Here’s what you need to know about how to use your customer data platform (CDP) as your data warehouse:
Customer data platforms are less robust and general-purpose than data warehouses, but they come with many features and functionality for the use of marketing teams.
CDPs perform valuable activities such as data integration, identity resolution, and marketing attribution.
Both CDPs and data warehouses require the choice of the right ETL (extract, transform, load) tool to get information inside them.
Users of CDPs should take advantage of marketing-specific functionality such as lead scoring, data enrichment, and personalization.
- CDPs must achieve the same level of data governance, data privacy, and data security as data warehouses.
Whether you’re a mom-and-pop store or an ecommerce giant, understanding the customer journey is crucial to your organization’s success. When you collect data across a wide range of customer touchpoints, you can use this wealth of information for many different use cases: performing audience segmentation, improving your marketing campaigns, boosting customer engagement, and more.
However, this brings up the question of data management: where will you store all of this information? For many businesses, the correct answer is a customer data platform (CDP): a dedicated system for data collection, storage, and analysis of customer information.
Customer data platforms have a number of benefits as a means of handling information about your customers and potential customers. This causes many organizations to wonder: can you use a customer data platform as your data warehouse? For most companies, the answer is yes. In this article, we’ll discuss using a customer data platform as your data warehouse, including what you need to know before getting started.
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What Is a Customer Data Platform (CDP)?
A customer data platform (CDP) is a software-based solution that seeks to create a unified customer profile of individuals who patronize your business, establishing a single view of the customer across the enterprise. This includes many different types of data about customer demographics, customer behavior, customer interactions, and more.
For example, a CDP can keep track of your customer's behavioral data: website visits, newsletter clicks, social media interactions, etc. You can then link this information to transactional data (i.e., what customers bought, when they bought it, how much they paid, the payment method, etc.) to understand how these behaviors can predict customers’ purchases. Finally, you can use the business intelligence (BI) and analytics insights you glean from these connections to enhance the customer experience or elevate your campaigns and outreach efforts (e.g., by improving your marketing automation sequence).
The primary benefit of CDPs is that they help establish a “single source of truth” or a customer 360 for all of your customer data. Whether you’re a key stakeholder or a member of the marketing team, everyone in the organization can be on the same page in terms of customer information, thanks to the customer data platform. CDPs standardize and centralize the most up-to-date and accurate information about your customers and potential customers in one location, making it accessible to all who need it.
CDPs perform several essential functions, such as:
Data integration: CDPs pull information from a wide range of data sources and data sets, both internal and external. These sources may include your website, email marketing software, social media platforms, sales data, feedback and surveys, customer service interactions, and more.
Identity resolution: CDPs help link various identifiers and data to a single individual. For example, an Ecommerce business may have multiple ways of identifying customers: email addresses, phone numbers, website cookies, etc. With a CDP, you can automatically associate these different identifiers with the real person behind them.
Marketing attribution: In marketing and Ecommerce, attribution is analyzing your touchpoints to understand which events had the most impact or influence on a customer conversion or purchase. CDPs help with attribution by collecting all of these data points and activities under one roof so that you can run analyses and generate reports.
CDPs are a specialized form of data management platform (DMPs), which are digital solutions that help organize enterprise data. As the name suggests, CDPs are explicitly designed for holding customer information. Another difference between CDPs and DMPs is that CDPs typically focus on first-party data (i.e., information that your company generates, collects, and owns), while DMPs tend to focus on second and third-party data (i.e., information from other companies or institutions).
Another important matter is the issue of CDPs vs. CRM (customer relationship management) solutions. CDPs are closely related to CRMs: both are software platforms, usually SaaS (software as a service), for keeping track of customer data. However, the two concepts aren’t quite the same. Forbes has described the notion of a CDP as “like a CRM on steroids. It doesn’t so much help you engage the customer as it helps you engage them in an even more meaningful way.” CDPs help with the activation of your customer data on a level beyond the typical CRM. For example, CDPs can often collect data on anonymous and unidentified users, while CRMs typically lack such functionality.
Related Reading: Customer Data Platform (CDP) vs. Reverse ETL
What Is a Data Warehouse?
A data warehouse is a centralized, unified system for data aggregation, storage, processing, and analysis. Data warehouses collect information from across the organization and preserve it in a single location. This typically occurs via data integration methods such as ETL (extract, transform, load).
Data warehouses constitute an essential component of your data infrastructure. Like CDPs offering a single customer view, the enterprise data warehouse acts as a “single source of truth” that contains the latest version of your company data. Data warehouses also help break down data silos, making information more accessible to the people who need it. Once information is inside the data warehouse, data scientists and business analysts use artificial intelligence and machine learning tools to process it and generate valuable insights.
Businesses may use variants of the data warehouse, depending on their specific needs. For example, a data lake is a massive archive of raw data for users who prefer to transform this information after ingesting it into a repository. A data lakehouse combines the two architectures of the data warehouse and data lake, trying to achieve the benefits of both approaches. Data marts are essentially mini-data warehouses designed for the needs of a particular team or department.
The benefits of using a data warehouse include:
Improved data quality: During the transformation stage of ETL, data often goes through data cleansing to remove inaccurate, duplicate, and out-of-date information, leading to higher final data quality.
Better data governance: By establishing a centralized repository to which your data pipelines flow, data warehouses provide structure to the movement and management of the information across your organization.
Smarter insights: Data warehouses make it easier to sift through massive quantities of information to find cutting-edge insights, helping you establish stronger data-driven decision-making.
