Specialist software is typically needed to undertake successful and efficient customer data management. There are different types of customer data management systems to choose from, such as Customer Data Platforms (CDPs) and Data Management Platforms (DMPs). You’ll need to consider your goals and motivations for your customer data management activities to determine which type of customer data management system will work best for your business.
CDP vs DMP
CDPs and DMPs often get mistaken for each other since they both help businesses organize and derive meaning from collected customer data. However, there are several differences, the main one being the type of data each one uses. Here are the 3 main differences between CDPs and DMPs:
1. The type of data they use
A customer data platform collects and unifies customer data across channels and systems to create a single source of truth. CDPs pull zero- and first-party data together to create comprehensive customer profiles, which can then be used to enhance marketing through tactics such as personalization.
A Data Management Platform collects third-party data sources (such as cookie IDs and other anonymous data points) to create anonymous audience profiles, which are typically used as targets for advertising and acquisition marketing.
2. Their use of customer identities
A customer data platform collects personally identifiable information (PII) on users, since this is necessary for creating detailed customer profiles. Good CDPs ensure you’re collecting PII in an ethical way by having very strong data security and helping you set data standards to make sure website visitors have opted in to your data collection, and also giving you the ability to delete visitor data if necessary.
DMPs, on the other hand, typically collect and manage large anonymised data sets. Anonymity is essential to the DMP’s role as a way to exchange information about audiences without violating personal privacy. Unfortunately, this makes it harder to confirm that the data has been collected in an ethical and legal manner.
3. Data retention
A customer data management platform retains data for longer periods of time, since customer profiles will become richer and more accurate with more data. A good customer data platform will also allow your customers to request access to or deletion of their data, and some CDPs even let you set limits on how long your customers’ data is held.
Conversely, DMPs retain data for shorter periods of time, typically 90 days. This is because fresh data is generally considered best for advertising campaigns, i.e. an advertiser would want to target people who are interested in a particular sector or topic right now, or have been interested in the past 90 days at most, as opposed to people who were interested in the topic 5 years ago.
Overall, a Customer Data Management Platform empowers you to access and store customer data in a single source to create a single customer view (SCV), which can then be used to improve the customer experience through personalization and targeting.
Data Management Platforms give you access to massive data sets and allow you to gather new audiences, however they can’t help you differentiate since the same information can be retrieved by your competitors and other users of the same DMP. They also offer less control over how you use and label the data.