CDPs provide insightful and effective solutions for reducing unnecessary costs, increasing revenue, improving the customer experience, and driving customer-centric innovation. When deciding whether to make the investment, it’s important to understand what to expect and how to measure the value and efficacy post-implementation. To help you in your decision, here are the 4 main ways a CDP can positively impact your business.
CDPs combine, cleanse, standardise, and enrich your data into a holistic single customer view. Described as “marketing’s holy grail,” CDPs improve the customer experience by giving every team the ability to self-serve insights and drive proactive, personalised engagement across channels.
As with any software investment, CDPs offer a wide variety of valuable use-cases, as well as some risks. The only way to effectively estimate the impact of a CDP is to articulate your own needs, goals, and motivations; carefully evaluate each vendor; consider customer testimonials and case studies; ask smart questions of salespeople; and assess its value for every team and business function.
In this playbook, we’ll discuss the highest impact areas for CDPs, including:
- Customer-centric transformation and agility.
- Revenue growth and increased customer lifetime value.
- Cost savings, operational efficiencies, and reduction of manual effort.
- Frictionless and personalised customer experiences.
We’ll also provide some key metrics and suggestions for measuring each.
Before we start—a note on ROI
The ROI of a CDP depends on a number of factors, including the marketing creative you use, your appetite to test and optimise campaigns, your business’s culture, your media budget and spend, your current business activities, your team’s overall analytics maturity and level of technical know-how, and more.
In general, the most effective CDP implementations—that is, those with the highest return—are accompanied by a customer-centric culture, an eagerness to test and learn, and an adaptable team ready to get their hands dirty with the new software.
Impact, therefore, is about more than ROI. There are a number of other hard and soft outcomes for leadership, teams, and customers that need to be considered as well. In reviewing each of the following impact areas, think about the unique circumstances regarding your business and how the strategic and practical value of each will bubble up into a tangible revenue lift.
Transformative outcomes for leadership
Customer-led innovation and cultural change: Empowering your employees with self-serve access to customer data is a powerful catalyst for cultural change and innovation. With all of your data connected, enriched, and standardised in one, easy-to-use platform, you can see a clear and holistic picture of who your customers actually are—not stereotypes or gut instincts about who you believe them to be—and establish customer-centric product and marketing strategies that drive unprecedented results.
Accelerated decision-making and agility: Waiting on insights and reports from an IT team can take weeks, and by the time it’s ready, it may be out of date. A CDP democratises access to customer data across teams and business functions and allows even non-data scientists to test, interrogate, manipulate, and draw meaningful conclusions from that data. When users are empowered to make data-driven decisions that support customer-centric outcomes in fewer and faster steps, your business can respond more quickly and effectively to change.
Improved employee satisfaction and engagement: Even the most talented and motivated employees will become frustrated when disparate and inaccurate data prevents them from excelling in their day-to-day responsibilities. When you empower your employees with the freedom and capability to make data-driven decisions, you create a highly engaged workforce. Additionally, an increased focus on customer-centricity aligns the entire organisation around a shared vision and mission: Genuinely understanding and engaging customers with the experiences they deserve.
Transformative outcomes for teams
Cross-functional collaboration made easy: In many businesses, customer-facing teams are still working in silos: different data systems, different processes, different cultures, and different customer knowledge. These silos lead to misalignment in channel-based strategies and ultimately, less-than-satisfactory customer experiences. A CDP allows all teams to come together over a shared understanding of the customer and develop insight-driven strategies that provide consistent and personalised experiences across every channel.
Increased autonomy and frequency of test-and-learn cycles: With the ability to self-serve insights within your team, you can increase the speed and frequency with which you segment audiences, orchestrate customer journeys, activate omnichannel campaigns, proactively serve and engage customers, and track omnichannel performance. All allowing you to make confident decisions that drive better results. Additionally, a CDP that can auto-update audience segments across channels can continuously optimise your campaigns without creating extra work for your team.
Demonstrate a positive impact to the executive team: Every employee wants to make the value of their activities more visible to the executive team. A CDP with straightforward tools for sophisticated reporting gives you the ability to easily exhibit your performance, make the case for budget increases when needed, and champion new initiatives with holistic data to support your ideas.
Upskilling and professional development: To maximise the impact of your CDP, users need to be both data-literate and data-driven, with an openness to innovation, and the domain knowledge and expertise required to build effective campaigns in response to customer insights. By partnering with a CDP vendor that offers training, education, and strategic guidance beyond the initial implementation, you’ll have the chance to develop your technical and analytical skills with some of the best minds in the industry.
KPIs to measure the impact of customer-led transformation
KPIs and metrics for measuring transformation include:
- Year-over-year revenue growth
- Loyalty program engagement and growth
- Employee satisfaction scores
- Employee turnover rates
- # of new initiatives
- ROI of customer-centric initiatives
- Employee feedback
- NPS or CSAT scores
Because innovation and transformation can be difficult to quantify, it’s important to collect qualitative performance data as well. Employee surveys, customer surveys, and other “soft” types of feedback can provide important insight into the effectiveness of your transformation initiatives and the overall impact of the CDP on your business.