Tighter data security: Storing all your information in a single location helps you more tightly track and control the individuals who have access to it, strengthening data privacy and security organization-wide.
How To Use a CDP as Your Data Warehouse
As we’ve discussed above, there are important differences between a customer data platform and a data warehouse. Most notably, CDPs are intended specifically for customer data, while data warehouses can hold all manner of information. Beyond customer data, this may include internal company records, historical performance trends, larger market shifts, operational and logistical data, and much more. Thus, data warehouses are much more general-purpose, befitting a wider range of use cases.
However, that doesn’t mean a data warehouse is a right choice for every situation. Businesses that are highly customer-focused, and that collect a large amount of customer data, may not see the need for a bulky and expensive data warehouse.
Instead, these companies may prefer to use a more lightweight, purpose-built CDP that comes packed with useful features for storing and analyzing customer data. These features may include:
Formulating a single customer view of your company’s customers and potential customers, linking disparate information together into a unified profile.
Performing customer segmentation and audience building (for example, identifying customers who have spent above a certain amount in the past six months, or customers who have not made a purchase recently).
Creating models, forecasts, estimations, and predictions to better understand and foresee your company’s operations.
As such, many organizations may be interested in using their customer data platform as a data warehouse itself. Others may want to use both a CDP and data warehouse in combination (perhaps with some form of reverse ETL). Regardless of your chosen setup, below are some tips for how to use a customer data platform as your data warehouse.
1. Select the right ETL tool
Regardless of whether you have an actual data warehouse or you’re treating your CDP like one, you need a way to get information inside this repository. Building your own custom integrations is technically feasible, but requires a great deal of advanced knowledge and manual effort. It’s also highly brittle: if the underlying service changes, the connector may break, bringing down your entire data pipeline and requiring you to fix things—fast.
For these reasons, the vast majority of businesses choose an off-the-shelf data integration solution like Integrate.io, which handles all the technical complexity for you under the hood. The Integrate.io platform incorporates more than 140 pre-built connectors and integrations for the most common databases, cloud services, analytics tools, file formats, and more. Integrate.io also comes with a standard API (application programming interface) connector, so that you can communicate with and extract data from any service with a REST API.
2. Take advantage of CDP features
As mentioned above, customer data platforms have a variety of special features and functionality that distinguish them from a general-purpose data warehouse. If you want to use a customer data platform as your data warehouse, it behooves you to make use of these features for working with customer data in particular.
Some of the applications and use cases of CDP software include:
Lead scoring and qualification: Customer data platforms can help sales and marketing teams decide which prospective customers (“leads”) appear the most promising. In lead scoring, each prospect is assigned a number based on the likelihood they will convert to a paying customer or their potential value for the business.
Data enrichment: Your internal customer data is valuable enough, but it can also be enhanced by enriching it with other data sources (e.g. third-party data from government records or other companies). Customer data platforms help users synthesize and reconcile all this information, forming cohesive customer profiles that provide a more complete picture of your audience.
Personalization: According to a McKinsey & Company study, 71 percent of customers expect businesses to offer personalized campaigns and interactions—and 76 percent become frustrated when they don’t deliver. Customer data platforms allow users to segment customers into different audiences and even perform hyper-personalization, drilling down to individual clients to provide a truly unique customer experience.
3. Verify data governance
Enterprise-class data warehouses come packed with features to ensure data privacy and security for the sensitive and confidential information they contain. This may include compliance with regulations such as the European Union’s GDPR (General Data Protection Regulation) and the CCPA (California Consumer Privacy Act). These regulations place strict limitations on how businesses can store and process a customer’s personal data.
Since CDPs are not data warehouses, at least by design, their level of compliance with data privacy and security regulations may vary. Make sure that your choice of CDP is able to meet the required standards for your business and industry—and if not, investigate how you can bring it up to speed before you use your customer data platform as your data warehouse.
How Integrate.io Can Help With Customer Data Platforms (CDPs)
Whether you decide to go with a general-purpose data warehouse or use a customer data platform as your data warehouse instead, you need a way to get all this information inside your chosen tool. This naturally leads to the question: what are the best data integration and ETL tool for customer data?
Integrate.io is a powerful, feature-rich new platform for ETL and data integration that helps companies of all sizes and industries unify their data across the enterprise. The Integrate.io platform has been built from the ground up for the needs of Ecommerce businesses working heavily with customer data.
Thanks to Integrate.io’s user-friendly, no-code, drag-and-drop visual interface, you don’t need a staff of data engineers to perform complex data integrations. With Integrate.io, even non-technical employees can build robust, production-ready, real-time data pipelines, selecting from a variety of data sources and transformations. Integrate.io includes more than 140 pre-built connectors and integrations, pulling information from the most popular websites, data sets, and SQL and NoSQL databases to fit your existing workflow.
Integrate.io is packed with useful features to help Ecommerce businesses better manage and make use of their customer data. With Integrate.io’s lightning-fast FlyData CDC (change data capture) feature, for example, you can select only those records and databases that have been altered since your previous data integration job. By avoiding duplicate integrations, this feature saves you a great deal of time and effort in the long run.
Another truly invaluable feature is Integrate.io’s reverse ETL capability. Using reverse ETL, businesses can migrate information out of a centralized data warehouse and into a dedicated third-party tool (such as a customer data platform). By making this information more accessible to a wider range of people, instead of just data scientists and other technical users, reverse ETL helps you operationalize valuable customer data.
Want to learn more about how Integrate.io can help with your customer data integration needs? Get in touch with our team of data experts today for a chat about your business needs and objectives, or to start your 7-day pilot of the Integrate.io platform.