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How the CDP Categories Tackle Marketing Challenges

No recent marketing technology has grown faster than CDPs. Now, the quickly evolving market is breaking into two distinct categories—Customer Data Infrastructure (CDI) and Customer Data Activation Platform (CDAP). What is the impact of this on marketers? More effective solutions across customer experience use cases, writes Vijay Chittoor, Co-Founder and CEO of Blueshift.

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Customer Data Platforms (CDPs) have grown rapidly in the last few years. But as a new CDP pops up nearly every week to join a rising, loosely defined category, and as the marketing clouds have each rushed in to announce their own future visions of a CDP, it’s no wonder that marketers are confused about what are CDPs, how they should use them, and how to evaluate a CDP buy.

Since the inception of the CDP category, the market has struggled to converge on a single category definition or a set of requirements. The reason? CDPs have been leaned on to plug marketing gaps across a variety of distinct use cases. While the CDP Institute defines CDPs as “packaged software that creates a persistent, unified customer database that is accessible to other systems,” it further classifies CDPs into three categories—Access, Analytics, and Campaigns—based on the primary use cases supported.

Also Read: First-Party Data: The Key to Building Winning Brands

This focus on different use cases and business problems is why we’re beginning to see the quickly evolving CDP market break into two distinct categories—Customer Data Infrastructure (CDI) and Customer Data Activation Platforms (CDAP). What’s more, existing vendors are starting to self identify their playing field.

Silo Problems Behind Every Marketing Challenge

As customer engagement becomes more digital, dynamic, connected yet fragmented over the last couple of decades, marketers have found themselves constantly up against two key challenges—siloed data and siloed experiences.

1. Siloed Data: Data today lives across so many channels, teams, and systems. Your email marketing team, digital marketing team, sales team, analytics team, and customer support team—all use different systems that each collect data only for that channel and that each have their own data rules and definitions. On their own, each system provides only a partial view of the customer, and the different data schemas used, make unifying data across the existing martech stack nearly impossible. This is why teams get out of sync and waste endless resources stitching together the data needed to execute marketing campaigns, often with limited success.

2. Siloed Experiences: People interact with brands across endless touchpoints throughout the day. That’s made managing customer experiences increasingly complex, especially when each channel is managed through a different platform and campaign execution decisions are made at the channel level using data only from that channel. Your ad-tech software makes decisions purely based on ad-interaction data, your email software makes decisions based on email data, your website system executes based on website session data. This is why we all experience disjointed brand experiences at a time when customer demand for relevant, personalized experiences continues to grow.

Also Read: The Key Differentiators between DMP and CDP

The Customer Data Platform (CDP) Category Divide

Each of these silo challenges requires a distinct solution. Stepping up to the challenge, a subset of CDPs that can be further categorized as Customer Data Infrastructure (CDI), have emerged to resolve the technology infrastructure complexity causing the data silo challenge. Another subset of CDPs, further categorized as Customer Data Activation Platforms (CDAP), have focused on fixing the siloed customer experience problem, helping marketers adapt as the customer engagement paradigm shifts from batch-and-blast, channel-centric messaging to 1:1 customer-centric experiences across channels.

What is Customer Data Infrastructure (CDI)?

CDIs unify siloed data and pipe it across your martech stack. They act as reliable data orchestrators that have robust processes for capturing, modeling, and managing raw data. They have all the APIs, SDKs, and tag managers needed to capture data from different systems. They then cleanse and normalize raw data to get it in reliable form before routing that data to different systems at pre-scheduled intervals or through continuous streams. They also provide data governance and security, so users can trust that data is accurate and complies with internal and external policies. However, while CDIs can connect disparate data from all customer interactions regardless of schema, they don’t provide marketers with a means to actually do anything further with that data.

The value-addition that CDIs bring is that they often serve the needs of CTOs and their organizations by providing them the infrastructure, standardization, and data management foundation that brings incredible time savings to engineers. But while CDIs solve the herculean effort of data collection and management, and provide the data foundation for marketing and business success, they still leave marketers with endless data that they then need to figure out what to do with. That’s where CDAPs come in.

What is a Customer Data Activation Platform (CDAP)?

CDAPs fill the gap between having data and using it to deliver experiences. They activate data from your CDI by understanding your data at a customer level, deriving intelligence from it, and making customer engagement decisions that dynamically shape marketing actions across channels. They can be thought of as the central hub of data, intelligence, and decisioning that automate cross-channel marketing decisions. They then send marketing decisions to other systems to trigger actions at the right time for each customer creating dynamic 1:1 content driven by customer data and insights.

The value that they provide is that CDAPs help marketers not just access data, but activate that data by having it work for them across every channel and every customer interaction. Marketers today have too much data to make sense of, too many channels to connect, too many customer engagement decisions to make. CDAPs provide the solution by taking all historic and real-time data and using it to orchestrate 1:1 experiences for coordination across channels. This not only resolves the experience silos by providing a centralized platform that orchestrates cross-channel experiences around customers’ interests and behaviors, but they provide a scalable, marketer-accessible solution to scaling 1:1 customer experiences.

Also Read: Data Orchestration Is Key to Delivering Great Customer Experiences

Marketers’ Winning Formula—CDI + CDAP

So, what silo problem does your organization face? Most companies struggle with both, and they’ll find that their marketing strategies will continue to underdeliver and leave untapped revenue and growth opportunities until both silos are resolved. Lucky for them, there are now dedicated solutions purpose-built to solve each challenge.

CDPs have promised to be a silver bullet to marketers’ pain points. But the high-level problem of creating the right customer experiences across an increasing number of channels is more nuanced. As data has become the language of marketing ecosystems, there are two stages to creating delightful, data-driven, customer-focused experiences. First, you need both the right data pipes, and then you need a scalable way to activate the data being piped in. Solving for both will allow marketers to finally realize the vision of having each interaction be based on real-time customer insights, consist of the right content, and happen at the exact right moment in the channel it’s most likely to drive action.

With the CDP industry dividing into the true underlying categories of CDI and CDAP, the category distinction will finally give marketers the complete solution they’ve been searching for.

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