Our 3-pronged framework for measuring change can help you understand the impact of transformation initiatives on sales and revenue growth. Click here to learn more.
Revenue-based outcomes for leadership
Growth in customer lifetime value: Retaining, upselling, and cross-selling your current customer base is the quickest path toward revenue growth. A CDP gives you the ability to measure, predict, and grow the value customers provide your business over their lifetimes, turning one-time buyers into two-time buyers and repeat buyers into long-term brand evangelists. Happy customers tell their friends, fuelling further revenue growth in the future.
Improved customer experiences reinforce brand equity: As the saying goes, “the customer’s perception is your reality.” By using a CDP to improve the consistency, relevancy, and convenience of every customer experience, you enhance the customer’s perception of your business and ultimately strengthen your brand. Strong brands attract loyal, high-value customers, and in turn, those customers provide feedback that can guide the next steps in your growth.
Renewed focus on revenue-based KPIs: When your teams are scrambling to draw actionable insights from disparate data, manually uploading audiences and activating campaigns, and struggling to make sense of the customer experience across siloed channels, they’re less focused on optimising their marketing strategy and revenue growth. A CDP improves process efficiencies, streamlines cross-functional collaboration, and simplifies bottom-line reporting, freeing up your employees’ time and effort to focus on generating sales.
Revenue-based outcomes for teams
High-quality prospecting: Growing your email database with quality prospects for future marketing is a critical step toward building profitable relationships with customers—but the keyword here is “quality.” By understanding who your highest-value customers are, how they shop, and which messages and creative resonate most with them, you can tailor your prospecting efforts to focus on those with the potential of becoming highly engaged and valuable customers. A CDP allows you to orchestrate contextualised prospecting campaigns and welcome journeys to introduce qualified prospects to your brand and boost the likelihood of future conversions.
Supercharged customer acquisition: Likewise, customer acquisition is a key component of any revenue generation strategy. With advanced audience segmentation, omnichannel targeting, automated campaign activations, and continuous monitoring and reporting of performance, a CDP simplifies the process of setting up acquisition campaigns while strengthening the results of those campaigns. In other words, CDP-powered acquisition has a positive impact on revenue while reducing manual effort for marketing teams.
Re-engagement and upsells: Too often, brands ignore lapsed customers who have opted-out of marketing emails when there’s still the potential for re-engagement and upsells via other channels. With unified data, you can identify customers who’ve opted-out or disengaged from email and target them through alternative channels instead. Additionally, you can automate campaigns to re-engage customers before it’s too late. These automated, omnichannel re-engagement campaigns can lead to material growth in customer lifetime value and overall revenue.
Proactive, personalised service: Traditionally, in-store sales associates haven’t had access to customer data, which is a huge missed opportunity for tailoring service to the individual, boosting order sizes, streamlining conversions, and growing revenue. A CDP with clienteling capabilities gives in-store associates access to complete customer histories and recommendations for next best purchases, enabling associates to provide exceptional service that drives sales.
KPIs to measure the impact on revenue
KPIs and metrics for measuring the impact on revenue growth include:
- Year-over-year revenue growth
- Customer lifetime value
- Return-on-ad spend
- Average order value
- Conversion rate
- Email list growth
- Customer retention
Of the KPIs on this list, customer lifetime value is the most important metric for a customer-centric business. CLV is a measure of a customer’s actual or predicted value to your business, and it can be used to track the health of a broad range of business areas, from how well you know your customers to product development. Click here for expert tips on how to measure, predict, and grow customer lifetime value.
3. Cost Savings
Cost-saving outcomes for leadership
Increased operational efficiencies: As the all-in-one hub for insight-driven marketing, sales, and customer service, a CDP drives significant operational efficiencies across the business. IT and Analytics teams can spend less time on low-value list queries and more time on sophisticated analytics; marketers can self-serve insights, automate common customer journeys, and shift their focus from menial tasks to more strategic priorities; and customer service team members can quickly and efficiently verify customer identities, respond to tickets, and collect feedback for continuous improvement. The time, effort, and budget saved from these efficiencies can be redirected to higher priority activities to drive value and innovation.
No need for outsourcing: Most CDPs are designed to be marketer-friendly, enabling self-served insights and omnichannel campaign orchestration without the help of a sophisticated technical resource. Because these tasks are simplified and automated for business users, a CDP reduces the need for outsourced work by agencies or freelancers. This elimination of outsourced work can save thousands in costs for the business without overtaxing capacity-limited teams.
Minimised software vendors and tech point solutions: Cleansed, standardised, de-duplicated data transformed into a single customer view within a CDP means that every team has access to the most complete and up-to-date customer information. When every team is given access to the same tool, the same dataset, and the same breadth and depth of functionality, you don’t have to invest in multiple tools for multiple teams. This saves costs, frees time from training teams and managing vendors, and ultimately unites your business around the customer, facilitating personalised and efficiently-executed customer experiences at every touchpoint.
