Many companies are currently striving to digitalise their customer management and are not only coming across the well-known abbreviation CRM, but also the buzzword Customer Data Platform (CDP). Here, data no longer has to be entered manually. A CDP collects the data autonomously and creates customer profiles itself.
The customer data platform collects first-party customer data (transaction, behavioural and demographic data) from various sources and systems and links this information itself to create complete and individual customer profiles. This creates an even better 360-degree view of the individual customer. Above all, this allows you to target marketing campaigns more precisely and efficiently at individual customers.
CDP - the natural evolution of CRM
This changed with the emergence of the first data management platforms (DMP) in 2000, which also helped the marketing department to plan and implement media campaigns. In contrast to CRM systems, DMPs worked with data from second and third-party providers and were therefore also able to segment anonymous identities. The problem was that this created data silos to which only individual departments had access. Marketing, for example, was unable to access sales data. And sales had no access to the data management platform.
Customer data platforms now provide a remedy. They have emerged in the wake of increasing demand for better customer experiences and the associated omni-channel marketing initiatives. CDPs are able to deliver a unified customer view by automatically collating data from a wide range of sources on a single, comprehensive platform, such as events and website movement profiles. In this way, CRM and CDP have a common justification in companies.
How does a CDP help in comparison to CRM?
Today's customers have high expectations of companies. They know what makes a good and personalised service and will quickly switch to a competitor if they are offered better value for money elsewhere. A consistent customer experience across all channels, appropriate recommendations and personalised communication should therefore be a matter of course for every company by now. Unfortunately, however, many companies are still a long way from realising this dream. One of the main reasons for this is that many companies are hopelessly overwhelmed by the flood of data and the handling of all the information.
No wonder: the volume and speed of digital data is complex. New data is constantly being added, while recently collected information is already out of date. This can completely overwhelm conventional database software. A CDP, on the other hand, is specially designed to manage this type of data flow. For example, a CDP helps with the following points:
- Customer rating forecasts: Enriching customer profiles with additional data makes it easier for you to determine the probability of purchase, churn, visits or e-mail openings.
- Omni-channel automation: You can provide your customers with personalised messages that you can always send at the time when they are most likely to open them - regardless of the channel.
- Smart behavioural retargeting: Integration with your social media activities allows you to run campaigns independently of websites. This allows you to observe and evaluate how your customers move around the Internet.
- Connecting online and offline: By merging your online and offline activities, you can create an accurate customer profile. You will also be able to identify customers from online activities when they enter brick-and-mortar shops.
- Customer segmentation & personalisation: You can segment customers according to their behaviour and offer them personalised omni-channel experiences across the entire customer lifecycle.
- Product recommendations: Through various recommendation models such as "similar products" or "previously purchased products", you are able to provide customers with first-class buying experiences to increase brand loyalty and boost sales, up-sells or cross-sells.
- Conversion rate optimisation and A/B tests: You can use automatic A/B tests to determine which variant of your campaign performs better.
CDP and CRM - the dream couple of the future
CRM systems will never lose their raison d'être in companies. After all, they are still an important part of the customer loyalty strategy. And CRM and CDP are not mutually exclusive: Many companies currently run a customer data platform in combination with a CRM system.
After all, CRM systems continue to provide unbeatable services in the management of customer data in a sales-orientated environment. However, they do not collect data independently across different channels, as is necessary for modern marketing, for example. CDPs are still mainly used in the marketing sector. However, many software providers are currently working on dissolving the boundaries between marketing and sales and simplifying collaboration through standardised solutions.
One thing is certain: both customer data platforms and CRM systems are useful for improving the customer experience. CRM tools provide access to the historical data that enables sales and customer service representatives to interact with customers in a personalised and effective way. If the brand's goals are to gain a better understanding of its customers and how they interact with the brand across all channels - in real time - CDPs are the means of choice for an optimal customer experience.