Businesses have more opportunities than ever to engage customers. But many are struggling to identify and action the digital signals from those customers. They have the right data, but it’s all in back-end silos.
A customer data platform (CDP) can help you to remove the barriers to effective customer engagement. It enables you to unify all your disconnected marketing data, so you can create clean, combined, customer profiles. This smart profile data is then made available to all your other platforms.
How to choose the right platform – Luxid’s three-stage process
It’s not difficult to see why so many B2B businesses are opting for a CDP. But once you’ve made this decision, how do you select the platform that’s right for you? How do you manage the purchasing process? And do you know how best to integrate the technology into your organisation?
At Luxid, we have a three-stage process that helps you to make all the right decisions on your journey to CDP success.
The first stage is ‘evaluation’, where we assess all the available CDPs against your business needs. Stage two is the ‘investment proposal’, where we build the base case. We ensure you have the necessary budget, the required management support and can proceed with the RFP process. Finally, we move to ‘implementation’ – the platform, integrations and set-up of all the agreed use cases. User training is essential in this phase.
Stage 1: Evaluation – Aligning CDPs with your business needs
Identifying key use cases
At the outset of the process, we focus on your specific business needs. There are many different use cases for a CDP, all with nuances that will impact the requirements and features of the platform. To help you focus, these are the top use cases that we commonly see at Luxid:
- Customer retention
- Customer acquisition
- Privacy & regulatory compliance
- Personalisation at scale
- Loyalty programmes
Comparing CDPs and architectures
Once we’re clear on your needs and priorities, we start to assess these against the many CDPs that are on the market. We estimate there are now more than 150 different platforms that describe themselves as CDPs, so it’s important that you make like-for-like platform comparisons.
To help with this process, we assess and shortlist CDPs both in terms of their functions and their architecture. When assessing by architecture, there are three broad categories we use. Firstly, there are ‘composable’ CDPs. You might decide that you need several different functions and capabilities – composable enables you to bring together several different platforms to achieve this. Next, we have ‘integrated’ CDPs, where you will have one platform and one user interface that integrates with all your different data sources and your activation channels. Finally, there are the ‘suite’ CDPs. These are from the likes of Salesforce, Oracle, Microsoft and Adobe, and integrate into their other platforms, forming part of a bigger tech offering.
Using Luxid’s scoring system for objective assessment
To help our clients navigate their way through all the different CDPs, we have developed a scoring system that assesses platforms according to 15 different criteria. This score is weighted according to the features that best support your use cases. Price and quality are also factored into the final scoring.
Stage 2: Investment proposal – Building the business case
Quantifying added value with metrics
Having worked successfully with many clients in this area, we’ve identified some critical learnings for effective CDP assessment. We cluster these into three buckets: process, platform and team.
From a process perspective, a request for information (RFI) is a vital way to ensure that you get the right features and capabilities in your platform. But don’t blindly trust the responses – dig deep to ensure that your use cases are being properly met by the CDP’s features.
From the platform side, make sure you know your data challenges in real detail – just how well will your shortlisted CDPs integrate with your activation platforms, and what tweaks can you make with those integrations when both importing, exporting and transforming data?
And from a team perspective, make sure you understand the skills and training implications that a CDP will have on your operating model. Partner resources are valuable here.
Once we’ve worked through all of this, we can confidently build the business case. This always starts with the use cases and the added value that you expect the CDP bring to bear. Here you need to use business metrics to assess the added value, such as: customer lifetime value, annual/monthly recurring revenue per customer, average order value, and cost-per-lead/opportunity.
Again, there are many different use cases you can assess, so be focused. We advise working with four broad, practical use case categories: operative efficiency, media spend efficiency, increased output and license synergies.
Budgeting for first year and ongoing costs
You will need to think carefully about the required investment to include in the business case. For the first year, there are several key areas to include: annual CDP license, CDP onboarding project with implementation partner, annual CDP operative external consultancy cost, and – in some cases – the increased data warehouse costs.
For the following years, you should consider the rate increases that come with growing platform utilisation, development projects such as the feature and capability builds, and you should also look at the cost-of-total-ownership of your tech stack.
And finally, when it comes to pricing, there are three specific models. First, there is the data and operations volume-based – here you must know how many data events you will have your CDP, which can be tricky to evaluate. A little easier to manage is the second approach: profile-volume based. This is calculated according to the volume of the identified and anonymous profiles you will be managing with the platform. The third model is focused on the license costs of your functions and capabilities. In practice, there is rarely just one model at play, so Luxid can help you navigate this based on actual volumes and individual circumstances.
Stage 3: Implementation – Setting up for success
Finally, we move to ‘implementation’ – including platform integration and set-up of all agreed use cases. User training is essential in this phase to ensure smooth adoption and operational efficiency.
Why partner with Luxid for your CDP journey?
There can be quite a lot of complexity involved in selecting the right platform and managing the business case and purchasing process. Luckily, Luxid has considerable experience here. We can help you at every stage of the journey and our expertise covers everything you will need for CDP success: tool selection & strategy, technology set-up, marketing & data ops, and analytics & machine learning. Talk with an expert at Luxid about your CDP needs and unlock the marketing potential of your customer data.
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