What is a Customer Data Hub? (And Why Do You Need One)

Geoffrey Keating on June 9th 2021

Modern businesses run on customer data. Executives use it to make decisions, marketers to personalize campaigns, product managers to iterate features, and support agents to deliver outstanding service.

Regrettably, the information used across the organization is often outdated, incomplete, or even incorrect. Departments collect the same information in different formats. Crucial data is siloed because it’s accessible to just one team or can only be used with the help of engineers.

A customer data hub can solve these and other challenges so that your entire company leverages its customer data to the maximum extent possible. We’ll explain how in these steps:

  • What is a customer data hub?

  • Benefits of a customer data hub

  • Five features to look for in a customer data hub

  • Elevate your customer data analytics with Segment

  • Three companies that improved data management with Segment

  • FAQs on customer data hubs

What is a customer data hub?

A customer data hub—also called a Customer Data Platform (CDP)—is the primary collection point for all your customer information. It sits at the center of your data ecosystem and connects to all the channels, platforms, and products your customers use. It collects data from each of these channels, then lets you organize and act on that data, often in real time.

Say you want your customer support agents to proactively offer both solutions and a special offer to customers who reach out while browsing your website. A customer data hub would collect information from that customer’s journey across devices, sessions, and pages. The customer data hub then stores this data in a single customer profile and makes it available in real time to your agents through a tool like Twilio. They can use this data during their conversation, for example, by proposing a special offer based on the products your customer has been looking at or previous orders they’ve placed.

Because it sits at the center of your data ecosystem, your hub also plays an essential role in data governance. It ensures data is standardized across the organization and compliant with privacy regulations.

Benefits of a customer data hub

Your customer data hub brings all your customer information together in one place, thereby ensuring it’s accessible for the entire organization and always up to date, guaranteeing your data quality. Without such a hub, your customer data might become siloed or duplicated, and non-technical teams need to rely on engineers to access or work with customer data.

They create a single, accurate view of each customer

Your data hub captures your customer’s actions when they use your products or services and can do this on any touch point, channel, or platform. It then attributes every interaction to the right customer and synthesizes this information.

Segment does this through Personas, real-time customer profiles that become a single source of truth for all your teams, like product, marketing, and support.

Teams can access and connect their tools and processes to these profiles to visualize the customer journey, generate reports, or create advertising campaigns.

They increase marketing ROI and sales through personalization

The rapid evolution of customer data hubs finally makes true personalization possible. You can capture actual customer behavior in real time instead of relying on outdated or unidentifiable information, sometimes from third-party sources. This data allows you to refine your customer profiles, segment them, and then ingest their data into personalized ads, funnels, campaigns, and offers. This, in turn, leads to higher conversion and ROI.

For example, say I’m looking at some shoes online, put them in my cart, but leave without making a purchase. A CDP can make sense of these events, assign me to a pre-defined audience of “cart abandoners,” and activate a downstream marketing tool like a customer relationship management (CRM) to send out an email. Within minutes, I receive a special offer for those shoes in my inbox. That’s a personalized customer relationship based on both understanding and action.

They enhance customer privacy and regulatory compliance

A customer data hub allows you to manage and audit the Personal Identifiable Information (PII) you capture. This is crucial for checking if your data is compliant with privacy regulations like the General Data Protection Regulation (GDPR) in Europe and California Consumer Privacy Act (CCPA) in California. It’s also necessary for fielding customer requests about how your company uses their personal information.

Advanced customer data hubs like Segment allow you to automate much of the work related to privacy compliance. You can enforce data standards across the organization through tracking plans and block data you’re not allowed to capture at the source using Segment’s Privacy Portal.

They boost operational efficiency with fewer engineers

Your customer data hub ensures you capture data in a consistent format across the organization. This standardization means every team can connect tools to the customer data they require without first needing engineers to prepare the data. Such improvements enable innovation because they allow all departments to move faster based on reliable data.

For example, your marketing team can independently configure a new tool that helps them optimize the acquisition funnel without bothering engineers or data analysts.

