Welcome to episode 2 of Martech Mastery on CDP Benefits. This is a video series from ActionIQ’s Head of Martech Strategy James Meyers. As a former analyst for one of the world’s most respected technology research and advisory firms, James wants to help you make great technology decisions and look like an expert in the process. Check out episode 1: CDP 101.
This episode of Martech Mastery is about the benefits of customer data platforms (CDP) and the risks of forgoing this technology. Watch the video below:
What CDP Benefits Can Organizations Expect?
Different teams require CDPs because of common pain points associated with their roles and responsibilities. These include:
Due to siloed and disjointed data, as well as a lack of technical expertise, teams focused on customer experience struggle with understanding their customers, segmenting different audiences and activating experiences for them. These teams need technology that provides a 360-degree view of all customers and a business-friendly user interface to access and take action on customer insights.
Endless requests from other teams — often concerning audience segmentation — and fragmented customer identities prevent data analytics teams from being able to build accurate predictive models. These teams need technology that empowers business users to self-serve customer insights and provides analytics professionals with powerful identity resolution tools.
As with analytics teams, IT teams struggle with constant requests from other areas of the organization. These are typically related to customer data management. Along with challenges related to a lack of integrations with other tools, the results of these requests are ever-growing operational costs and insufficient bandwidth for tackling high-impact projects. These teams need technology that enables business users to access customer data on their own and gives IT professionals prebuilt, vendor-managed integrations.
Vendor lock-in — which usually comes hand in hand with rising license fees — and inefficient technology stacks force executives to contend with growing technology costs and an inability to achieve business goals. These teams need technology with a plug-and-play architecture that allows them to explore low-cost, best-of-breed alternatives and is built around the “hub and spoke” marketing technology model recommended by leading research and advisory firms.
What Are the Risks of Not Implementing a CDP?
As James points out in the above video, organizations that do not invest in a CDP must rely on multiple teams — including marketing, operations, analytics and IT — to build and launch campaigns. By contrast, in organizations that have implemented a CDP, analytics and IT teams are free to work on other high-impact projects while the lift for marketing and operations teams is significantly reduced.
Organizations that forgo using a CDP face challenges related to:
- Delays: Business teams must wait days or weeks for technical support.
- Disjointed customer experiences: CX teams are unable to effectively orchestrate cross-channel experiences.
- Business inefficiency: Analytics professionals spend the majority of their time aggregating and cleansing customer data.
- Cross-functional rifts: IT is blamed for business stagnation.
- Subpar customer service: Service professionals remain unaware of customers’ past interactions and frustrations.
- Competitive risk: Organizations become less customer-centric than their competitors.
What is the ROI of a CDP?
According to a Forrester Total Economic Impact™ report commissioned by ActionIQ, organizations that don’t invest in a CDP miss out on many business benefits. The 522% return on investment of a CDP includes:
Revenue growth is driven by:
- 80% increase in conversion rates
- 20% increase in average purchase value
- 7% increase in return on advertising spend
Cost decreases are driven by:
- $1.6 million in cost savings due to sunsetting legacy technology and services
Efficiency gains are driven by:
- 40% improvement in data analyst efficiency
- 25% improvement in marketer efficiency
Stay tuned for episode 3 of Martech Mastery, when James will dive into the differences between CDPs and MDMs.