and unlocking a significantly higher level of flexibility.

Hybrid CDPs

A hybrid customer data platform consolidates the complete array of CDP features into a seamlessly integrated platform while retaining some compatibility with your data warehouse architecture. Despite these advantages, the technology currently finds itself in a nascent stage of development. Numerous vendors heavily depend on data duplication processes, leading to significant latency issues and escalated storage expenses due to redundant data storage in both the data warehouse and the CDP.

How Does a Customer Data Platform Work?

Customer data platforms entail four main tasks: gathering data, blending data, utilizing data, and extracting insights from data. Now let’s dive deeper into each one.

Gathering Information

CDP acts as a centralized hub for all the customer information within your company. It provides an accessible and organized repository where every team member can easily locate customer data. To accomplish this task effectively, CDP must uniquely identify each customer by collecting and integrating data from various CRM platforms and data streams across your company, including systems like marketing platforms, service software, and e-commerce engines that typically operate independently. The process of aggregating and unifying this diverse data to pinpoint each customer’s complete engagement history is commonly referred to as “customer resolution”.

Achieve data synchronization

Once CDP amalgamates all of the organization’s data and generates customer identities, the subsequent task involves consolidating these identities across different devices. Essentially, this process entails connecting the identity details of known customers, like email addresses and phone numbers, with any anonymous data they might have disclosed before becoming customers, for instance, anonymous cookies and mobile device IDs. Cross-device identity resolution lies in providing a holistic view of customers’ journeys. For instance, you could observe a customer’s journey, starting with an email campaign, progressing to your website, and culminating in sharing information, downloading content, or purchasing.

Engage with Your Data

Once CDP establishes and consolidates fully integrated customer profiles, it proceeds to unleash this valuable data for swift access by your teams to tailor customer interactions in real time. The essence of this customization lies in linking the customer data within your CDP to a plethora of technological platforms used for engaging customers. These platforms encompass a wide array of tools, such as email dispatch systems, automated workflows, real-time analytics demand side platforms, and content management systems.

Extracting valuable insights from data

With the unified customer profiles provided by your CDP, exploring the entirety of the data each customer shares and monitoring their full customer journey is simplified. This data serves as a valuable resource for gaining insights into customers, segmenting them, and effectively creating lookalike audiences and personas to connect with new audiences. Furthermore, CDP centralizes and organizes all customer data, making it an essential source for validating your efforts’ impact on revenue and return on investment (ROI).

Why Do Businesses Need Customer Data Platforms?

Below are the top three reasons why businesses need to integrate CDP.

Disorganized data

When your data is fragmented, deciphering your customers and establishing meaningful connections with them grows increasingly challenging. With the escalating utilization of diverse data sources by companies, the importance of a CDP as the ultimate source of truth to unify all data becomes more critical than ever. Integrating your various data sources through a CDP simplifies the process of uncovering valuable customer insights at any time.

Customer identification

Only one in three marketers express contentment with their capability to link customer identities across numerous data sources. Serving as a central data hub for your customers, CDPs possess the capability to address multiple issues concerning customer identification. They aggregate data from diverse sources to construct unified profiles for every individual customer.

Simple segmentation

Initiating the organization of your data and consolidating customer identity profiles represent the initial steps toward enhancing segmentation and targeting strategies. Subsequently, a well-designed CDP will effortlessly unveil common attributes shared by customers, simplifying the audience segmentation process and enabling personalized interactions with everyone.

Final Takeaway on Customer Data Platform

Customer data platform (CDP) has sparked as a potent solution to conquer the challenges linked with managing and utilizing customer data. Through establishing a centralized hub for data collection amalgamation and analysis a CDP enables enterprises to grasp a thorough understanding of their customers and provide customized experiences on a large scale.

This is a guest post by Aparna M. A., a Content Writer for Kings Research.

About Aparna

Aparna, a Content Writer for Kings Research, is an enthralling and compelling storyteller with deep knowledge and expertise in creating analytical, research-depth content. She is a passionate content creator who focuses on B2B content that simplifies and resonates with readers across several sectors, including automotive, marketing, technology, and more. She understands the importance of researching and tailoring content that connects with the audience.

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