What is a Customer Data Platform (CDP) and How Does It Work?

Knowing your customers is essential for creating successful marketing initiatives and boosting sales

In today’s competitive and ever-changing retail market, every interaction and transaction your customers make provides valuable data through various channels. The challenge lies in centralizing that data to interpret and act on it effectively. That’s where Customer Data Platforms (CDPs) come in.

At Leal, we aim to help you maximize the value of your customer data. This guide will teach you about CDPs, how they work, their purpose, and their advantages. With the CDP - My Customers module from Leal 360, increasing your sales becomes easier by collecting, processing, and activating your customer data.

What Is a Customer Data Platform (CDP)?

A Customer Data Platform (CDP) is software designed as a database that collects, unifies, centralizes, interprets, and activates diverse customer data from multiple sources in real-time.

CDPs provide a comprehensive and unified view of your consumers, integrating demographic, transactional, behavioral, and psychographic data. This allows you to answer key questions:

• Who are your customers?
• What do they prefer?
• What do they expect from you?
• What, where, and how often do they buy?

With an intuitive design, CDPs are ideal for marketers, offering quick and functional access to customer data. They enable informed decision-making to create and execute marketing and sales initiatives that are more focused, efficient, and effective.

"66% of consumers are willing to share their personal data with companies, if by doing so it will enhance their customer experience."

How Does a Customer Data Platform Work?

1. Collect, Unify, and Store Data

Every customer interaction and transaction provides valuable data, often spread across multiple channels. CDPs centralize this information, eliminating scattered, duplicated, or inactive data across various systems.

CDPs collect data from multiple customer touchpoints:

• Physical store transactions
• E-commerce platforms
• Email campaigns
• Social media
• Mobile apps
• Web forms
• Billing systems
• CRM, DMP, ERP systems, and more

Data collection can occur in real-time or in batches, depending on the platform. Once gathered, CDPs process and unify the data to create complete customer profiles that are updated with every transaction or interaction.

Manage, Analyze, and Segment Data

CDPs present customer data in real time, offering actionable consumer insights. The platform securely manages and stores data while ensuring it remains private from unauthorized parties.

You can segment your customers into specific audiences manually or automatically based on defined attributes. These segments can then be used to direct your marketing, communication, and sales efforts.

Activate Customer Data

Based on your customers' information, after segmenting them, interpreting their data, and obtaining insights, you can take various actions to build meaningful relationships with your clients. Examples include:

• Campaigns targeting inactive customers
• Hyper-segmented promotions
• Loyalty programs to increase purchase frequency and retention

With Leal 360's CDP - My Customers module, you can use the RFM model (Recency, Frequency, and Monetary Value) to categorize and value customers based on:

• How recently they purchased (Recency)
• How often they purchase (Frequency)
• How much they spend (Monetary Value)

This helps identify your top dormant customers and average dormant customers, allowing you to reactivate them through personalized and/or automated campaigns using the Campaigns module.

Benefits of Using a CDP for American Businesses

CDPs drive the growth of your business. When you have a deep understanding of your customers and stay updated on their preferences, you can build meaningful relationships with them. This leads to customer retention, higher purchase values, and incremental sales. Below, we outline some additional benefits that Customer Data Platforms offer:

1. Centralize Data and Turn It Into Actionable Insights

CDPs eliminate data silos, centralizing all customer data in a single platform. This gives you a complete, updated, and accessible view of your customers, your segment, and your market share.

CDPs transform raw data into valuable insights, helping you better understand your brand, products, and services—critical in the competitive American retail market.

2. Protect Customer Data and Build Trust

It’s easy to violate data protection laws when information is scattered, disorganized, duplicated, and buried across multiple software and applications. This is a common issue for companies operating in high-volume, fast-turnover markets like retail in America.

CDPs help prevent privacy policy breaches by centralizing data, making it accessible and easy to manage.

3. Boost Productivity

CDPs automate customer data management, simplifying tasks for marketing, sales, product, and service teams. Forget manual data tracking, segmentation, and inefficient initiatives.

Centralized data also promotes coordination and collaboration across departments.

4. Optimize Investments

With complete and updated customer data, you can allocate budgets to truly effective initiatives. Informed decisions allow you to create the right offer for the right customer at the right time through the best channel.

5. Monitor and Adjust Initiatives in Real Time

CDPs let you track marketing and sales initiatives, providing valuable feedback on your products and services. This allows you to address issues quickly and effectively.