Segment Protocols lets you create a global, standardized tracking plan for your organization, ensuring you collect data across channels, platforms, and tools in a consistent format. Such standardization is essential to quickly deliver trusted data to all business units, like marketing, sales, success, analytics, and product.

Having all your data in Segment also makes it easier to answer critical business questions by generating and sharing sales, operational, and other metrics quickly across the entire organization.

Five features to look for in a customer data hub

With budgets for customer data hubs increasing rapidly at many companies and 34% of large firms planning to buy one by 2022, it’s essential to understand the five features to look for when evaluating different options.

Pre-built and custom connectors

Pre-built and custom connectors allow your data hub to capture information from as many data sources as possible to build a complete view of your customer. For a quick implementation process, a customer data hub should offer hundreds of pre-built connectors—out-of-the-box integrations with third-party tools—and plug-and-play tracking scripts to track customer actions on owned properties like your website.

At the same time, the ability to configure custom connectors by building Application Programming Interfaces (APIs) is critical, too. You’ll never find a customer data hub that can connect to every tool or platform in existence, so you need a way to build custom connectors as well.

Segment offers hundreds of integrations with apps like Braze, Google Analytics, and Amplitude. You can also easily create your custom connections using Functions.

Identity resolution and visitor stitching

Identity resolution can tell you which users are which as your customers visit different channels using a variety of devices. A customer data hub that offers identity resolutions figures out that device ID 2733 is an existing customer, or that website visitor A is the same person as app user B.

Since most companies lack proper data infrastructure, customers often don’t get recognized across channels. Or, relevant data exists somewhere in the company, but most teams can’t access it to build a complete picture of each customer. This situation leads to outdated or even incorrect business reports, irrelevant marketing initiatives, and support agents who annoy customers by being ignorant of previous interactions.

Segment solves this by stitching together raw customer data from across all your channels into single customer profiles accessible for the entire organization.

Audience segmentation capabilities

With your customer data synthesized in profiles, you want the ability to segment them into audiences based on specific attributes or events. This segmentation allows you to target your customers with tailored content, messages, and offers. You can do this with Segment Personas.

For example, you can create an audience of people who have abandoned their cart—put an item in their shopping basket but left without making a purchase. Then you can define an action that triggers automatically for anyone who gets added to that audience, like sending them an email with a special offer for the item they left in their cart.

Ability to act on data in real time

A customer data hub should enable you to instantly launch events and campaigns based on changes in your customer information. Suppose there is a delay in synchronizing your data. In that case, whatever action or communication you launch based on that data might be outdated by the time it reaches your customer, harming the relationship.

Acting in real time is not just about the processing speed of the infrastructure. It also stems from your teams’ ability to connect their tools and processes to customer data without requiring help from engineers.

Segment Destinations lets teams connect customer data to their favorite tools in real time. This enables them to always work with the latest information, and customers only get to see relevant content, messages, and offers.

Setup and implementation speed

When it takes months to set up your customer data hub, that’s a long period during which you miss out on the potential upside of your customer data.

Segment Professional Services (SPS) offers Jumpstarts, fast consultancy engagements that get you set up within weeks instead of months. Some customers like Staples Canada even report seeing data flowing the day after signing their contract with Segment.

Three companies that improved data management with Segment

Here are three companies that used Segment as their customer data hub to improve and optimize their businesses.

By implementing Segment at the center of its technology stack, Stylepit, a digital fashion retailer, can easily and quickly execute new initiatives, nearly doubling its marketing tool set in less than a year. Segment’s comprehensive catalog of integrations has also unlocked experiments with new systems and projects.

Martin Brummerstedt, Data Scientist & Digital Project Manager at Stylepit, says: “Before, business users had to go through IT for every new initiative. With Segment, we’ve been able to move a lot quicker across technical and business teams because Segment makes data easily available to all users.”

Stylepit propelled its growth strategy and advertising performance by using Segment. In less than a year, a first-party, no-cookie customer data strategy resulted in:

  • 1.7x increase in Return On Advertising Spend (ROAS)

  • Faster time-to-value from a collaboration between data science and marketing

  • Doubled marketing stack and activation

  • Optimized email spend while remaining compliant

Instacart uses data to improve the grocery delivery experience

Instacart is an online grocery delivery platform that works with more than 350 retail partners. It delivers from more than 25,000 stores across 5,500 cities in the U.S. and Canada.

