Customer Data Platform or CDP strode into the limelight in 2014. Coined by David Raab, Founder, CDP Institute, a CDP is defined as packaged software that creates a persistent, unified customer database that is accessible to other systems. It is a pre-built system that gives a comprehensive view of a customer by capturing and storing information (behavioral, demographic, and transactional) from multiple systems. Data that is stored in a CDP can be linked and used by other systems for managing customer interactions and analysis.
In the past 4 years, the CDP market has grown exponentially. As per a report by the CDP institute, the CDP industry revenue will reach an astounding $1.3 billion in 2020, which is a 30% increase over the previous year. As the CDP evangelization takes up more prominence in the future, it is necessary to quell some common misconceptions that have risen over the years. It’s time that we demystify popular CDP myths for Financial Services marketers.
Myth 1: A CDP is a marketer-managed and marketer-only system
A CDP’s packaged nature makes it slightly easy to maintain than other corporate systems. However, the notion that CDPs are completely managed by marketing is incorrect. Yes, marketing is a technology-driven function today. But this doesn’t mean that the IT department has no role to play. Corporate IT helps CDPs in acquiring data by providing access to various systems within the organization. Both marketing and IT need to work in tandem to make a CDP function efficiently.
A CDP can be implemented in any department that deals with data. Its association with marketing is primarily because of its popularity with marketers who have been using it to unify data and create a single customer view in their organizations. It’s not a marketer-only system. There is nothing inherent within the technology that ties it to marketing. Any department that requires customer data in a unified format can make use of a CDP.
Myth 2: A CDP’s main capability is Identity Resolution
It might seem obvious that a system that can build unified customer profiles should be able to link data from different sources that relate to the same customer. Many CDPs provide this built-in identity resolution. But many do not. It depends on the Financial Services firm that has purchased and implemented a CDP. If the firm is procuring data from a single source and has an existing system to resolve identities, they would not need an identity resolution feature in their CDP. What most CDPs have in common is the ability to retain data links over a period of time which is essential for stitching together unified profiles.
Myth 3: A CDP can solve a company’s data management problems
If financial firms think that implementing a CDP in your existing technology architecture can solve all your data management problems, they are wrong. A CDP is very good at unifying customer data but it cannot prevent other organizational issues such as regulatory constraints, reward systems, departmental obstacles, employee skills, etc. It can only help in identifying some of these problems and not solve them.
Myth 4: CDPs are known for handling only personally identifiable first-party data
A CDP can handle personally identifiable first-party data very well when compared to other systems such as a data management platform (DMP). Most financial companies use CDPs for primarily managing first-party data. However, CDPs are also good at managing third party anonymous data. Very few companies use a CDP for this purpose though. If put to the task, a CDP can store and manage third-party data as proficiently as it handles first-party data.
Myth 5: A CDP works well if it’s linked to all systems
A CDP needn’t be connected with all the systems in an organization to derive maximum value. It can deliver the same result if it’s connected to a few systems or even a single system. Connecting all the systems in a firm is a mammoth task as some systems may not be built to easily integrate with others. A less extensive CDP deployment involving 1 or 2 systems will still reap great results.
Myth 6: Implementing a CDP involves an overhaul of your existing technology stack
CDPs are pre-built packaged software that can fit into an organization’s existing technology stack. It’s an excellent data aggregation tool that can unify data from disparate sources. Financial Services companies needn’t overhaul or make major changes to their existing systems. A smooth CDP integration requires marketers to identify systems that can provide relevant data to the CDP and enable proper data transfer to and from the CDP.
Despite their technological and other internal organizational challenges, CDPs create a holistic customer view and help marketers create seamless experiences for their customers. Marketers are able to create personalized journeys that are optimized across multiple digital channels. Therefore, it is important that they understand and dispel popular CDP myths that can give an incorrect perception about its features and capabilities. The more accurate the understanding, the better it will serve in selecting the right Customer Data Platform for your business.
To know more about CDP and its use cases relevant to your business, please feel free to reach out to email@example.com.
By Bijoy K.B | Senior Associate Marketing at Lemnisk