Is a Customer Data Platform the same as a Master Data Management Solution?

Customer Data Platform series: 4 of 5

Over the next 5 weeks, read a new blog each week from our CDP Series as our CMO helps you to understand the CDP landscape, capabilities and functionality.

The basic raison d'être of both a Master Data Management (MDM) solution and a Customer Data Platform (CDP) is similar. Both exist to ensure that a business has a supply of carefully curated, unified, accurate and reliable corporate data, a single trusted view to deliver insights and drive business innovation, but that's where the similarities end.

For a start, MDM is a discipline and a set of processes designed to transform organization-wide data, especially in large companies, while a CDP is a packaged software product with a specific purpose to deliver a single view of the customer that the marketing department can use for the improved personalization of marketing campaigns. Another key difference is who stands to benefit from their use and how they are managed within the organization.

What is an MDM solution?

Gartner defines MDM as "a technology-enabled discipline in which business and IT work together to ensure the uniformity, accuracy, stewardship, semantic consistency and accountability of the enterprise’s official shared master data assets".

In other words, it is a collection of approaches, processes and technologies used to manage critical data within an organization. Successfully managing, consolidating and optimizing such a wide variety of information will typically require a background in database management or IT, and it's even possible to study MDM at university or as a Masters degree.

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 different departments within the business to work together to ensure its master data assets can be shared throughout the organisation, providing professionals with the appropriate data to meet their business needs.

The Customer Data Platform definition

unified-data-system 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 with other software products, marketers must know how to use a CDP, but they 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 professionals to manage 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 Master Data Management solutions and Customer Data Platforms differ?

MDM is a tool that can be used to pool all sorts of data, from every department and on every aspect of the organization, and the resulting repository can be tricky to manage and unwieldy to use. A 'single source of truth' doesn't necessarily mean a Single Customer View, though depending on the organization's specifically tailored curation rules, it could. It might instead represent the go-to place for details of the company pipeline, department finances, company suppliers or anything else the MDM Stewards want stored in the system.

A CDP deals with customer data, first and foremost, and does so under the control of the marketing team. Therefore, it collects, cleanses, de-duplicates and stores any information marketers might need that can be gathered from marketing technology platforms and pockets of data in the business, including 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 an individual's interactions with your brand across all marketing channels. For analytics, insights and personalization, it’s a critical resource for marketers who have problems with data silos within their organisation. Furthermore, our Omnichannel Marketing Excellence report found that CDP users "are more than five times as likely to be using advanced customer data analytics to support real-time or time-based triggered messaging and personalization (37% vs. 7% for non-CDP users".

Unlike a CDP, a MDM system does not easily connect to marketing execution or orchestration systems, so it lacks the ability to amalgamate marketing data across the board and collect real-time insights to be used in campaigns. It can, however, act as a source of data and feed into a Customer Data Platform, enriching the deposit of marketing data available for use.

Essentially, MDM facilitates the sharing of enterprise data within a business; it is not a platform designed to consolidate customer data sources and make the data marketing-ready for use within campaigns.

This blog article is an extract from BlueVenn’s “A Marketer’s Guide to Customer Data Platforms” eBook.

Remember, this is blog 4 of 5 in our Customer Data Platform series. For more from our CMO on the CDP landscape, capabilities and functionality, read blog 5 of 5 now or subscribe to the blog for alerts.