In our lives as consultants, we have sadly witnessed various horror stories of companies justifying to senior management on investment in Customer Data Platforms. Even after banging the drum constantly, the business case gets rejected predominantly because the senior leadership sees it as a cost centre rather than an investment centre. Does this sound familiar?
In some cases, the business case has failed to clearly articulate the commercial and customer benefits and outcomes CDP can drive, while in others the organisation was just not mature enough for a CDP. So, in order for organisations to self-select whether they need a CDP, we have put together a checklist for who does and doesn’t need a CDP.
Who needs a CDP?
- Personalisation is high on the agenda – For companies where personalisation, hyper personalisation and personalisation at scale are key to their success, CDP is an absolute must. In such scenarios, CDP sits as at the centre of delivering highly personalised content recommendations, marketing campaigns, product enhancements, pricing based recommendations and enhancing overall customer engagement and loyalty.
E-commerce organisations such as Amazon and Etsy are an ideal case in point. In these cases, CDP can store and track customer interactions, preferences, purchase history, and tailor product recommendations, personalise communication, and optimise the shopping experience, which translates into increased sales and customer loyalty. These companies will not be able to operate without a CDP.
- Omni-channel and consistency of customer experience differentiates you - For organisations where customer experience and the consistency of their experience across multiple channels is key, CDP enables you to maintain this uniform profile across all channels including website, app, e-mail, social media or any other platform.
A good example of this scenario is travel companies or house builders where customers hop from mobile to desktop to social media. The consistency of recommendation and experience is crucial to convert these customers on what could be a long lead time.
- Dynamic content and recommendations are key to success - For organisations where real-time and velocity of data is important, where recommendations are due to be given in real time or where customer needs are changing swiftly and the market landscape is dynamic. Subscription-based service like Netflix is an ideal case. CDP allows Netflix to analyse viewer behaviour and preferences, creating custom content recommendations in real-time.
- Your business is moving from digital maturity 1.0 to 2.0 – You are a digitally semi-mature business looking to scale up and have already reaped the benefits of segmentation, localised personalisation and have limited knowledge of your customers. Now you are trying to move from segmentation to one-to-one personalisation and single to multi-channel personalisation in order to gain a more rounded view of your customers
In the above scenarios, the CDP is like the DJ of your party, seamlessly mixing customer data tracks to create a hit single.
Who does not need a CDP?
- Lack of variety in data - CDP is very dependent on the variety of data and if an organisation is limited in the variety and types of data it collects e.g. few data sources, then a CDP is not required. A basic system which captures and unifies data is more appropriate.
- Lack of volume of data – In the same vein as above, if an organisation has good variety of data but does not have lots of it, much simpler solutions of data unification exists.
- Limited online presence - Operations where a business has got a limited online presence and their customer base and market dynamics are relatively static and less complex, then basic CRM and marketing automation platforms are more suited to this sort of market.
- Data and digital maturity – If an organisation is at a low level of data and digital maturity and is only starting to understand concepts of segmentation, data unification, personalisation, customer experience, a CDP investment might be too premature.
- Investment capability / affordability - CDP requires significant investment in terms of technology cost, people cost and also in terms of the integration efforts. So, if the commercial and financial state of the business does not stack up, CDP investment will not be viable yet.
- Operationally immature - If your business is not operationally ready to use the sophisticated personalisation that CDP can generate, investment at this level of immaturity will be wasted. Businesses will become like the fishing club which decided to tryout a CDP, and is now generating individualised fishing strategies for each member, complete with sonar-equipped fishing rods – when all they really wanted was a nice day by the lake!
Speed Read – Get a CDP if:
- Personalisation is high on your agenda
- You are a very customer centric business and giving customers clever recommendations and experiences is key to your success
- You operate across multiple platforms and want the customer experience to be consistent across those channels
- You tick the above boxes and have the maturity, budgets and resources (internal or external)
- You are confident that your team are mature enough to ensure the recommendations and outputs from CDP can be operationalised
Don’t get a CDP if:
- If you don’t have volume and variety of data
- If customer experience and personalisation are not key differentiators for your business
- You can’t handle it operationally
- If you are a small and don’t have budgets
- You are start of your personalisation journey with segmentation and large group based personalisation rather than one-to-one personalisation
In a nutshell, organisations looking to provide personalised recommendations, targeted marketing, seamless and consistent customer experience across multiple channels and where the business model is highly customer-centric is the ideal case for CDP (this is where CDP is an investment centre).