Choosing the right CDP for SaaS companies
“If you know the enemy and know yourself, you would not fear the outcome of a hundred battles”
Sun Tzu, Art of War
As a SaaS business owner or marketer, spare a moment and think about how a usual prospect in your funnel makes up their mind towards a buying decision. The journey starts somewhere in the problem unaware phase, where they don’t yet know they have a pain-point that is seriously hurting their business. Once they are made aware of a glaring inefficiency in their SaaS building/marketing/success process, they realize they have a problem on their hands, which when fixed could yield an uptick in their revenue and improved bottom lines; or worse, a problem big enough that can bleed them out.
Once they’re problem aware, they are likely to be searching for solutions that can help them address their SaaS inefficiencies. They will google their heart out, read blogs and consume other forms of content, consult other founders and their wider network to gauge just how serious their problem is, and if it makes business sense to solve it. Somewhere along in this exercise, they come across tens, if not hundreds of products that solve the same problem just as you do - albeit in a different fashion maybe. This is when they’re solution aware, and feel empowered enough to make that buying decision. Rinse and repeat for thousands and thousands of all the other prospects in your funnel.
While on the outset, this may sound incredibly obvious, yet this process is something that most SaaS companies find extremely challenging to track. When a prospect shuffles between reading blogs on your website, opening your newsletters, engaging with your social channels, being a part of your community to straight up using a search engine to find you and your products, how do you keep a constant tab on where they are in the process, and how far are they in their buying journey?
“Opportunities multiply as they are seized”
Sun Tzu, Art of War
The growth function of a SaaS company is only as good as the quality of customer data at its disposal. And the success of a well-oiled SaaS growth machine lies in their ability to harness this data to weave experiences that are personalized to their potential customers' engagement with the brand. Buying decisions are almost never linear, they always follow a meandering path to come to that decision. In a world with a million touchpoints and interactions, how do you visualize a unified view of the path of your prospects?
Enter CDP - An invaluable resource you absolutely have to consider to peep into the mind of your potential customers.
As SaaS marketing increasingly becomes an API driven affair, every SaaS company uses a custom MarTech stack in an attempt to give them a holistic view of their customers. The problem? How to build a database that communicates with all siloed entities of this stack to present a unified view.
A CDP does exactly that, which is
Pulls in customer data from the MarTech stack of your choosing
Organize and cleanse this data into unique records for each potential customer, and
Make these records accessible to all entities in your MarTech stack.
Most SaaS companies collect first-party data, but cannot use it as efficiently as third-party data to form concrete growth strategies.
We’re living in a time when the big 3 - Google, Amazon, and Facebook have a monopoly on all the cookies, SaaS companies need to expedite the collection of first-party data especially in the wake of GDPR and CCPA regulations to avoid being completely dependent on them for third-party data. While it is true that there aren’t many choices out there in terms of advertising for SaaS companies, it is imperative now to forge first-hand relationships with customers and learn everything you need to learn about them through your own data. And with a ton of CDP platforms out there, it’s time SaaS companies take action and expedite customer-centric thinking and personalized experiences.
But how exactly is a CDP different from a DMP or a CRM?
There are fundamental differences between a DMP, a CRM, and a CDP. In terms of data collected, a CRM just records the customer lifecycle data (sales-centric) that you have to manually enter into the system in case of offline data. Note that this data is only valid for people who have already made the purchase of your SaaS product or are in the consideration phase, it does not account for any anonymous visitors who are lurking out there, regularly interacting with your brand and on their way to the decision making phase.
And while a DMP is good for handling third-party data for the purpose of advertising, a CDP uses first-party data to influence all aspects of marketing - it is not just limited to advertising.
A DMP, in an attempt to build look-alike audiences for targeted ads, retains data for small periods of time, but a CDP retains it for a longer period, in an attempt to facilitate relationship building across channels between your SaaS and the potential customers out there.
CDPs work with personal information shared with you by a prospect with their consent, such as their name, email address, and social handles; while a DMP works with anonymous data such as cookies and IP addresses. And since third-party data changes hands oh so often, the element of user consent is a tricky slope to navigate.
So how do you determine when to use a CDP or a DMP?
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
Same guy I’ve been quoting all along
To begin with, let us clear this at the offset - this is not a CDP v/s DMP debate. Both of them are unique in what they do, and both of them have their uses for SaaS companies. The utility of a CDP does not negate the utility of a DMP and vice-versa.
Consider using a DMP in the following scenarios:
If you want to leverage third-party data to create lookalike audiences to build marketing campaigns that are unfamiliar with your product.
Since privacy and anonymity is the foundation of DMP data, they can only retain data for as long as the cookies are valid. This implies that DMP data can only exist for 90 days max, assuming prospects don’t clear the cookies in their browser.
If you want to run advertising to digitally target and acquire users from huge swathes of an audience who may have interests or intent that align with your SaaS product.
If you want to measure performance based on specific events, as opposed to a continuous and real-time tracking of what your prospects do.
In contrast, a CDP may be a good fit for your requirements if:
You intend to collect your own data, that is, first-party data such as personally identifiable information, interaction history with your brand among other things.
You want to store historical information for your potential customers in a large capacity for a longer period of time to re-engage them periodically.
If you want to have a 1:1 view of your potential customers.
If you only want to target prospects who have interacted with your SaaS brand in the past, as opposed to all people interested in the entire segment you operate in.
And finally, if you want to target prospects based on precise unique IDs such as name, email address, contact details, etc.
But keep in mind, you need to have a quality framework for collecting first-party data in order to unlock the full value out of a CDP.