6. Enhance Customer Experiences Throughout Their Lifecycle

A CDP allows you to personalize your customers' experiences and communications from the first interaction all the way to turning them into loyal advocates for your business.

The information generated with each interaction enables you to act and respond according to your consumers’ needs and preferences at specific stages of their lifecycle.

7. Maximize Results

This is likely the ultimate goal, the overall benefit. When you are more efficient, productive, and accurate, you achieve better results. By understanding and responding to your customers' needs, preferences, and trends, you can improve your marketing metrics and drive incremental sales.

Use Cases for Customer Data Platforms

We’ve already discussed the primary use of a CDP: centralizing your customer data to activate it effectively. However, a Customer Data Platform has a multitude of specific use cases, some of which we’ve already hinted at.

Here are the most relevant use cases:

• Access all your customer information without the need for advanced technical knowledge.
• Prevent violations of personal data protection and processing policies by simplifying data management and safeguarding your customers' privacy.
• Build a repository of complete customer profiles.
• Track your consumers’ interactions and transactions in detail.
• Segment your audiences in an advanced and automated way.
• Diagnose the health of your brand, products, and services through feedback and updated insights.
• Make informed decisions based on the insights derived from your customer data.
• Personalize customer experiences and marketing, sales, and loyalty initiatives. Create the right initiative for the right customer at the right time through the best channel.
• Create consistent omnichannel marketing strategies where all channels are in sync.
• Constantly monitor your marketing initiatives, obtaining valuable metrics to validate or adjust your actions.

4 Key Features of an Effective CDP

1. Real-time updates: Some platforms update data constantly, while others do it in batches. If you want to stay up to date and ahead of your competitors, you need the most current information.
2. High level of integration: The best CDPs integrate with multiple software and systems to collect information from all possible sources. Look for a CDP that easily integrates and syncs with your billing system and the rest of your platforms.
3. Actionable platform: Centralizing data is just the beginning. What is not used becomes obsolete. It’s pointless to have well-organized data if you're not going to use it. You need a CDP that provides mechanisms to activate your customer data: translate and use the information into concrete actions.
4. Intuitive platform: A powerful tool is useless if no one knows how to use it. The CDP should be easy to use and adapt by your marketing team and the rest of your company. Only then you can fully leverage it.

Leal 360: The Best Customer Data Platform in the Region

Among the best, there is always one that stands out: that’s Leal 360, much more than just a CDP.

The comprehensive Leal 360 platform offers its CDP - My Clients module, alongside three other modules designed to enhance and activate your customer database: the Campaigns module, the Benefits module, and the Voice of the Customer module.

With Leal 360, you can collect, process, and activate your customer data—all within a single, intuitive platform. We integrate with the most recognized billing systems on the market, as well as multiple other software, applications, and tools. This makes storing and managing your customers' information easier, keeping you in sync with their needs and preferences.

Through the CDP - My Clients module, you can collect, centralize, unify, visualize, analyze, and segment your customers, enabling you to activate them with our other modules. Powered by our technology and artificial intelligence, you can create customer profiles and audiences with dynamic and static segmentations, using customer attributes and the RFM model.

Why is Leal 360 your best choice in LATAM?

We are more than a CDP; we are an integrated platform designed to increase your sales by building valuable relationships with your customers.

With our four modules, you can comprehensively address your customers’ lifecycle.

• The Voice of the Customer module allows you to listen to your consumers and turn them into promoters of your brand.
• The Campaigns module helps you implement and monitor effective, automated, and personalized marketing initiatives.
• The Benefits module enables you to create successful loyalty programs to retain your customers.

Every day you spend not activating your customer data is money left on the table. If you want to build valuable relationships with your customers and boost your sales, schedule your demo and talk to us today!

FAQ

1. Is a CDP the same as a CRM?

CDPs and CRMs have distinct purposes and operate in different ways. A CRM platform manages customer relationships using their information, but it does not collect data from other sources. In contrast, a CDP is designed to centralize customer data for activation, including CRM data, while integrating it with data from other sources and interactions.

2. Is a CDP the same as a DMP?

Both CDPs and DMPs collect and store consumer data, and both are used for marketing and advertising initiatives. While CDPs centralize all customer data, DMPs are primarily used to acquire new customers by collecting and activating data from cookies and third-party sources. Unlike CDPs, the information collected by DMPs is typically anonymous and short-lived.

3. What is the difference between a CDP and an ERP?

CDPs centralize customer data from various sources for use in marketing, advertising, and sales initiatives. On the other hand, ERPs manage various internal resources and processes within a company to streamline operations.

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