There’s a whole landscape of customer data solutions out there, and the new customer data platform (CDP) category is causing confusion amongst marketers. Differentiating between CDPs and other solutions can be a difficult task.

We’ve made this guide to help you differentiate between them. If you’re feeling unclear on what CDPs are, check out our beginner’s guide, otherwise, read on to learn about what separates CDPs from other customer data solutions.

CDPs and DWHs

Unlike CDPs, which are developed specifically for marketing purposes, data warehouses (DWHs) are enterprise-wide solutions. Their main purpose is data consolidation and standardization for business intelligence (BI), which encompasses analytics, data mining, reporting and more.

Although they’re powerful, they aren’t optimized for marketing and a DWH alone doesn’t sufficiently fulfill a marketing team’s needs. In being optimized for BI, DWHs are lacking in areas that are crucial for marketers, namely segmentation, real-time marketing and integration with channel tools for message dispatch, as explained below

Segmentation is possible in a DWH, however, it’s a long process. Requests typically need to be submitted to the company IT team as DWH usage requires programming knowledge and the results are not instantly available. On the other hand, most CDPs enable marketers to perform in-app segmentation without assistance from IT, with segments and their sizes instantly available.

By design, DWHs don’t assist real-time marketing. As BI is retrospective by nature and does not require real-time data, DWH’s perform ETL (Extract, Transform, Load) processes that have a considerable lag between a customer’s actions and a marketer’s ability to access and activate their behavioral data. CDPs are optimized for real-time marketing, and so store behavioral data that is updated in real-time. A CDP’s UI allows marketers to access and activate data instantly, allowing for automated responses to customer action.

Finally, DWHs are not integrable with engagement channel solutions, such as those for sending emails, push notifications, text messages and more, as this isn’t necessary for BI. Creating messaging automation that utilizes data gathered and aggregated by a DWH is a complex process that requires heavy IT support. In contrast, CDPs integrate with engagement channel solutions to make gathered data instantly actionable, and some additionally act as orchestrators for connected tools, enabling automated cross-channel marketing.

DWHCDP
Purpose:Business intelligenceCustomer retention
Managed by:Business intelligence / ITMarketing / CRM teams
Customer profiles:Known, detailedKnown, detailed
Real-time data:NoYes
Campaign management:NoYes
Open access to other systems:Yes, but not real-timeYes
UI:NoYes
Integration with engagement solutions:NoYes

 

How do they interact with CDPs?

CDPs integrate with DWHs, and combine a DWH’s customer data with data from other sources to create 360-degree customer profiles.

CDPs and DMPs

Much like CDPs, data management platforms (DMPs) are built with marketers in mind. However, they differ in purpose and structure.

DMPs enable customer acquisition through ad targeting, and to this end gather temporary, third-party, anonymous cookies. As CDPs enable customer retention, they combine first-party known customer data from multiple sources to create permanent customer profiles.

DMPs segment anonymous customers based on their recent viewing history, and through synchronization with a demand-side platform (DSP) they are targeted with ads that have a probability of being relevant. CDPs, in contrast, segment customers based on a range of differentiators, from buying history to demographic to lifetime value and more. CDPs furthermore integrate with channel solutions to send personalized messages to customers.

 

DMPCDP
Purpose:Customer acquisitionCustomer retention
Managed by:Display (ads) teamMarketing / CRM teams
Customer profiles:AnonymousKnown, detailed
Real-time data:YesYes
Data permanence:TemporaryPermanent
Customer engagement:Programmatic display advertising through DSP integrationYes, through integration with engagement solutions

 

How do they interact with CDPs?

CDPs and DMPs can leverage the ‘cookie matching’ process. Cookie matching allows both solutions to identify the same user. This allows for higher quality programmatic advertising: A DMP’s upper funnel data can be enriched by a CDP’s detailed, lower funnel customer data.

Cookie matching also enables unique use cases. For example, CDP/DMP integration can identify unknown users. An unknown user who has previously logged in as a known user can have their temporary cookies matched to their permanent profile, thus de-anonymizing them. As another example, the synergy allows groups of known customers to be excluded from programmatic ad campaigns – useful for not advertising excessively to loyal or subscribing customers.

CDPs and CRM Solutions

Both CDPs and customer relationship management solutions (CRMs) collect data on known customers and create permanent customer profiles, but do so in different ways and serve different purposes.

