Customer Data Platform (CDP) Success Measurement
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. [1]
To assess the business impact of a Customer Data Platform (CDP), organizations must measure the ROI on five levers –
1. Marketing Efficacy –
Organizations must evaluate how a customer data platform can contribute in marketing efficacy. The contribution can be broken down into three areas –
I. Speed — How quickly can the CDP leverage personalized customer data in comparison to manual methods of segmenting and connecting customer data
II. Orchestration — How does a CDP yield better results through orchestrating messaging across advertising and marketing channels
Organizations can measure campaign results across marketing funnel (e.g. Awareness — reach, frequency and impressions) and based on specified campaign objectives (e.g. Engagement — Clicks, CTRs, ORs, dwell time, etc.)
III. Full customer view — How does a CDP help organization unlock better opportunities by providing full customer view
2. Operational Efficiency –
Organizations must evaluate the operational efficiencies that a CDP delivers by focusing on the cost savings aspects. Following are the key dimensions –
I. Data Integration Efficiencies — How does a CDP with the right pre-build connectors help in data integration across MarTech systems and help in reducing set-up and maintenance costs
II. Marketing Ops Efficiencies — How does a CDP automate marketing workflow and help organizations in saving resources
III. Media Cost Avoidance — How does a CDP help in reducing the spending on paid media through better suppression list management and syncing
3. Risk Management –
In order to measure the success of a CDP, organizations must assess how it helps in risk mitigation. Following are the key dimensions -
I. Platform Risk — How can CDPs help in mitigating the risks of platform lock-in, data loss, and obsolescence by storing a copy of your data that you can “replay” to new vendors, or the same vendor, at any time
II. Payback Risk — How can CDPs reduce the payback period of marketing campaigns and technology investments and thus reduce risk by integrating various MarTech platforms
III. Compliance Risk — How can CDPs help offset compliance costs and risks by providing the right filters and controls to track and govern where the data is being sent as well as how it is being collected and stored
IV. Security Risk — How can CDPs ensure compliance with data privacy standards and offset the cost of a potentially catastrophic data breach and fines
4. Strategic Value –
Marketing efficiency and efficacy are important reasons for implementing a customer data platform. But these are tactical concerns, managed by a subset of the business under relatively short time horizons. Organizations must assess how CDPs can help them create economic moats by creating demand side barriers and supply side competitive advantages.
I. Demand Side Barriers — How can CDPs leverage customer data to create better, “stickier” relationships that lead to a sustained competitive advantage (and high-profit margins) in the long-term
II. Supply Side Competitive Advantage — How can CDPs power data-driven decision making, resulting in cost advantages that new entrants cannot easily replicate
5. Cost of Ownership –
The final lever of ROI measurement series is total cost of ownership. The costs can be broken down into three major areas -
I. Implementation and Subscription Costs
II. Maintenance and Data Enhancement Costs
III. Professional Services and Training Costs [2]
References –
[1] https://lexer.io/marketing/how-to-measure-the-impact-of-a-customer-data-platform-cdp/
[2] https://www.mparticle.com/blog/building-a-cdp-business-case
