There’s a lot that goes into building a great tech stack for your business — and it all starts with choosing the types of tools you need.

A customer data platform can be a great centralizer for your tech stack. It brings all of your data sources together to give you a single view of the customer and their journey.

In this guide, we’ll look at what a customer data platform (CDP) does, how it differs from a CRM, and the benefits of adding a CDP to your tech stack.

Let’s get into it.

What is a customer data platform (CDP)?

A customer data platform (CDP) ingests data from all your sources to build a centralized customer profile. This happens in real-time to help companies better understand their customers and their journey, and to personalize their experience.

When data is unified in one, central source of customer truth, marketers can use any combination of behavioral, demographic, or transactional data to build audience segments and track a customer’s experience with your business.

According to CDP.com, the purpose of a CDP is to, “improve the efficacy and efficiency of your data-driven marketing campaigns.” This is accomplished by, “deploying data-driven insights to tailor personalized experiences at scale.”

What does a customer data platform do?

Adding a CDP to your tech stack will help you do four key things with your data — collect, clean, activate, and report.

1. Collect your data

A CDP uses integrations, SDKs, webhooks, and APIs to bring unstructured and structured data from all of your sources and channels into one platform. Data is ingested in real time so you can see behavioral data from campaign interactions or website and app activity alongside up-to-date transactional and demographic data.

Not only does this give you a central source of customer truth, it helps organizations achieve data democratization. As cdp.com put it, “employees can feel more empowered to make data-driven decisions, since they are using approved data points and sets. Non-technical employees won’t have to rely on data management experts as much to glean insights and ask data-related inquiries.”

2. Clean your data

As your data is being ingested, a CDP will clean and de-duplicate data to give you that customer view.

During this process, it will link information from your known contacts with anonymous data, like website activity through anonymous cookies, that was shared before they became known. This is called identity resolution and it helps unify a customer profile to give you a better understanding of the customer’s journey.

At this stage, data may also be enriched using a built-in or third-party tool to complete or update attributes and fields.

3. Activate your data

Now that your data has been ingested, integrated, and cleaned, you are ready to start activating it. A customer data platform will help you do this first by allowing you to build specific audience segments for targeting, and then by connecting to a marketing automation platform where you can use data to trigger messages, personalize communications, automate workflows, and more.

Ortto is a single tool for your customer data platform and marketing automation, meaning your customer data is available to be used in campaigns without requiring an additional connection.

4. Report on your data

Each of your individual data sources may have its own analytics tools, but when they live separately, generating insights on specific audience groups and connecting the dots between an outcome and the journey the customer took to get there is impossible.

A customer data platform helps you answer questions that require data from multiple sources. For example, you can look at how app or website activities impact revenue or churn.

The insights gained from this kind of reporting can become extremely valuable, helping you to do things like better attribute marketing initiatives, identify your ideal customer profile and understand their journey, and refine your go-to-market strategy.

What’s the difference between a CDP, CRM, and DMP?

Customer data platforms (CDP), customer relationship management (CRM) platforms, and data management platforms (DMP) are three different tools for managing customer data. And while there is some overlap between the three, they are built for different things and many businesses will need more than one in their tech stack.

What is a CRM?

A customer relationship management platform (CRM) helps businesses manage the relationships and interactions companies have with their current and potential customers. It tracks all sales channels and support interactions, as well as customer information to track the customer experience, nurture relationships, and improve profitability.

What is a DMP?

A data management platform (DMP) is primarily used to build profiles of anonymous individuals using data from cookies. This information is stored temporarily and matched against third-party lists. It can then be used to build lookalike audiences which can be shared with advertising platforms.

CDP vs. CRM vs. DMP

The primary focus of a CDP is to collect and clean data from all your sources —- including your CRM or DMP — to build a single view of the customer and their activity. This gives you an overarching view of your customer’s experience at every stage of their lifecycle and across every channel.

The primary difference between a CDP and other data platforms is that a CDP offers a consolidated view of all your customer data, whereas a CRM focuses on sales and support interactions between an account and the individuals within that account and your business and a DMP is singularly focused on anonymous profiles using data from advertising cookies.

CDP benefits and use cases

There are several CDP benefits and use cases, many of which are fundamental to succeeding as a business in 2024. For example:

1. Understand your customer and their experience

A CDP will collect data from a wide range of digital touchpoints across devices and channels, perform identity resolution, clean your data, and build a single view of your customer.

