At Sterling Woods, our mission is to drive hard sales for our clients. So when a new technology or technology buzzword starts to make the rounds, we like to kick the tires on it to make sure it can actually produce an ROI rather than serve as the latest shiny new object.
The current hot topic on the conference circuit is the Customer Data Platform (CDP). Here, we’ll unpack some of the most common questions surrounding CDPs so you can decide if it’s a technology you want to leverage for your digital business.
(Spoiler alert: You do.)
1. What is a Customer Data Platform or CDP?
David Raab, Founder of the Customer Data Platform (CDP) Institute, defines a customer data platform as “a marketer-managed system that creates a persistent, unified customer database that is accessible to other systems.”
But what does that mean exactly?
As marketers have started to collect more and more data, it has become increasingly difficult to manage and integrate it all. They needed to streamline all the pieces and parts to make informed decisions based on all the data points, rather than a select few. Enter CDPs.
Customer Data Platforms collect user data from multiple channels and match them together. Basically, CDPs make it easier to track your customer’s journey. They can follow and identify a single person, when and whether they are on your social channels, emailing with your brand, or have landed on a product page. Then, those details are stored in a single database for your team’s use.
2. How is a CDP different than my CRM like Salesforce or Hubspot?
While CDPs are often confused for CRMs, they do have a few key differences. Customer Data Platforms can track anonymous visitors whereas CRMs can only track known customers. Generally speaking, CDPs are simpler and more streamlined to prevent data duplication. And, most importantly, they integrate data across channels and departments in a way that CRMs are incapable of.
In short, a CRM can only tell you information about known customers/prospects that you input. CDPs can track known and unknown people across your different channels.
The simplicity of CDPs has also moved this kind of software out of the hands of IT and into the hands of marketers directly. This change is especially helpful for niche publishers who might need to work with lots of streams of data but don’t have a large or technical team to back them up.
3. How is a CDP different that my Data Management Platform?
The CDP is more focused on making sense of data you own about your customers, while a DMP is more about aggregating and generalizing third-party data.
CDPs are better for conversion: “I want to sell gardening tools to the people on my list who have demonstrated an interest in gardening through their behavior on my site.” DMPs, on the other hand, are useful for general advertising focused on demographic data: “I want to target 30-year-old women.”
Ultimately, my experience is you can make more money by using your own proprietary data smartly rather than buying aggregated third-party data from someone else. You’ll have specific, targeted insights you can’t otherwise collect. DMPs essentially exist to serve advertising, but you can use a CDP in all kinds of ways.
4. How can I use it to actually make money?
Because they are a pretty new technology, being able to say you have a Customer Data Platform is really cool—but it doesn’t serve much of a purpose if you can’t leverage the data you collect to actually make money.
In addition to their overall ease of use and omnichannel experience, CDPs can enable you to perform what I call “session-based marketing”. Based on a visitor’s prior behavior, what can you deduce about their needs/wants/preferences? And from there, how can you create the experience and produce the offer that best meets their needs?
Session-based marketing leads to more conversions and the retention of that customer. This, in turn, gives them a higher lifetime value and something you can track to make sure you are earning an ROI on your investment.
A Customer Data Platform can give publishers the leg up they need to solve their customers’ problems by serving them with the most comprehensive insights on the market, which—as we know—is the key component to monetization.
How Sterling Woods Can Help
The Sterling Woods Group teaches clients our five forces to methodically make more money online. The goal: make sure you lock in double-digit growth year after year using the power of digital media. Many companies have experienced over 50% growth using our system. Beyond the financial benefits, clients tell us that – for the first time in years – they feel truly focused.
We offer workshops, coaching, and keynote speeches. Sterling Woods is also an agency that launches new digital initiatives, so clients don’t have to add overhead. Our agency business model is unique in that most of our fees are based on performance.
About the Author
Rob Ristagno, Founder and CEO of Sterling Woods, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. He started his career as a consultant at McKinsey. Ristagno holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob is the author of A Member is Worth a Thousand Visitors: A Proven Method for Making More Money Online, set to be published in 2018. He regularly speaks at key media conferences, including at Niche Media events, Specialized Information Publishers Association meetings, and the Business Information and Media Summit.