CDP vs MDM: Contrasting managing and contextualizing data

Commerce today is dealing with a ratcheting up of increased customer experience expectations like never before. Customers aren’t impressed by what you did for them yesterday. They want to be constantly wooed by you, or they will seek out your competition – be it a direct competitor, or a replacement they can get faster, cheaper, or easier. 

Businesses are constantly innovating in their attempts to deliver a better customer experience. But at the heart of this journey is the desire to understand the customer better.  

Master Data Management (MDM) applications are the best tools currently in the market to manage and govern customer data. Multidomain MDMs can manage data from multiple domains (product, customer, retailer, store, etc.) with a single installation and provide insights into not just individual domains, but the interaction amongst those domains and, in the process deliver a true and operational 360-degree view of the customer. 

For comparison, Customer Data Platform (CDP) applications are a fairly new entrant in this market. Gartner defines CDPs as “marketing-managed tools designed for the creation, segmentation and activation of customer profiles.”¹ CDP applications specialize in collecting large amounts of customer data from a variety of sources and feed them into existing marketing technology (martech). 

A CDP is not a tool that can help you run a marketing campaign, but rather a unified view of the customers that you can then feed into a marketing automation tool. Marketing organizations are lured by the latest new shiny object in the market, but can CDPs replace MDM applications? 

Here are four critical areas that marketers should pay attention to as they consider CDPs for their organization: 

1. Governance 

What a CDP does really well is gather a lot of data from a lot of sources and correlate it. But without systems in place to control how this data is added to the system, rules to determine what to do with inevitable bad data, and specific conditions that tell the system how all of this data should be modified, the data is useless. Data is always dirty – governance helps to fix and maintain that data by ensuring that overall data quality remains strong. Governance should be at the heart of any data management system that claims to give you reliable analytics.  

2. A golden record of information 

CDPs are a marketing-specific tool. They pull information from and send information to other marketing applications. But they are not yet capable of integrations beyond that. In contrast, MDM solutions stand capable of creating and maintaining a “single source of truth,” or golden record, and eventually integrating with a wide variety of other powerful enterprise applications like ERPs to ensure that all systems have the same version of the data. This golden record is more reliable as a source of customer information not just for marketing campaigns but for other analytical purposes, even as a source of information for CDPs. 

3. Complexity of customer data 

Customer data without context is a case of quantity over quality. If the goal is to understand your customers to communicate with them better, it helps to have a proper understanding of when, where, and how your customers interact with each other and other parts of your business. For instance, if you know which of your B2C customers are related to each other, which of your B2B customers might also be suppliers to your business or which of your B2B customers are owned by other B2B customers, that’s information that provides context and operational intelligence. This kind of hierarchical management of customer data cannot be done by CDPs the way it can be done by MDMs. 

4. Cross-domain relationships 

Looking beyond customer data, the entirety of your enterprise data is even more complex, with all the domains interacting with each other. Your stores receive products from different warehouses, your warehouses store products from various product lines, and most importantly, your customers buy different products. While a CDP can give you a perspective on the segmentations of your customer data in isolation, only a multi-domain MDM system can store all the domains in one location. With a view of the cross-domain relationships available via MDM, your ability to look at multiple factors that interrelate to affect your business allows for an understanding on how these segmentations are interrelated. For instance, this dimensional view could allow you to learn about the relationships between the customer and the products they have purchased, products that can be sold to a customer or a segment, or the types of stores a customer visits so you can plan in-store promotions and with better targeting. 

Start with the Outcome 

Ultimately, the decision to go with a CDP should be driven with an eye on the desired outcome. If the goal is to merely look at customer data in isolation to run marketing programs, CDPs will suffice. 

MDM platforms are more technologically mature and natively designed with data quality as a bedrock principle, and the more important output from an MDM is the context you can derive from your data. When you need a holistic view of the entire business and perform deeper analysis on the interaction of all domains of your data, MDM is your answer.