This unified customer view will help you better understand the customer and their journey. In Ortto, every customer and organization contact in your CDP has an activity feed that consolidates actions taken including things like engagement with email or SMS campaigns, support interactions, plan changes, and website or app activity. This profile is accessible to all team members, meaning sales and support can have more meaningful conversations with leads and customers, marketing can better understand the journey leads take to conversion, and product teams can see how a user moves through an app or website.

2. Segment your audience

Audience segmentation is one of CDP's superpowers. When all your data is consolidated, you can build extremely sophisticated and specific audience segments to target with marketing messages, report on, or track over time.

This can also be helpful when building suppression lists of customers or leads who should not be targeted with specific marketing messages or advertisements. For example, you can build a suppression list of existing customers and share it with your ad platforms to ensure you are not wasting budget sending PPC ads to existing customers.

Audience segmentation can also help with lookalike modeling for PPC campaigns, helping to lessen advertising waste and improve conversion rates and retention.

3. Personalize marketing messages

When your CDP and marketing automation are working in sync, you can use any behavioral data point to trigger marketing messages and use dynamic content fields to include relevant customer details in your communications.

Over time, your messaging can become even more personalized, as interactions with one campaign or set of campaigns are captured in your CDP to help you better understand the content your customers are interested in, their goals, and how you can send them more relevant communications.

4. Scoring customers and leads

When structured and unstructured data are consolidated in one platform, you can build more sophisticated and powerful lead and engagement scoring models. For example, a lead scoring model can bring data related to ICP fit alongside data related to intent to provide a more accurate lead score, helping sales to prioritize their efforts.

Similarly, customer success teams can identify expansion opportunities and churn risk by using a combination of data from all their sources, including behavioral data points like product usage or cancellation terms viewed. Plus, they spot trends in the data to help more accurately forecast expansion and churn.

5. Democratize data

A CDP does the work of consolidation and cleaning, giving your teams access to data from across the business in a format that is easy to understand. This means both technical and non-technical individuals in an organization can leverage data for decision-making and communications across channels.

Commonly available data is also associated with more accountability and transparency in business, helping to keep teams and individuals focused on the core business goals.

How to choose a CDP that helps your business grow

There are several things to consider when assessing different CDPs, including:

1. Data sources and tools you need to integrate

Make a comprehensive list of your data sources and any marketing automation tools you will need to integrate including the marketing automation solution you intend to use the consolidated customer data in.

Ortto’s CDP is connected to a robust marketing automation solution, making it incredibly easy for marketers to target the right people with the right message at the right time.

2. Existing and future use cases

Consider all your existing and future use cases, and check that the CDP you’re vetting can achieve them and how much technical help will be needed to make it happen.

3. Onboarding and technical requirements

Onboarding is typically the most arduous part of using a CDP and some CDPs will require more technical help on your side than others. Many CDPs, including Ortto, have built-in integrations with popular data sources like Salesforce, making it easy to bring your data into the platform.

The better organized you are during onboarding, the more you’ll get out of your CDP so consider how you want your data to look and act before you start.

4. Security and compliance

Data privacy and security are absolutely critical to success in a CDP. Ask about compliance and support in this area, and look into any specific requirements for your industry, like HIPAA for health industries.

5. Budget and ROI

This is not always a straightforward equation. Some CDPs, like Ortto, have marketing automation, reporting, and customer support tools that can replace or complement your existing martech stack. This can significantly improve the ROI of the tool and help you to consolidate tools for more efficiency.

Another word to the wise — ss you’re evaluating tools, look beyond the list price and enquire about extras like onboarding fees or support fees — these can add up and blow out your ROI.

6. User interface and experience

Remember one of the key benefits of a CDP is that it can democratize your data and give all team members, regardless of technical ability, access to a clean, consolidated view of the customer. With this in mind, it is important to choose a platform that is truly intuitive and easy to use. The fewer roadblocks in the way, the more likely it is your team will utilize the data in your CDP to make better, more informed decisions and execute powerful and personalized marketing campaigns.

7. Support available

Great support isn’t just about troubleshooting issues, it can be the difference between an individual feeling empowered to explore a creative new marketing strategy and feeling too overwhelmed to challenge the status quo. A great support team is not just there to bug catch or help with account questions, they are readily available to support your growth — they’re close to the product team and can help come up with clever solutions.

Getting the most out of your CDP

A CDP is built to help everyone — regardless of technical background — unlock the power of data for marketing personalization and insight generation. To get the most out of it, onboard all individuals in product, sales, marketing, support, and success, and reiterate that the CDP is now the central source of customer truth for your business.

The more your team uses your CDP, the more powerful it will become and the better everyone will understand your customer, their journey, and the activities that lead to improved business outcomes.