A CRM solution’s primary function is to create a database of a company’s customers, primarily with basic profile data and one-to-one interactions (signing up, purchasing, complaining or something else) for bookkeeping purposes, mainly for the benefit of sales teams and customer support. That’s done through a combination of automated and manual input processes. Customer profiles are not detailed 360-degree profiles, as CRMs do not account for all customer data. CDPs gather and aggregate data from any connected data source automatically to create detailed customer profiles that, unlike a CRM’s, are optimized for marketer usage rather than sales and customer support’s usage.

Some engagement automations exist, but CRMs are mainly used to optimize manual one-to-one engagement. CDPs, depending on the provider, can activate their aggregated data through segmentation and cross-channel campaign management for automated and highly personalized marketing campaigns across channels.

CRMCDP
Purpose:Bookkeeping / customer retention / customer serviceCustomer retention
Managed by:Sales / CRM teamsMarketing / CRM teams
Customer profiles:Yes, not detailedKnown, detailed
Real-time data:NoYes
Customer engagement:If yes, through native email automationYes, through integration with engagement solutions
Segmentation:SomeYes
Integration with external solutions:LimitedYes
Lead management:YesNo
Sales forecasting:YesNo

 

How do they interact with CDPs?

CDPs are able to integrate with CRM solutions and combine the data they collect with data from other sources for detailed customer profile creation.

Integration allows for interesting use cases. For example, an automation can be set up whereby if a customer has complained, and that complaint has been marked in a CRM system, the connected CDP can be set to exclude that customer from upcoming marketing campaigns before the complaint is resolved, so as not to annoy the already disgruntled customer. Afterwards, an apology campaign can be sent using the CDP, and usual marketing campaigns resumed once the customer is happy again.

CDPs and Marketing Clouds

Of the different types of customer data solution, CDPs and marketing clouds differ the least in purpose. Both aim to enable consistent and personalized marketing and CRM across channels. Differences arise in approach and effectiveness.

Marketing clouds take “all-in-one” approaches, coming with their own data aggregation and engagement tools. A CDP, in contrast, acts as a core in a tech stack, orchestrating the data and engagement solutions that connect to it. CDPs enable the “best-of-breed” approach, allowing marketers to integrate the best or most suitable solutions for each role.

The ‘all-in-one’ approach taken by clouds is ineffective compared to the CDP model due to its lack of flexibility. A clouds’ tools are either developed in-house by dedicated development teams or vendors and their solutions are acquired. These approaches share two inherent issues: Firstly, internally developed or acquired tools may not necessarily be the best tools for the job. There may be more up-to-date, or simply better niche solutions on the market that clouds cannot connect with. Secondly, marketing clouds lag behind shifting market trends. When new engagement channels are developed, clouds have to build tools for that channel themselves from the ground up or seek to acquire them in long and costly processes. CDPs, in contrast, have the flexibility to connect with best-in-class solutions, with marketers benefiting from the ideal solution’s innovation and ability. They can integrate with tools for new channels as soon as they’re made available, thus staying on top of marketing technology trends.

Marketing clouds are furthermore less effective than CDPs for real-time marketing, as their data infrastructures aren’t sufficient for real-time data streaming in most cases. CDPs use big data technology that can log and activate behavioral data the moment behavior occurs. That enables messaging that responds to exact customer needs in real-time.

Due to their closed nature, marketing clouds may not have a connection to sufficient data sources to create detailed customer profiles. CDPs can integrate with every available data source and combine every kind of customer data to create unified, complete, 360-degree customer profiles.

They also differ in how easy they are to implement. A marketing cloud, by design, replaces an entire tech stack in an expensive and risky implementation process. CDPs integrate with and orchestrate a tech stack’s solutions, reducing risk, implementation time and cost.

Marketing cloudsCDP
Purpose:All-in-one marketing solutionsCustomer retention

Managed by:

Marketing / CRM teamsMarketing / CRM teams
Customer profiles:LimitedKnown, detailed
Real-time data:NoYes
Data infrastructure:LimitedFlexible
Customer engagement:Through natively developed or acquired toolsThrough integration with engagement solutions
Implementation:Replaces an entire tech stackIntegrates with an existing tech stack

 

How do they interact with CDPs?

A cloud’s capabilities can be enhanced by CDP integration. Detailed customer profiles and segments are provided to the cloud by the integrated CDP, improving upon the cloud’s limited data aggregation abilities, whilst the cloud’s engagement tools are used to engage with customers.

You can read more about CDP and cloud interaction here.

To Conclude

With the possible exception of marketing clouds, CDPs should not be seen as replacements for other customer data solutions. Instead, CDPs work as meta-systems, orchestrating a tech stack’s solutions to create holistic customer views and consistent customer engagement.

For further viewing, we recommend b.telligent’s brilliant talk on the MarTech ecosystem!