Companies today are swimming in customer data but often feel like they are not doing all they can to harness it fully.

Customer Data Platforms (CDPs) and Master Data Management (MDM) solutions are two extremely powerful tools that enable you to use every detail you know about your customers to create amazing customer experiences... if you use each of them correctly.

People often confuse them with each other even though they serve totally different purposes. Unsurprising, given that the terminology to describe each and the marketing content for each looks, at least at face value, remarkably similar – if not identical. That is the first problem.

In order for you to create those beautiful customer experiences that drive engagement and conversions, you need to know how to use CDP and MDM together. The synergies this creates go far beyond the results of each system operating independently.

Most companies don’t know this, so read on and build a strategic advantage in the industry, learn what each system does, and how they together to create unbelievable opportunities to engage with your customers. Out-dazzle your competition.

CDP and MDM: The differences and similarities

We've established that both CDPs and MDMs are key players in the world of customer data management. But how exactly are they different? And where do they overlap? Let's break it down.

What the Customer Data Platform does

The CDP is your customer whisperers. They're all about understanding your customers on a deep level.

They gather every little detail about how customers interact with your brand. This includes things like:

• what they browse online
• what they buy in-store
• which emails they open
• what ads they click on social media

You get a rich, dynamic profile of each customer so you can personalize their experience and keep your marketing efforts laser focused.

What the Master Data Management system does

MDMs, on the other hand, are your master organizers. They ensure all your important data – about customers, products, suppliers, and more – is accurate, consistent, and readily available. Trustworthy data is the foundation for success of all data related projects and CDP success is no different.

Your MDM makes sure everything is properly categorized, labelled, standardized, segmented, enriched, accurate and free of duplicates. Without it: chaos.

CDP (Customer Data Platform):

• Real-time transactional data: Website visits, app usage, email opens, clicks, purchases, social media interactions, and other customer behaviors.
• Event data: Customer interactions, such as page views, form submissions, and product searches.
• Preference data: Customer preferences, interests, and demographics.
• Third-party data: Data acquired from external sources, such as data management platforms (DMPs) or CRM systems.

Customer MDM:

• Customer identifiers: Unique identifiers such as customer IDs, email addresses, and phone numbers.
• Demographics: Age, gender, location, income, and occupation.
• Contact information: Addresses, phone numbers, and email addresses.
• Preferences and interests: Product preferences, purchase history, and website behavior.
• Account information: Account status, credit limits, and payment history.
• Loyalty program data: Membership status, points, and rewards.
• Communication history: Correspondence, calls, and interactions with customer service.

A side-by-side comparison

The below image from our friends at Gartner gives you a great overview of what each system does and doesn’t focus on.

Image source: Gartner report X  

CDP : Designed to activate purchases by providing real-time insights into customer behavior and enabling personalized marketing campaigns. CDPs focus on driving customer engagement and conversions.
Customer MDM : Designed to provide a foundation of trusted customer data by ensuring accuracy, consistency, and completeness. Customer MDMs focus on data quality and governance, supporting efficient operations and compliance.
In essence, a CDP is about action (driving purchases), while a Customer MDM is about foundation (providing reliable data).

As you can see, the two systems aren’t rivals: They’re allies. And if you’re an ambitious retailer in a competitive multichannel marketplace, you need them both, working together, to build a strong data foundation. So, let’s look at how they work together.

How you use them together: MDM fuels CDP success

As we have established, in your CDP you gather and analyze all your customer interaction data. You build the critical insights you need for marketing and customer experience initiatives.

But for those insights to occur – and for your marketing and customer experience initiatives to have a chance of success – your CDP is 100% dependent on the quality of the data it uses.

And that’s where you need your MDM.

Data quality issues

Just like you wouldn’t want your GPS to use inaccurate and outdated information (to lead you off a cliff), you don’t want flawed data fed into an important system such as your CDP.

Therefore, you want the MDM in place to make sure you can trust that data. Without it, you will not get the results you expect from your CDP. You will produce misleading insights, and you won’t be able to engage your customers effectively.

Here a few bad outcomes:

1. Poor segmentation

If you segment your customers based on incorrect information, you will send them irrelevant messaging and waste both their time and your marketing efforts. For example, targeting high-income individuals with budget product promotions due to inaccurate income data.

Your MDM helps with this by ensuring data accuracy. And it does so by cleansing and standardizing data from various sources. In the example above, it would verify income data against reliable sources.

2. Failed personalization

If you want to give customers personalized recommendations and offers, those will fall flat if they are based on incomplete, duplicated or outdated customer profiles.

Your MDM helps with this by creating a "golden record" for each customer, by consolidating data from all sources and resolving any inconsistencies. This means your CDP has a complete and up-to-date view of each customer.

