How to Pick the Right Customer Data Platform for Your Personalization Strategy

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Customer data platforms foster deeper understanding of your customers and facilitate more personalized experiences. Use this guide to pick the right one.

customer data platforms represented by a woman standing in front of a board

Customer data platforms emerged on the business software scene several years ago and have been subject to a lot of hype since then. Despite the excitement, there is still some confusion on what a customer data platform (CDP) actually is, especially given its overlap with related technology.

What is a customer data platform?

Gartner defines a customer data platform as “a marketing system that unifies a company’s customer data from marketing and other channels to analyze customers, enable modeling, and optimize the timing and targeting of communications.” CDPs “include a user-friendly interface that helps activate customer data and enable personalization across multiple channels.” (Full article available to Gartner clients.)

Similarly, the CDP Institute defines a customer data platform as “packaged software that creates a persistent, unified customer database that is accessible to other systems.”

To be a true CDP, a software solution must:

  • Be primarily made for marketers.
  • Store individual-level customer data to present a unified view of the customer.
  • Work with or enable other systems to use customer data for end goals like personalization.

This means CDPs pull in customer data from every relevant channel (e.g., your CRM, customer service software, company website, social media profiles, etc.) to create fuller understanding of your customers. This rich customer knowledge is used to better segment audiences and push data back out to channels that enhance targeting, personalization, and marketing efforts.

How to evaluate CDPs using 4 core capabilities

So, how can you find a customer data platform to fit your needs?

Start with Gartner’s definition of a CDP, and ensure any solution you consider has the following four core features, in addition to a marketer-friendly interface.

1. Data collection

Any customer data platform you consider should be able to gather first-party, individual-level data from your customers from multiple sources, both online and offline. Because each interaction builds out your understanding of your customers, this data persists as long as needed for processing, though many CDPs now contain GDPR compliance functions (which could involve customer requests for data removal).

Individual-level data can include identity information such as names and emails, as well as attributes like demographic information and behavioral interactions with your company.

2. Profile unification

By focusing on individual-level data, your CDP should be able to consolidate profiles from multiple devices or separate customer records to the correct individual they belong to.

The system should be able to remove or consolidate duplicate information (such as a single customer who uses multiple email addresses). Some systems can also aggregate customers into a household or account, if desired.

3. Segmentation

At minimum, marketers using a CDP should be able to create and manage rule-based customer segments.

Some advanced software offerings may leverage predictive analytics to automate and suggest new segments.

4. Enable action

At their core, customer data platforms promise marketers the ability to create data-driven personalized customer experiences. By unifying customer data and knowing your customers better, you can create smarter, narrower segments and more personalized experiences.

A true CDP should use the above three features to be actionable. CDPs should be able to send segments and instructions to a separate execution tool (such as an email marketing campaign system, mobile messaging system, DMP, DPE, or DXP). Some CDPs can carry out these functions themselves, without needing to kick segments and instructions to another tool.


For a downloadable summary of how to evaluate CDPs:


What is not a customer data platform?

Despite the ongoing hype, confusion over what qualifies as a CDP abounds, and many vendors try to pass off related technology as CDPs. Consulting firm Winterberry Group released a report in March which found that of 100+ analyzed companies that self-identify or are described by others as CDPs, they would classify fewer than 20 as true customer data platforms.

Why the confusion? Customer data platforms, or software solutions that are marketed as CDPs, don’t contain radically new features. Data integration, segmentation, and personalization features are familiar to marketers and exist in other products. Many vendors have simply repackaged or fortified existing technology to appeal to the growing CDP demand.

But a customer data platform is not a customer relationship management solution (CRM), data management platform (DMP), digital personalization engine (DPE), digital experience platform (DXP), or a master data management solution (MDM). Though there is often overlap, each of these systems has specific strengths and uses cases, and many work well with a CDP.

One of the primary benefits of a CDP over related technologies is the speed and volume with which it can process information, without requiring IT personnel ownership.

Take a look at this table of related technology, and how each solution can be used with a CDP:

Software Solution Primary Use Relationship with CDP
Customer Relationship Management (CRM) Lead conversion, customer account management, and marketing analysis Complementary: CDPs and CRMs can exchange data. A CDP could also be a part of a CRM package.
Data Management Platform (DMP) Digital advertising, primarily using anonymous, de-identified data Complementary: CDPs and DMPs can share data back and forth.
Digital Personalization Engine (DPE) Personalized marketing campaigns Output: There’s significant overlap, but a DPE can be an action endpoint for CDPs.
Digital Experience Platform (DXP) Individualized digital experiences (e.g., website personalization) Output: DXPs are an action endpoint for CDPs.
Marketing dashboards Visualize and analyze marketing data Output: Marketing dashboards are an action endpoint for CDPs.
Master Data Management (MDM) Broader business data, beyond marketing and customer-specific Input: MDMs can be a source of CDP data.

For a graphical representation of the relationship between CDPSs and related technology:


Questions to ask when talking with vendors

Once you’ve determined that a CDP fits your business needs and then narrowed your list to include true CDPs, you need to find the right one for your business.

CDPs differ in levels of advanced features and technical complexity, so it’s a good idea to have a list of questions to ask vendors before making a purchase. Here’s a few to get you started:

List of Example Questions to Ask Vendors

  1. How easy or complex is technical implementation of your product? Does your CDP require coding knowledge or IT oversight?
  2. Does your CDP have a marketer-friendly interface?
  3. What, if any, storage limits are in place?
  4. What integrations work with your solution?
  5. Does this product use machine learning and predictive analytics?
  6. Does your CDP offer an easy way to create segments that can be used with other tools?
  7. What customer service offerings do you provide to help us get the most out of your solution?
  8. Does your product incorporate offline data?
  9. Does your CDP include GDPR compliance features? Is it hosted on a secure, cloud-based server?
  10. Can your solution process structured and unstructured data? Does it accept data from multiple sources?
  11. Do you have case studies to share?
  12. Can your tool help identify users and take them from anonymous to known customers?

For a downloadable question card to use in vendor meetings:


Keep in mind that a CDP may not be the best solution for every business. If you already have a digital personalization engine or CRM that offers an additional CDP package, you may want to expand your existing systems.

But if you’re looking for a dedicated solution to enrich your customer understanding and deliver more personalized experiences, a customer data platform may be the key to unlocking your personalization potential.

Start your software search with Capterra’s directory of customer data platform solutions.

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About the Author

Kristen Bialik

Kristen Bialik

Kristen Bialik is a senior specialist analyst covering customer experience for Capterra. She holds B.A.'s in English and Communications from the University of Michigan and an M.A. in Journalism Research from the University of Wisconsin-Madison. Follow her at @kebialik for insight on CX for small and midsize businesses.

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