Instacart uses Segment as a single source of truth for its customer data. It uses Segment Sources to collect data across applications—iOS, Android, web—and third-party cloud services—Zendesk, SendGrid, and Facebook Ads. Segment Destinations delivers the data to analytics and marketing tools, and Segment Warehouses loads the data into their data warehouse.

Fareed Mosavat, Senior Growth Product Manager at Instacart, says: “Segment for us is the beginning point for all of our event data and our behavioral data. It’s the tool to get the data everywhere it needs to go and then back to our warehouse so we can analyze it to keep improving our business.”

ClearScore replaced a home-grown platform with Segment's customer data platform

Since launching in 2015, ClearScore, an online credit scoring service, has provided over 6 million people with a free report on their credit score. As it expanded into more markets, it wanted to segregate data and give each country manager the ability to adopt the tools they needed for local data analysis. Segment made this possible by creating separate workspaces and flexible integration with their marketing and analytics tools.

Bruce Wood, Data Principal at ClearScore, highlights, “We didn't really have real-time data available until Segment. We used to have to wait 24 hours to be able to get our hands on the data and analyze it. Segment surfaces any issues in the customer experience that might hurt monetization and has allowed us to make better business decisions faster.”

The benefits for ClearScore from its Segment implementation:

  • 3x cost savings by using Segment’s platform instead of building a solution in-house

  • 25% of engineering resources preserved for building and innovating the ClearScore product by avoiding required maintenance of their own data system

  • Companywide insights delivered in real time. Real-time access to customer data for all teams across the company, including marketing, product, and analytics

FAQs on customer data hubs

These are the four most common questions users have about customer data hubs.

1. What does a data hub do?

A customer data hub—often called a CDP (Customer Data Platform)—is the central collection point for all your customer information. It connects to all the channels, platforms, and products your customers use and lets you organize and act on that data, often in real time. It simplifies collecting data and hooking up new tools, allowing you to spend more time using your data and less time trying to manage it.

2. What are the main types of customer data?

There are four categories of customer data, and Segment captures all of them:

  • Identity data lets you identify an individual customer, for example, by their name, email address, or phone number

  • Descriptive data helps you get to know your customers better, like their profession, hobbies, or marital status

  • Behavioral data comes from interactions your customer has with your products and services. For example, a button they click on your website, purchases they’ve made, or features they use within your product

  • Qualitative data usually gets collected through surveys. It gives you an understanding of how your customers feel, for example, by rating your product or answering questions about the customer support experience

3. How does Segment’s CDP work?

Segment captures data in all locations where your customers are active, like your app or website. It does this through a piece of Segment code you place on your site or by connecting to existing third-party services, such as Google Analytics.

Segment synthesizes all the information you collect, then cleans and organizes it according to the standards you set. All departments can connect their favorite tools and services to work with this customer information, often in real time.

4. Are CDPs hard to set up?

It’s easy to set up Segment as your CDP. You only need to add a short piece of Segment code to your website, app, or server. With that done, you can start capturing and collecting data from your favorite marketing, product, and analytics tools. In most cases, you won’t even need to touch your tracking code to connect new tools.

Elevate your customer data analytics with Segment

With Segment as your customer data hub, you’ll end siloed and disorganized data at your company. Every team will quickly see results from your customer data analytics efforts. You can expect:

  • An expanded, single view of each customer, accessible across the organization for every team and tool

  • Increased sales and marketing ROI through relevant and timely personalization of customer interactions

  • Enhanced customer privacy and regulatory compliance, delivered mainly through automated classification and standardization of your customer data

  • Improved operational efficiency provided with fewer engineers, as teams can independently connect their favorite tools and access up-to-date customer data

With your data clean, organized, and standardized in a customer data hub, you can understand your customers, map their journey across touch points, and make better business decisions.

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