Does a Customer Data Platform really deliver profits?

In recent years, the Customer Data Platform (CDP) has secured a strong position within the Martech Stack. The ability to build a 360-degree customer profile and deliver the right message through the right channel appeals to many companies. However, concerns have also arisen about demonstrating the ROI of a CDP. This, in our view, is not the fault of the CDP itself. As a SaaS solution, a CDP is heavily dependent on how it is implemented, and this is where companies often struggle. We frequently encounter the following issues:

• The data quality within the company is insufficient, leading to a poorly fed CDP.
• Organizations try to do too much at once, resulting in a lack of focus.
• Integration processes take too long, preventing the CDP from being fully utilized.
• Or there is a lack of the necessary internal expertise.

Let's take a step back. What is the actual value of a CDP, and how do you measure it? We use two key pillars for this:

1. Operational efficiency 

The first is ‘operational efficiency.’ This is often overlooked. While we tend to focus on the direct revenue a CDP generates, it’s equally important to consider the gains within the organization after implementing a CDP. It’s crucial to make these gains measurable so that the figures are truly meaningful. Consider the following examples:

• Faster time-to-market
• Reduction of manual tasks
• Less reliance on IT/technical resources
• Time savings through process and workflow coordination
• Improved flexibility and agility to respond to the market

2. Perfomance & revenue

With the second pillar, we focus on concrete metrics and revenues. It's important to first understand the current figures and then compare them to the results after implementing a CDP. This could include:

• Comparing the overall conversion rate before and after implementing a CDP
• Comparing the number of abandoned baskets before and after implementing a CDP
• Comparing the average order value before and after making recommendations through a CDP
• Measuring savings in advertising budget or more efficient use of this budget and achieving higher conversion rates

Work with KPIs

Establishing and measuring these objectives clarifies the value of a CDP. By working with SMART goals, you can take it a step further: achieving them faster and thereby enhancing the value of the CDP. It is essential that the full setup and deployment of the CDP are linked to at least one of these objectives. We use a KPI framework to make this clear. This framework allows you to compare selected projects or use cases with established KPIs, ensuring that the justification for a project or use case is derived from a KPI.

At GX, we help organizations unlock the full potential of their customer data with our diverse services and solutions that deliver tangible results. As an experienced Customer Data Platform (CDP) consultancy partner, we assist with the independent selection, implementation, and activation of various types of CDPs.