Cost-saving outcomes for teams
Self-served insights reduce time-to-value: Traditionally, discovering customer insights is a manual and time-consuming process or is reliant on an IT resource or external analyst. A CDP gives marketers the ability to quickly and easily draw customer insights, develop data-driven personas and personalised campaigns, and activate those campaigns across channels without waiting on help from the IT team. This increases the frequency of test-learn-optimisation cycles, improving both the impact of campaigns and the speed with which those campaigns can be executed.
Reduced waste and maximised budget: Using a CDP, you can perform advanced audience segmentation and suppression to reduce wasteful ad spend and maximise your budget. High-value audiences are targeted for personalised campaigns, while low-value or churned audiences are suppressed to avoid spending your budget on people who are unlikely to convert. This combination of saved costs and precise targeting leads to high-impact campaigns that drive growth.
Automation reduces manual effort: Manual, inefficient processes can cause substantial costs to rack up across the business. Automation, on the other hand, frees up team bandwidth for further innovation and development. With a CDP, you can automate a number of important, but menial tasks, including audience updates, customer journey triggers, cross-channel campaign activations, and more. This creates massive time savings and process efficiencies.
Opportunities to capture missing data: Collecting and accessing customer data from brick-and-mortar locations has always been a challenge—but this missing data is a significant loss that most businesses currently ignore. By implementing a CDP-powered retail solution, you can begin capturing the in-store data that’s currently lost, which will help improve interactions between customers and sales associates, enable more holistic customer insights, and extract more value out of every customer touchpoint. Additionally, a CDP with a built-in form feature like Lexer allows you to efficiently capture customer feedback and unify the responses with customer profiles, increasing the depth of your customer IQ and the effectiveness of your customer communications.
KPIs for measuring cost savings
KPIs and metrics for measuring cost savings include:
- Customer profitability
- Time it takes to launch campaigns
- Team effectiveness ratio
- Employee feedback
- Total IT spend on customer-focused software
Customer profitability is a measure of the total profit you earn from a particular customer, taking into account both the revenue earned and the costs associated with acquiring the customer and fulfilling their orders. Accurately calculating customer profitability can be difficult and time-consuming when done manually, but a CDP can help you keep track of this valuable metric with ease. Click here for more information on what customer profitability is and how to measure it.
4. Customer Experience
Experiential outcomes for the customer
Relevancy at every touchpoint: Today’s consumers expect relevant, informed, and frictionless experiences no matter where, how, or with whom they engage. By using a CDP to genuinely understand your customers, you can personalise your communications and streamline service—and these convenient and personally-relevant experiences are exactly what your customers deserve. Relevant, one-to-one interactions boost engagement and keep them coming back for more.
Proactive and personalised outreach: Using a CDP, you can identify high-value customers at critical moments in the customer journey and then send personalised messages to add value and special care at those moments. In-store sales associates can access customer histories and next best product recommendations to offer the best, most contextualised customer experience. Post-visit, the data captured through the in-store interaction can be used to tailor follow-up special offers and content for a more relevant and engaging omnichannel experience. Proactive and personalised strategies like these let the customer know that you understand them and you’re committed to making their lives better.
Streamlined service: When a customer contacts customer service, they do it with the expectation that whichever staff member responds to that request will be able to quickly identify who they are, what their purchase history looks like, and any relevant conversations they’ve had with other associates in the past. A CDP-powered customer service solution enables just that. Centralised data, efficient workflows, personalised recommendations, and advanced analytics tools ensure consistent, one-to-one service for any customer, through any associate.
KPIs for measuring customer experience
KPIs and metrics for measuring customer satisfaction and experience include:
- Customer lifetime value
- NPS scores and surveys
- Recency and repurchase rates
- Churn rate
- Customer reviews and testimonials
- Ticket volume
- Social engagement
- Email engagement
NPS surveys are one of the most common methods for tracking customer satisfaction, but its weakness is that it doesn’t tell you the reasons behind the scores. To get the most out of your NPS surveys, you have to augment them with additional questions that take a deeper dive into customer preferences, attitudes, and behaviours. Click here to learn more about the types of customer insights you can discover through CDP-powered NPS surveys.
Lexer ensures CDP outcomes with strategic guidance and support
The true value of a CDP investment comes not from the technology itself, but from the ways in which you use that technology to drive outcomes for business users, executives, and customers.
Without proper training on how to use the CDP, as well as the skills and experience necessary to draw accurate, actionable conclusions from your customer data, the impact of your investment will likely fall short. In fact, improper use and lack of expertise are some of the most common reasons that CDPs fail.
By choosing a CDP partner like Lexer, who provides strategic guidance and ongoing support, you’ll set clear goals and expectations prior to the implementation, receive strategic recommendations based on an initial review of your data, and continuously revisit and optimise your campaigns for optimal results.