3. Ineffective campaigns

Delivering the wrong message to the wrong audience leads to low engagement and poor conversion rates – not to mention you’re chasing your beloved customers away. And it all could be due to something as simple as sending a promotional email about a product a customer has already bought.

Your MDM helps with this by maintaining a single, accurate view of each customer. There will be no duplicate records, and your CDP has the correct information about customer interactions and purchase history.

4. Generally skewed customer insights

If you draw conclusions from flawed data, you will make poor decisions and ineffective strategies all around. Just imagine diagnosing the customer churn rate based on inaccurate data on customer interactions.

Your MDM helps with this by keeping your customer data accurate and consistent. Your CDP can then generate reliable insights into customer behavior, preferences and trends. In the end you will have more informed decision-making and more effective strategies for customer engagement and retention.

A quick look at what your MDM does

We have already alluded to it a little in previous sections, but for clarity let’s sum up what the MDM system does to create that reliable data foundation you need for your CDP to do its magic.

Essentially, we’re talking about three key processes:

Data cleansing

Your MDM can find and fix errors and inconsistencies in your data. For example, it can:

• correct typos, misspellings, abbreviations, nicknames, joint names
• parsing and standardizing formats (dates, addresses, etc.)
• validate information against trusted sources

Data matching

Identity resolution (finding duplicate customer records) even when customer records exhibit some differences is a critical capability and a role particularly well suited to MDM. Using configurable ‘fuzzy matching’ rules, machine learning name and address knowledge bases and granular survivorship rules, MDM enables the identification of matching (duplicate) customer records across (and within) disparate data sets, even when records do not appear immediately to be the same. Duplicate customer data and lack of standardization are the largest challenges we continue to see.

Data enrichment

To enhance the value of your customer data even more, your MDM can pull in relevant information from external sources. This can be:

• address, email and phone validation
• demographic data and segmentation data
• Loyalty rewards
• Or even aggregated sales data, spend or other insights from CDP

...and lots of other valuable insights that make you understand your customers even better.

Through these processes, MDM creates a "golden record" for each customer. It gives you (and your CDP) a single, trustworthy and comprehensive source of customer information. Data you can have confidence in. Trustworthy data.

If you have seen the chaos that can be customer data, you can probably appreciate the difference between feeding your CDP clean, organized and enriched data, and “normal”, chaotic data.

How Stibo Systems MDM Platform enhances every CDP

While the synergy between MDM and CDP is clear, not all MDM solutions are created equal. So let us give you a quick, to-the-point summary of our own powerful MDM platform, designed to elevate your CDP initiatives and get the absolute most out of your customer data.

Let’s break it down for you:

Unmatched data quality

The Stibo Systems MDM really excels at cleansing, matching and enriching data – the key elements in enhancing your CDP. That’s how you lay the foundation for best-in-class segmentation, personalization and campaigns.

Easy to integrate

Seamlessly integrate our MDM with leading CDP platforms, quickly creating a smooth flow of data flow of data between the two systems. Immediately eliminate the data silos and get that unified view of your customers.

Scalable and flexible

Use an MDM that can adapt as your business evolves.

Handles multiple domains

Stibo Systems MDM goes beyond customer data. With our multidomain capabilities, you can manage product, supplier, location, and other critical data domains – all in one place.

The synergies you will see are spectacular: A comprehensive view of your business that even further enhances the value of your CDP insights.

Expertise spanning many industries

Having been at the forefront of MDM for decades, we have experience working with businesses across various industries, including retail, manufacturing and finance. This industry-specific knowledge means our MDM solution is tailored to your unique needs and challenges.

Summary

Customer MDM and CDP serve different purposes but complement each other rather than compete directly in the realm of customer experience.

Customer MDM (Master Data Management)

• Focus: Ensuring data accuracy, consistency, and integrity across the organization.
• Key Strengths: Providing a single, reliable source of customer data; crucial for operational efficiency and compliance.
• Contribution to Customer Experience: With clean and accurate data, MDM helps streamline processes, avoid duplicate records, and ensure consistent customer interactions.

CDP (Customer Data Platform)

• Focus: Collecting, unifying, and activating customer data for personalized marketing and real-time engagement.
• Key Strengths: Creating detailed, actionable customer profiles; enabling tailored marketing campaigns and personalized interactions.
• Contribution to Customer Experience: Enhances customer engagement through targeted, relevant communication and a deeper understanding of customer behavior.

Complementary Role

• MDM supports CDP: By providing a reliable foundation of accurate customer data, MDM ensures that the customer profiles generated by CDP are based on clean and consistent information.
• CDP enhances MDM: By continuously feeding rich behavioral and interaction data back into the system, CDP helps keep customer insights up-to-date and actionable.

While MDM focuses on data quality and governance, CDP excels in leveraging that data for real-time personalization and engagement.

Together, they provide a robust framework for delivering outstanding customer experiences.