Data Integration

Customer Data Platform (CDP) vs Master Data Management (MDM)

Customer Data Platform (CDP) vs Master Data Management (MDM)

Melissa AU Team | Customer Data Platform, Master Data Management | , , , , ,

There’s no doubt about it – the key to retaining customers isn’t about fighting price wars, it’s offering them the best experience possible. Customers like being wooed and to do this, the right way, businesses need to understand their customers. This is why customer data is so important. You need to know what is in your customer’s shopping cart to send them reminder emails, you need to understand their demographic profile to personalize their landing page, and so on.

This is where Master Data Management (MDM) and Customer Data Platform (CDP) come in. While both handle data, there are a few intrinsic differences between them. Let’s take a look at what these applications are and the difference between them.

What are Master Data Management (MDM) applications?

MDM is a data-led, technology-enabled discipline aimed at creating a single, reliable data source for all operational and analytical systems. It is typically driven by IT to ensure accuracy, uniformity and semantic consistency of the enterprise’s master data assets. To do this, it pools the data into master data files and tracks relevant data points throughout the organization.

MDMs merge data by comparing multiple data points such as names, addresses, phone numbers, etc. Many MDM products are a part of larger data handling solutions.

What is a Customer Data Platform (CDP)?

As the name suggests, a CDP caters exclusively to customer data. It can be described as a packaged software that connects to all customer-related systems and allows business users to manage and manipulate the collected data. CDP empowers marketing teams to provide personalized customer experiences. It links data by comparing a single data point such as IP addresses or email accounts to identify prospects.

Master Data Management vs Customer Data Platform

Let’s look at some of the critical differences and approaches between MDM and CDP.

Data governance

Both CDPs and MDMs can handle vast amounts of data. However, as all businesses know, when it comes to data, quality matters more than quantity. A CDP cannot differentiate between good and bad data. Once the data enters the system, it does not have rules for how to deal with poor data. Thus, the value of the data held is significantly lowered.

On the other hand, MDMs are designed to create unified data views. The system collects data from multiple sources and validates it to create a reliable data source for the organization. Often, the data from MDMs is used for CDPs.

Data integration

CDPs are designed with the marketing team in mind. It pulls structured and unstructured information from various marketing applications and helps the marketing team assess what or why a customer is doing something and thus, what is the next step they need to take to woo the customer. The system is not capable of further integrations.

On the other hand, MDMs are designed to create a single source of truth. They can collect and send information to various enterprise applications and are not limited only to marketing. It can be used for business analytics, to drive data-based decisions, etc.

Adding context to data

For any kind of data to be valuable, it must be with context. CDPs collect and compare data but they have limited abilities when it comes to the hierarchical management of customer data. MDMs are much better suited to do this.

MDMs create links that help businesses understand aspects such as which 2 customers are related, which customers are also suppliers, etc. Understanding how customers interact with each other and the different parts of a business provide valuable operational intelligence.

Single vs Multi-Domain

Data is complex and typically the various domains are constantly interacting with each other. CDP offers a great perspective on customer data in a domain but this is an isolated view of the customer. Users can apply varied rules to match data for different purposes and each application can work with their own IDs to unify the data within the CDP.

If you’re looking for a multi-domain view, MDMs offer better functionality. By organizing data with cross-domain relationships in mind, it allows a business to see all the different factors affecting it. For example, you can see the type of products being sold to a segment of customers and the modes of purchase to improve promotions and target customers with higher accuracy. In terms of matching data sources, MDMs follow more rigid rules.

What do You Need?

While MDMs are more established, CDPs are a relatively newer player in the field. You can work with both or choose one based on your end goals. If it’s just about customer data for your marketing team, A CDP will suffice. But, if you need a system that helps derive context from all the data collected and gives you a holistic view of the business, MDMs are a better solution.

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