A question that I’ve started to get asked a lot recently is whether Master Data Management (MDM) and a Customer Data Platform (CDP) are interchangeable. More specifically, if you have a Master Data Management system in the business, can it be used to deliver the same results as a Customer Data Platform? And if not, then why is a CDP different to an MDM solution?
To answer this you really need to think about the fact that MDM is a discipline and a set of processes to transform organization-wide data. However, a CDP is a packaged software product with a specific purpose to deliver a single view of the customer from multiple data sources that marketing can use for improved personalization of marketing campaigns.
So what is an MDM Solution?
MDM can really be defined as a collection of approaches, processes and technologies that someone can even study at University or as a Masters degree. Typically requiring a background in database management or information technology, there are qualifications for roles such as Administrator, Specialist, Engineer or Developer.
The main use of an MDM is to deliver a ‘master record’ that ensures data accuracy, reliability and consistency across all business data. By pooling the data into a single point of reference (master data files), and tracking the most essential data points within a company, MDM allows the business to work together to ensure its master data assets are shared throughout the organisation, providing various departments with appropriate data for their business needs. This should provide the marketing team with access to its data and perform many of the Single Customer View functions of a Customer Data Platform, but doesn’t always.
The Customer Data Platform Definition
In contrast CDPs are built exclusively for the management and manipulation of customer data. Importantly, a CDP is packaged software built for business users (mostly marketers), and will connect to all customer-related systems. Much like other software products, marketers must know how to use a CDP, but don’t necessarily need to understand the intricacies of how a CDP works under the bonnet. In short, the aim of the CDP is to empower the marketing team, and the business as a whole, to realize a coherent, trustworthy, and persistent ‘Golden Record’ from many data sources without needing a team of engineers or IT.
The definition of a Customer Data Platform from the CDP Institute is "packaged software that creates a persistent, unified customer database that is accessible to other systems".
David Raab, the founder of the CDP Institute expands this definition to include three critical elements:
- "Packaged software": the CDP is a prebuilt system that is configured to meet the needs of each client. Some technical resources will be required to set up and maintain the CDP, but it does not require the level of technical skill of a typical data warehouse project. This reduces the time, cost, and risk and gives business users more control over the system, even though they may still need some technical assistance.
- "Creates a persistent, unified customer database": the CDP creates a comprehensive view of each customer by capturing data from multiple systems, linking information related to the same customer, and storing the information to track behavior over time. The CDP contains personal identifiers used to target marketing messages and track individual-level marketing results.
- "Accessible to other systems": data stored in the CDP can be used by other systems for analysis and to manage customer interactions.
So how do Customer Data Platforms and Master Data Management Solutions differ?
A CDP manages a lot more than just master data; it captures all the details of transactions and behaviors that are not technically “customer-related”. It will then match these touch-points to the singular customer record creating a memory of their interactions with your brand across all marketing channels. For analytics, insights and personalization it’s a critical foundation for marketers that have problems with data silos.
Whilst an MDM solution can unify data to create a “single source of truth”, it is not specifically designed for capturing customer data, and therefore not commonly a marketing initiative. Unlike a CDP, an MDM does not easily connect to marketing execution or orchestration systems. It can, however, be a source of data that feeds into a Customer Data Platform.
Essentially, MDM facilitates the sharing of enterprise data within a business, rather than being a platform to consolidate customer data sources and make the data marketing-ready for use within campaigns.
This blog article is an extract from the Marketer’s Guide to Customer Data Platforms eBook.
Want to know more? Download the ‘Marketer’s Guide to Customer Data Platforms’ eBook
This blog article is an extract from BlueVenn’s ‘A Marketer’s Guide to Customer Data Platforms’ eBook.
Download a copy of the full eBook for more CDP advice, how a CDP differs from other data management technologies, or the different types of CDPs and what to look out for when researching technology vendors.