Now that we appreciate the problems faced by enterprises due to the lack of a single repository of customer data; let us see how CDPs solve customer data problems for companies.
Problem: Different sources for customer data
Solution: Connect different sources of customer data easily using a CDP
Explanation: CDPs solve the business problem of having different sources for customer data. The customer data may come from an iOS app, an Android app, a FireTV app, a website, a physical point of sale, Salesforce, WordPress, and so on. CDPs come with connectors, using which you can easily integrate with different sources cost-effectively. Using APIs or using SDKs, you can connect your sources to your CDP to bring the data from different sources into one single database. You can also send the data after transformation, or as it is, to different destinations. For example, after building customer profiles, you can send the data for analytics to Mixpanel, or marketing systems like Blaze.
Problem: Lack of unique customer profile
Solution: Connect different sources of customer data and built a unique customer profile
Explanation: In today’s phydigital world, customer interactions with brands have become complex. Customers may interact with a digital ad on one channel and then may purchase from a physical store. Without the ability to combine the data from different sources, getting a complete picture of the customer journey is impossible. CDPs offer identity resolution or identity stitching capabilities, where CDPs correctly attribute multiple data points to the same person and assign each profile a permanent customer ID. With the use of AI and machine learning, it is now possible to evaluate thousands of touchpoints and assign the correct customer ID. Imagine doing it manually!
The customer profile created is called persistent customer ID and can now be utilized for different business use cases. A persistent Id is an identifier that can provide a single view of an individual across numerous devices, including desktop, mobile web, and in-app, without duplication.
Figure 2.4: CDPs help in unifying data from different sources (source: https://www.treasuredata.com/cdp-academy/customer-data-unification/)
Problem: Ineffective marketing
Solution: Using persistent Id, marketers can avoid targeting certain users with low or zero interest and improve marketing effectiveness.
Explanation: After you create persistent IDs, it is possible to recognize customers as individuals rather than just disconnected data points from different sources. This information can be used to improve the accuracy of attribution models, which will help you understand which channels are working the best in sales. Based on the complete set of data, you can optimize the campaigns more effectively. You can avoid sending ads for products to people who have already bought the product or are actively pursuing a support ticket related to a purchase. You can deploy cross-channel frequency capping to prevent oversaturating your audience with too many ads.
Problem: Adhering to strict data protection and privacy laws
Solution: CDPs are designed to handle data protection regulations and privacy laws.
Explanation: CDPs use persistent Ids due to which it is easier to follow regulations such as the right to be forgotten. If any user wants their data erased, an enterprise can do so if all the collected information is recognizable using a persistent Id. Also, the data is stored securely in data warehouses that follow strict data protection and governance policies.