The ROI of a Customer Data Platform: How to measure it and how to maximize it

Jim Young on September 7th 2022

What is the most important ingredient for a successful customer experience program? 

According to hundreds of business leaders across the globe, the answer is good data. 

Unfortunately, many businesses lack the right technology to manage the ever-increasing volume and complexity of customer data.

To compound the issue, the threat of inflation and economic downturn have put more pressure on leaders to prioritize profitability, cost-savings, and efficiency.

In response, a number of firms are turning to customer data platforms to drive business impact by ensuring that all teams across their organizations can operate with access to clean, reliable data.

Because a customer data platform can deliver results for multiple different teams across the business, we are often asked: “What’s the exact ROI from investing in a CDP?”

To address this question, we conducted a survey with Aberdeen, the leading industry research firm, to investigate in precise terms the numerous benefits a CDP can have on your bottom line.

Let’s dive in.

ROI benchmarks to justify your customer data platform investment

One of the simplest ways to illustrate the cumulative ROI of a customer data platform is to measure the performance of businesses that are using a CDP against those that are not.  Across several KPI categories, businesses that use a CDP are knocking it out of the park.

Notably, 9.1x greater annual growth in customer satisfaction and 2.9x greater YoY revenue growth represent impressive returns on investment for customer-first businesses. 

It should then come as no surprise then, that in the next five years nearly half of business leaders surveyed will increase their CDP budgets by 25% on average. 

With customer data platforms in place, these companies are better able to connect and unify first-party data across channels, ensure that data is accurate, and personalize every customer interaction to each individual’s preferences.

The chart below illustrates just a few of the benefits a CDP can have on your bottom line.

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Source: Aberdeen

It is important to remember, however, that these benchmarks only represent the average impact of a CDP on business outcomes. Some businesses will achieve greater returns, some less. 

To help ensure maximum value on the ROI of your CDP, we've outlined three simple steps for you to follow.

How to maximize the ROI from your CDP investment

1) Use data to understand buyer behavior

The ability to seamlessly integrate data from all relevant sources is critical for businesses looking to build a comprehensive understanding of customer behavior. 

Put simply, a CDP helps standardize your data across the organization. This allows your customer-facing teams to better deliver relevant, personalized experiences by segmenting customers based on various criteria such as previous spend, loyalty, or demographics. 

In turn, you can uncover trends and correlations influencing customer behavior that would be otherwise hidden to non–CDP-users.  

Standardized data can also help your business reduce churn by identifying common elements in the journey of lost customers, and drive revenue by targeting high-profit clients or those with the best product fit. 

SpotHero, a popular parking reservation service, is a great example of a company using Segment to standardize their customer data and drive conversions by unlocking insights into user purchase behavior. 

Zoom with margin

So you have already established a single view of the customer — now what? 

2) Use data to hyper-personalize customer interactions

The next step is going beyond integrating data across enterprise systems and toward activating customer insights to provide hyper-personalized experiences. 

The research shows that companies using a CDP are better equipped to deliver consistent messages to their customers through multiple channels (89% vs. 82%). In addition to consistency, you can use real-time insights to tailor the content and timing of your interactions to the unique needs of each buyer. 

This capability can substantially improve customer satisfaction, retention, and LTV.  In fact, our third-annual State of Personalization report shows that nearly half (49%) of consumers said they would become repeat buyers after a personalized experience with a brand.

Put simply, using first-party data to personalize your customer interactions will result in a direct impact on your bottom line. 

For companies looking to maximize the ROI of a CDP, personalization is the name of the game. 

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3) Use data to continuously improve marketing performance

The last insight we can apply from Aberdeen’s research involves the impact of good data on employee performance.

Consistent, reliable data drives better performance by providing business leaders a frame of reference to evaluate employee activity and determine areas of inefficiency or training needs.  

Although a CDP can empower every team across the organization, the most impactful benefits are often enjoyed by the marketing department. More specifically, the ability to accurately map each step of your customer’s journey or target the most profitable customers can vastly improve the ROI of your marketing campaigns. 

Segment is a powerful toolkit for orchestrating the customer journey that allows marketers using our customer data platform to: 

  • Build custom audiences 

  • Sync those audiences to advertising, email, a/b testing, chat, and other tools in real-time

  • Get a single view of the customer across all digital properties and touch points

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As economic uncertainty looms ahead, there is a window of opportunity for businesses to realize an outsized return on investment by harnessing the power of customer data.

Yet the fact remains that 40% of enterprise leaders struggle with the challenge of getting accurate data for their customer experience efforts. Poor data quality, fragmented customer insights, and outdated technology each present considerable obstacles for non–digitally-native firms. 

Fortunately, the adoption of a customer data platform can help businesses overcome these challenges by improving the ability to harness and activate customer data. 

On this point, the research is clear — CDP investments are paying dividends. Companies with a CDP are outperforming non-users in annual revenue growth, customer satisfaction, and employee engagement, among other KPIs. 

However, the implementation of new technology is not enough. It’s essential to follow best practices as well. 

Using good data to understand buyer behavior, improve marketing performance, and deliver hyper-personalized customer interactions are three steps you can take today to ensure you are getting the maximum ROI from your CDP investment. 

The State of Personalization 2022

Our annual look at how attitudes, preferences, and experiences with personalization have evolved over the past year.

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