How can you measure the ROI of a customer data platform?

A high-quality customer data platform allows professionals to connect and leverage data efficiently to achieve continuously updated views of customers and their behaviors. As digital adoption continues to increase, improving data quality has vaulted up the priority lists for business leaders, weighing up the right technology to measure the increased complexity and volume of customer data accurately. With a quality CDP, business leaders can ensure all departments across their respective organizations can count on reliable data to make informed decisions. 

Considering that 73% of companies value CDP as a critical aspect of their customer experience efforts, customer data platforms are vital because CDPs allow marketers to keep pace with fast-moving customers consistently. CDPs establish the right communication cadence for different customer types and subsequently present such communications with high levels of context. Measuring the return on investment (ROI) of a CDP can be done from various wavelengths to help marketers understand how much value their platforms generate. 

The ROI benchmark you should prioritize 

For added motivation to make the most out of your CDP investment, all you need to do is look at the statistics comparing businesses that have such a customer data platform compared to those that operate without one. 

Statistics show that businesses with a CDP platform in place realize more than nine times the yearly growth that businesses without one have. Additionally, businesses with a customer data platform achieve nearly three times more year-on-year revenue growth than businesses without one, showing how integral CDPs are to customer-first brand development. 

With the potential for strong returns, marketers can successfully unify and connect first-party data across multiple channels, adding preciseness to the data while increasing personalization, which customers are increasingly demanding. 

Using data to read buyer behavior accurately 

Seamlessly integrating data from many relevant sources allows retailers, CPG, media buyers, and other professionals to develop a detailed understanding of how consumer behavior works. A good CDP standardizes data across the business, ensuring customer-facing teams deliver personalized experiences through customer segmentation. The segmentation is based on previous spending, demographics or customer loyalty. 

With standardized data at your disposal, your business reduces churn by highlighting common elements for lost customers during customer journeys, driving revenues by targeting the most profitable clients. Also, the data allows you to uncover trends influencing customer behavior that businesses without a CDP can’t access. 

Measuring using outcomes

Outcome-lead measurements for CDP ROI define the broad areas of business impact and subsequently break down the impact into specific measurables. 

Data outcomes reflect changes to data following CDP deployment, including opt-out rates, customer engagement rates, and customer database growth or capture rates. 

Alternatively, there are marketing outcomes that business leaders and marketers should consider, whether the primary CDP output will be from personalized/programmatic campaigns or loyalty programs. There are acquisition, conversion, and engagement-based use cases used for outcome measurements. The acquisition-based use cases typically measure new leads and customers. The conversion-based use cases highlight the average order value, repeat buys, and the abandonment of shopping carts. Meanwhile, engagement or retention-based use cases measure customer lifetime value as well as engagement scores and retention costs. 

Then, compliance outcomes focus on data compliance and security with a CDP solution. And, there are efficiency outcomes that measure whether it’s faster or easier to manage big data points and push them into functional applications like marketing, exploring the seamlessness of integration. 

Use case measurement

Use cases also help marketers and brand leaders successfully define CDP metrics. 

With data-led applications, marketers can leverage data integration to create single views of each customer, with the key metric being the recognition ratio. The higher the ratio is, the better the understanding is of the prospective customer and audience as a whole. Marketers can successfully measure any operational efficiencies attained by a single customer view that they can control, view, and activate without needing help from analytics or IT departments. 

Alternatively, marketing-led applications have the principal objective of boosting marketing performance. To do this, first-party data is activated within marketing programs, with performance metrics covering efficiency parameters such as:

• Acquisition efficiency and conversion volumes among key target audiences
• Retention Costs
• Renewal rates

Lytics is a customer data platform that ensures you provide the hyper-personalization that your customers demand, relying on data-driven insights to help you improve your business performance. Craft highly personalized experiences with our Decision Engine and rev up your customer data management so we can help you grow your business organically.