You have heard it before and I am sure you read a lot about it as well BUT do you really understand the importance of a customer data platform?
WHAT is a customer data platform?
There is enough literature out there that explains and defines a CDP but let me try to give you the simplistic meaning of a customer data platform. First, we need to understand the problem that it is trying to solve so let us spend some time on it.
Until a few years back there was limited know-how of analytics or any other platforms that collect visitor information but fast forward a few years into the future people understood the value that they could get from such platforms that collect visitor data.
Once they started to get a hang of the tools there was another problem that they started facing.
It was the problem of having too much data to analyze.
On average a mid to large size company uses over 100 cloud tools across various functions in the business. For instance, marketers would use tools like Marketo, Hubspot, Intercom, etc. Then the sales team would use tools like Salesforce, outreach, etc. The product team would use tools like Amplitude, Mixpanel, Google Analytics, etc, and so on for other departments.
In isolation these tools work great and give you a lot of insights BUT there is valuable information of the “same user” across all these tools.
To summarize there were two main problems
- There was a lot of first-party data ( the data that the company owns) which is golden information for any business to deeply understand customer behavior but it was hard to analyze.
- It was hard to get a unified view of a visitor. Let us take an example to understand this better. Imagine that you wanted to create a personalized email campaign for users that satisfy these three conditions
- Customers that have an LTV of more than X
- Customers that have used features A and B more than X times in the last 3 months
- Customers that have raised X support tickets in the last 3 months.
The data for the same set of users sits in three different tools and to achieve the above segmentation we need to have a unified view of a customers.
Enter CDP !!!
The diagram above explains the function of a CDP. I hope by now you understand the basic function and the problem that a customer data platform solves.
Note: The content above is just to give you a basic understanding of a CDP. I will deep dive into the specifics of it in my future posts.
Is it useful for product managers?
By now you understand that there is a lot of “super useful” data sitting in our systems and a CDP might help us make some sense out of that data. Let us now understand a few use cases of how a product manager can leverage the power of a CDP.
For any it is very important to ship feature in a timely fashion but it is also their responsibility to ensure that those features are being used. It could be a joint ownership between marketing and product but at the end any product manager would want their features to be used by customers.
Let us talk about a very important example to understand this better.
After a particular feature is ready to be shipped it goes through multiple go-to-market activities to ensure the adoption of the feature. Product managers typically use the following tools directly or indirectly to market/educate customers.
- Customer communication
- In product chat tools such as Intercom or Drift
- Ad/Social media marketing
- Google Adwords
- Facebook marketing
Every feature new or old is built for a specific audience within your customer base. You can either send mass communication to all your customers or you can send personalized communication targeting specific audiences
Assuming that you have product analytics set up and you also have business data of your customers ( MRR, ARR, LTV, industry, etc). You now have a lot of information that you can use to create personalized experiences.
How often do you contemplate on sending a customer communication such that your customers are not overwhelmed with excessive emails/push notification etc?
For example, you want to send an ebook and an offer to educate and retain the customers who have a low adoption of a particular feature and they also are high-value accounts ( high ARR plus high LTV). Most product people have such audiences in their mind but they are unable to execute such experiences but imagine you have such audiences ready to be sent across all the tools mentioned above! This will give you a better ROI plus a better experience for your customers.
There are tons of more examples where product managers can truly leverage the power of a CDP and the “golden” data that is sitting idle across their tools.
This is just an introduction post on customer data platforms. There is a ton of information that I plan to share with all of you to make this “viral” subject easier to understand.