A Customer Data Platform (CDP) and Master Data Management (MDM): what are they?

Now that cookies are slowly disappearing, first-party data rank higher on marketers’ priority list. They value customer data and a 360-degree customer differently. On the other side you’ll find data management and IT. For them, data quality and (customer) recognition are just as important. Through laws and regulations they became aware of the importance of correct customer data long ago. What do these groups have in common? They understand customers, simplify operations and achieve goals through data platform technology.

In practice, marketers often reach for a Customer Data Platform (CDP), whereas departments such as data management and IT lean on Master Data Management (MDM). But what types of platforms are they? Are they really that different? We’ll explain it in comprehensible language.

What is a Customer Data Platform?
Imagine, you go skiing. You take out a temporary cover via your travel insurance before departure. They store this information.

There’s a big chance that in that same time period a year later, you’ll receive an email from them. Because maybe you’ll go to the snow again. In that case you obviously can’t ignore the winter sports cover. You choose to stay at home this year, so you don’t respond.

You receive another message around the summer, because you’ll probably compensate for skipping winter sports by going on a distant summer holiday. Then don’t forget to change your policy to world cover. It only takes one call and they’ll arrange it.

If you pay close attention, you’ll notice that the insurer gradually knows you better. They understand your preferences and wishes and use these insights for the offer that they make. For example, through the website. That’s where you log on and see all details, but there’s also a personal offer. One that perfectly fits your current situation. How does the insurer do this? Most likely with a CDP where they gear their marketing actions towards your behavior.

“If you pay close attention, you’ll notice that the insurer gradually knows you better. They understand your preferences and wishes and use these insights for the offer that they make.”

Everyone describes a Customer Data Platform differently. The CDP Institute* calls it “packaged software that creates a persistent, unified customer database that is accessible to other systems.” We see it as a platform that merges all your customer data into one unique customer view. With this unique customer view, you know in which phase of the customer journey a customer finds himself. It gives marketers clear customer insights for creating more personalized marketing actions and campaigns.

What is Master Data Management?
Your car doesn’t start anymore. You can’t go without because you have a busy family and work life, so you check second-hand offers online. Eventually you reach a website of a brand dealership offering a private lease option. Since a monthly contribution for a new car sounds better to your ears, you plan an appointment.

You visit the dealer a week later, make a test ride and you’re convinced. Now comes the most exciting part; finances. The car dealer has the Quality Mark Private Lease and checks whether the lease contract fits you. They do this through a connection with the National Credit Register. This organization enhances the financial well-being of Dutch citizens. The dealer enters the details and is shown whether the lease option is reasonable in no time. The contract is printed, you sign it accordingly and you leave the office with the car keys. How was this carried out so quickly? The National Credit Register matches applications and registrations with existing credit data and similarities in their system. Behind all this is Master Data Management.

Research agency Gartner** describes MDM as “a technology-enabled discipline in which business and IT work together to ensure the uniformity and accuracy of the enterprise’s official shared master data assets.” This sounds just as complex as it truly is. An easier formulation is that it concerns tools and processes used by organizations to manage company data and create a single source of truth. It allows them to work more efficiently, make accurate decisions and improve data quality. Therefore, it counts as the best solution for when you’re continuously required to recognize data and customers across all organizational processes. Especially when the identity of a customer needs to be correct beyond any doubt.

“Therefore, it counts as the best solution for when you’re continuously required to recognize data and customers across all organizational processes.”

Customer Data Platform vs. Master Data Management
A CDP and MDM both focus on simplifying data management. We see that the technologies increasingly grow towards each other. For example, there are CDPs on the rise with MDM concepts and technologies. This keeps us busy too. It’s one of the reasons why we merged with Human Inference.

What really distinguishes the platforms? Their focus. Marketers use a CDP for more personalized and stronger customer interactions. They want to stimulate customer engagement, loyalty and conversion. Data management teams and IT use MDM in striving for accurate data. They need to make one consistent data stream available for each business process.

As we already wrote in the blog When do you use MDM and a CDP: organizations with complex (customer) data streams benefit from both platforms. One doesn’t exclude the other. Especially when there are platforms that contain the best of both worlds.

Think about your (organizational) targets and what you want to achieve. This guides you in making the right choice easily. Otherwise, we’re always here to help.

_{* CDP Institute. (2021, 13 August). What is a CDP? https://www.cdpinstitute.org/learning-center/what-is-a-cdp/
** Gartner®. (n.d.). Definition of Master Data Management (MDM). Gartner Glossary. https://www.gartner.com/en/information-technology/glossary/master-data-management-mdm}