- Comparison insight. CDP vs. MDM highlights different roles in data handling, with CDP focusing on customer data and MDM on governance and accuracy.
- Market growth. Both CDP and MDM markets are expanding, emphasizing their importance in modern data management.
- Holistic approach. Combined usage of CDPs and MDMs allows businesses to maintain accuracy and enhance personalization across data systems.
Data is the kernel of any business in today’s evolving digital landscape, empowering organizations to make better decisions, drive innovation and provide enhanced customer experiences.
However, the digital channel explosion, subsequent proliferation of touchpoints and demand for personalized experiences have resulted in a never-ending data labyrinth. With mergers, acquisitions and evolving regulatory framework, the need for speed is eminent to maintain accurate and consistent data for positively impacting business dynamics.
The most pressing challenge faced by the top brass in organizations is to handle and manage customer and master data complexities. This article explores data management and attempts to unravel the synergies between customer data platform (CDP) and master data management (MDM).
Focus and Scope of CDP vs. MDM
CDP has become increasingly relevant in the realm of marketing and customer experience. With the global CDP market estimated to grow at a CAGR of 32.4% by 2027, enterprises are quickly realizing their transformative potential in leveraging customer data. It is worth noting that applications of customer data platforms extend beyond marketing as investments are being made in solutions that offer a more intimate look into the customer journey from lead to conversion. With the growing consumer awareness and demand for improved data protection and privacy, enterprises seek sustainable data handling and distribution practices.
Additionally, businesses favor a versatile CDP — capable of managing vast data sets and facilitating seamless connections between source and destination systems. Take, for instance, a CDP that facilitates data exchange and management between the IT department of any brand to its operations, manufacturing and vendor liaison systems.
Coming to MDM, modern data management strategies are unimaginable without the same.
This particularly stands true for industries where data accuracy and consistency are paramount, such as healthcare, finance and manufacturing. Emerging approaches like agile MDM or hybrid MDM are gaining traction as organizations adapt to evolving needs. The accelerated deployment of artificial intelligence (AI) and machine learning (ML) algorithms enables businesses to automate data governance processes. This, in turn, is easing off the burden on IT teams while improving data accuracy.
The global MDM market size is expected to grow at a CAGR of 16.85 % by 2030. These numbers demonstrate the growing significance of MDM in enabling efficient data management and governance across various industries.
Related Article: Customer Data Management Is the Key to Consumer Trust, Profitability
Core Capabilities of CDP vs. MDM
While CDP and MDM seamlessly integrate into operational systems and assist with data extraction and management, certain key capabilities set them apart. Let’s have a look.
CDP capabilities at the core are to collect, unify, analyze and activate data, including:
- Data collection: User data is collected from various online and offline resources (data browsing, cookies, names, demographic data, emails, device addresses, page visits, purchase history, etc.) in real-time.
- Profile unification: Duplicate profiles of customers are matched up. Sometimes devices, email IDs of the same customers and even aggregating customers to the same household accounts are also done.
- Segmentation: AI/ML algorithms are deployed to conduct segment discovery, proclivity models and predictive analytics. They also manage importing and deployment of custom models.
- Activation: Campaigns that include email, mobile messages, advertising, suggested recommendations, dynamic and self-optimization are rolled out and optimized from time to time.
MDM manages and governs an organization’s critical data assets based on the following core capabilities:
- Data integration: Gives a unified, consistent and accurate data view by integrating information from various sources.
- Data quality management: Algorithms and techniques help in data cleansing, matching and maintaining quality metrics. Duplicate and redundant data is eliminated, thus ensuring master data is reliable, accurate and free from errors or inconsistencies.
- Data lifecycle management: Assists in maintaining data through various phases such as creation, validation, archival or retirement. Ensures that master data is up-to-date, relevant and aligned with an organization’s evolving needs.
- Data hierarchy management: Helps enterprises maintain organizational or hierarchical structures in data to support various business requirements or procedures.
- Data governance: Policies, standards and guidelines are defined and enforced to protect master data. This helps in enhancing data security and protection.
Related Article: 3 Things to Consider Before Buying a Customer Data Platform
Use Case Scenarios for CDPs and MDMs
Data that can be consolidated and assessed are essential to gain valuable insights.
CDP Use Case
CDPs are powerful tools that leverage advanced analytics to gauge audience sentiment and optimize personalized campaigns. For instance, an FMCG (Fast-Moving Consumer Goods) business can greatly benefit from a comprehensive CDP that integrates data from various end-user touchpoints in real-time. Combining the CDP with a third-party tool, you can extract and streamline data through facial and address recognition right at the registration phase.
This integration improves audience segmentation, enables personalized content for customers and drives higher cross-selling and upselling opportunities. Moreover, since the data gathering, cleansing and enrichment processes are automated, it eliminates data silos and mismanagement, ensuring efficient data utilization.
MDM Use Case
MDM focuses on making data accessible, processable and employable for users throughout the company. An automotive company can invest in MDM to extract and segment critical information from various external and internal data points in addition to data management and governance. This includes, but is not limited to, extended product descriptions, technical data such as spare parts or exploded drawings and images.
MDM also streamlines and efficiently manages customer data, such as technical newsletters, marketing information and product brochures. By employing MDM, automotive companies can enhance process efficiency, enabling faster and more accurate warranty processing, installation processing and region-based quotation calculation and search. MDM empowers enterprises to leverage data effectively, enhancing overall performance and decision-making capabilities.
When to Use Both CDP and MDM Systems
It is important to know that both CDPs and MDM focus on making personal or product-related data more structured and accessible. Setting up a CDP-MDM system is an emerging territory and requires intensive support from the IT and sales departments. Investing in these solutions can help organizations have a holistic view of their customers while maintaining data accuracy and consistency across multiple systems and touchpoints. CDPs and MDM can be used together for the following cases:
- Integration: Basic and behavioral data can be collected and unified into hierarchical structures.
- Segmentation: Automation helps in creating dynamic clusters of user data. This simplifies the evaluation and distribution of relevant data.
- Personalization: Offering AI/ML-powered specific and consumer-driven content increases the chances of establishing contacts and project queries.
- Scaling: Centralized data repository saves costs and efforts required for data maintenance. It also helps in discovering new business requirements and revenue streams.
- Reporting: A clean CDP-MDM landscape combined with data visualization tools can convert marketing insights into actionable profits.
Final Word on CDP vs. MDM
By harnessing the power of data, businesses can ensure compliance, trust and customer-centricity that bolsters long-term growth. But amidst the growing data complexity, chief data officers and investors must prioritize user-friendliness, usability and data quality.
The evolving landscape demands robust solutions integrating data from various systems, processes and regions for a holistic business perspective. Here, value-driven data solutions such as CDPs and MDMs ensure a secure and sustainable future for businesses and customers.
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