The Pros and Cons of a Customer Data Platform

Your customer is already at the center of everything you do as a marketer.

You think about how your customer will react to your product packaging, your website design, your email copy, your customer support experience, and so much more. It’s all built and designed to give them a warm and fuzzy feeling toward your brand. 

So if you eat, sleep, and breathe the customer experience, why don’t you have better data and insights into your customer behavior?

That’s exactly the promise of a customer data platform (CDP). Honestly, we’d argue that all marketers need a CDP to power brand marketing, but it might not be the right choice for you. 

That’s why we want to provide the pros and cons of CDPs and explain what you need to consider when looking at a customer data platform in the world of commerce. 

Here are the advantages to you as a marketer, and the drawbacks as well. That way, you can decide if a CDP is the right choice for your team and your brand.  

Pro: Provides accurate data

If you’re using a data management platform (DMP) or customer relationship management solution (CRM) to manage all of your audience and campaign data, the information you use is normally a mix of first-party data and third-party data, which isn’t always accurate. 

Just take the keywords Instagram uses to target its users as an example of the dubious reliability of some third-party data (coffee, chocolate and wine are accurate keywords for me, ski, fast-casual restaurants and CrossFit, not so much). That may explain why fewer than a quarter of marketers are extremely satisfied with their ability to use customer data to create more relevant experiences. 

In contrast, a customer data platform only relies on verified first-party data alone. This means that your data comes directly from the mouths of your customers, so you know the information is 100% accurate and reliable for you to use.

Con: Shrinks your list

When you use a DMP for ad targeting, you don’t have to use 100% accurate information and can rely on third-party data to some extent. This isn’t the case with a CDP: the data has to be an exact match. For example, if you don’t have shoppers’ first names or locations in your system or –– even worse –– you’ve got the wrong information, you won’t be able to personalize your marketing campaigns. Imagine sending an email that starts with “Hi David”. The results won’t be pretty!

However, that means you may be about to lose some portion of your list. If you don’t have fully reliable information in your database, you have to let it go. This can be difficult for many marketers, but it’s actually a great thing for your business in the long term. You’ll be able to build more relevant marketing by focusing only on data you know to be accurate, but it will likely be a smaller number of buyers than you had before.

Pro: Provides a single view of customers

A CDP brings together all data about your customers in one place. This allows you to get a complete view of buyer behavior and interactions across channels and devices — from the first touch to the most recent. Instead of only working off email marketing or social media data, you can own all data and better understand customer preferences by drawing on more data sources, such as website behavioral information, support tickets, ad clicks, and POS data.

With identity stitching, even if a shopper has multiple IDs in your system, you can still understand it’s the same person each time and in each place, no matter what channel or device they are using. A CDP can resolve customer identity and create a reliable customer profile that can power your marketing. 

Con: Forces you to get real

Because a CDP uses identity resolution, it can identify quickly if you’re counting one user as multiple people on your list. This forces you to get past vanity metrics, such as email list size, and look at your monthly active users (MAUs) –– those people who are actually opening your emails, clicking on links for your ads, and visiting your site to actively browse. 

If a shopper hasn’t engaged with your brand in any way over the past year, for example, then they aren’t engaged and you either need to create a winback campaign or remove them from your list. This means you as a marketer have to be real about your metrics and face up to what your brand’s level of engagement truly is. 

Pro: Increases engagement rates

The old saying that quality is better than quantity holds true when it comes to your customer list. If you have an email list of 10,000, but 9,000 of those aren’t interested in your product or don’t interact with your brand, you’re clearly wasting your time as a marketer. And your email engagement rates likely show it — when was the last time you got more than a 20% open rate on an email?

A CDP gives you visibility into who is actually engaged with your brand, allowing you to clean up your email lists, sunsetting people who aren’t interested while focusing on those who are loyal customers or likely to become repeat buyers. Even more importantly, it can help you identify buyers who aren’t subscribed to your emails at all, but perhaps engage heavily on Instagram or elsewhere, showing you the true value of your marketing channels. Overall, a CDP helps you increase engagement by better understanding where and when your customers interact with you. 

Con: Takes longer to create marketing campaigns

With a CDP, you have to think beyond just email marketing and coordinate campaigns across channels and devices. If you only want to focus on email marketing, then a CDP isn’t right for you just yet. You won’t be able to provide a deeper level of personalization and targeting that drives results, but it’ll be quicker and easier to manage campaigns only via email. 

However, if you do want to target customers with the right content at the right time on the right channel and device, then a CDP will help you deliver results that just aren’t possible with siloed data and disconnected systems. It does take a lot more thought, effort, and organization, but the results are worth it in the end.

Pro: Enables better personalization

Each time a customer interacts with your brand, they’re sending you a signal that you can use to personalize your marketing — but only if you have access to the data. A CDP provides access to a dynamic and actionable view of every one of your customers, which supercharges your segmentation and helps you create more personalized content.

With a CDP you can use dynamic content to automatically populate content blocks that are most likely to convert according to the data you know about specific customers. Take browse abandonment emails. With a CDP, you can see which products customers have been looking at on your website and send them a personalized email and ads with content related to those items. 

Beauty brand Laura Mercier is a good example of this, as their emails include products specially curated for each customer based on past browsing and purchase behavior. 

Cons: Requires integration expertise

If you want to make the most of your CDP and make sure it ingests all the data you need to run your marketing campaigns, you need to make sure your systems integrate with the CDP. The more software and platforms you integrate, the better the data you’ll have to be able to personalize content and better target customers. But this does take work. 

While most common ecommerce platforms, ESPs, and loyalty programs will integrate quickly with your CDP, if you have a custom ecommerce platform or more complicated instances, you will need some development time to get things running. Integrations and CDP implementation require technical expertise in order to work.

Now that you know the pros and cons, hopefully, you can make an informed decision about what your business needs when it comes to customer data. Maybe you’re fine right now just using an ESP and ecommerce platform alone. But when you’re ready for a more powerful marketing solution, you know where to look.

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