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What is CDP and Why It is Necessary for Companies?
![Author: Prasanna Express Analytics](/inc/images/no-person-100.gif)
Posted: Dec 05, 2021
The Customer Data Platform (CDP) is the most useful tool for Chief Marketing Officers. As per the industry report, the market size is expected to reach USD 10.3 billion by 2025. It is because of the growth factors like increase in investment in advertising and marketing activities by companies, changing the representation of customer intelligence, and growth of customer channels.
But, before proceeding further it is very important for any organization to know what is CDP, and why it is necessary for companies.
What is CDP and why it is necessary for companies?
CDP is founded in 2016, according to the CDP Institute, it is a collection of software that offers a continuous, and uniform customer database that is easily accessible to other systems. In short, the CDP manages all your customer experience across different channels. This platform collects data from offline and online sources and combines them into a single consumer profile.
The functionality of CDPs is totally different from traditional database management systems, and they continuously chase customer data in real-time. With the help of CDPs, it is possible to boost customer interactions within a few seconds of their first interaction with the product or brand and offer tailored experiences for huge audiences.
The benefits of CDP are:
- Improves your business
- Strengthen your customer relationships
- Complement your marketing efforts
A CDP can increase customer engagement and boost digital conversions for your business. Hence, while choosing CDP vendors, it is suggested to ask for a proof of concept (POC), which gives you sufficient time to test the product in various ways and then choose the right CDP vendors for your business.
Based on Gartner’s research report, it is possible to get 80% of future revenue from 20% of its consumers. Further, a report from Harvard Business School says that the company’s profit percentage can be increased from 30% to 90% by enhancing its customer retention rate by 5%. Hence, customer retention, and churn reduction is the key priority for marketers.
How to Reduce Customer Churn with a CDP?
As explained already, CDP provides a full view of customers' journey with the brand. This covers information like customer’s transaction history, interaction history, both channel and busying propensity, website, and mobile app behavioral details, etc.
The benefit of knowing such information is that the marketers can understand all customers very well. With this analysis, they can do the following activities:
- Identify customers' needs, and preferences. This in turn helps in increasing engagements, and conversions.
- Find out customers who don’t like your company’s services and products, and planning to leave. Here, they can bounce from your brand, so you need to reduce
- Deliver the superior personalized offer to make your customer spend enough time on your website or mobile app.
- Marketers take the help of AI-powered algorithms, and use CDP to segment customers into numerous churn buckets and compose the suitable personalized message at the perfect time and on the perfect channel. This analysis is also useful in predictive analytics where you can predict customers’ future behavior and offer some personalized offers based on their predicted behavior.
So, it is recommended to choose the best vendor among top CDP vendors who use AI with CDP to increase your business productivity.
How CDP Improves Your Business’s Experience and Engagement?
It’s not easy to decide between various CDPs. It requires a lot more research by keeping your requirements and needs in mind. In short, understanding your customers and conducting thorough research plays a vital role. The following points will explain how CDP improves experience and engagement:
A single view of consumers across all channels: CDP gathers and arranges inconsistent data from various online, and offline sources into single to create a united view of the customer. Because of the centralization of consumer information, it is possible to get a 360-degree view of individual profiles obtainable for instant use.
Customer Segmentation and Personalization: Provide omnichannel experiences all over the whole customer lifecycle by segmenting customers as per their behavior.
Predict Customer Behavior: Predict customer behavior (visit, opens, the intent of buying, churn) and take necessary actions.
Behavioral Retargeting and advertising: The combination of Google Ads, Facebook Ads, and various channels create chances to execute acquisition and retention campaigns behind your website.
A/B testing and Conversion Rate Optimization: Create a stylish look for your website. Make use of A/B testing for creating various designs, and identify which model is suitable. Increase your ROI by adding pop-ups to your websites.
Omni-channel automation: Increase your probability of customer acquisition, and retention by sending them personalized messages, and engaging them on various channels.
Email Deliverability Improvement: Get higher open rates for emails. The time taken by a user to open his or her emails should be decided by the CDP, enabling you to send an email at the best time to each recipient.
What marketers should focus on while selecting the right CDP?
When selecting a CDP, marketers should ask the following questions:
Is it supports real-time data: Within a couple of seconds of your CDP getting data, it should successfully update your customer profiles (both known and anonymous) and segments. It is important to personalize an experience for known, and unknown users in real-time across various platforms.
Meets compliance and security standards: Marketers need to check whether a CDP should let your company’s capability to respond to GDPR, and meet the security standards like private, and on-premise cloud solutions.
Check whether there is any roadmap: Check the existence of a roadmap when judging tools. It is also very important to understand the features, and integrations they have prepared for the upcoming year. It will be an advantage if a vendor’s roadmap has updates, and supports the consumer.
Conclusion:
CDP is the one-stop solution for handling increased customer digital footprints and providing a value-added customer experience across all channels. It is secure, cost-effective, and accessible by many tools. It is a boon for marketers as it offers a better view of the market and helps explore limitless opportunities in the market.
About the Author
Senior Seo Specialist at Express Analytics. Has experience in Seo, Social Media, Blogging, Online Reputation Management, Google Ads, and YouTube Video Optimization.