Who's your CDP customer?

In the last four years, many vendors and I have been positioning CDPs to the usual suspects: CIO, CMO, Heads of e-commerce,... It turns out we were wrong

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March 7, 2023

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Who's your CDP customer? (This article is as valuable for CDP vendors as it is for CDP buyers)

I had a fascinating conversation today about who is your customer at your customer. Actually, in the last four years, many vendors and I have been positioning CDPs to the usual suspects: CIO, CMO, Heads of e-commerce,... You name it. But...thinking about those projects that had the most impact and were most inspiring? There the prime sponsor was actually the CFO...

And - all of a sudden - that makes sense...

How can CMOs and CDP vendors Sell a Customer Data Platform to the CFOs?

As a Chief Marketing Officer, you know that a Customer Data Platform (CDP) can provide valuable insights into customer behaviour and preferences. Connecting your CDP with paid media platforms gives you direct traction and results. The first use cases in the MVP phase are mostly aimed at this. And they deliver an ROI in 90% of other cases within six months.

But...that's not where the gold is. There is still something wrong with that...it still narrows down Marketing as a cost centre.

Even if you scale up your story and focus on optimising customer lifetime value, this is still a world's difference with the language the CFO speaks. On average, one Euro decrease in cost equals 5 to 8 Euro in revenue.

How can you persuade your Chief Financial Officer of its worth? What are the practical benefits of a CDP that sounds like music in their ears and that makes Marketing no longer be considered a cost centre but part of bottom-line growth?

Here are just some actual use cases taken from real-life deployments:

  • Bridging the sponsorship gap: your brand sponsors a major league sports club or a Cycling World tour team. How do you quantify the ROI of that investment? With some CDP you can set up 1st party cookie sharing, shared anonymised audiences, and sometimes even track based on geolocation - contextualising the influence of your sponsorship to that club - and adding this event to your attribution model.
  • Optimizing Inventory: A CDP offers deep insights into customer behaviour and can help optimize inventory levels. By analyzing customer data, a CDP can predict demand accurately based on also behaviour, enabling businesses to maintain the right amount of stock and avoid both understocking (which can lead to lost sales) and overstocking (which can result in increased holding costs). For example, if you're a retailer selling a popular product, a CDP can help you anticipate the demand for that product based on historical sales data, social media trends, and customer preferences. Armed with these insights, you can make informed decisions about inventory management, positively impacting your bottom line.
  • Enhancing Stock Rotation: with a CDP, you can improve stock rotation and reduce the costs associated with slow-moving items. By analyzing sales data and customer preferences, a CDP can identify slow-moving items and suggest targeted promotions to move them off the shelves. This frees up valuable storage space, helps prevent product obsolescence, and reduces the need for markdowns.
  • CDP insights can help you identify cross-selling and upselling opportunities by understanding which products customers are most likely to purchase together. This information allows you to create more effective marketing campaigns and increase the average order value, leading to a healthier cash flow.
  • Distributed marketing: by partnering up with your dealers - if you have a channel-enabled business - and jointly do marketing in the region of let's say, their physical store; you can start distributing the costs for these advertising budgets and cascade them down your distribution network without losing control of the chain.

Additional CDP Benefits. Here are a few more CDP benefits that your CFO will appreciate - based on more common language:

  • Enhanced Customer Lifetime Value: By providing a 360-degree view of customer interactions, a CDP enables you to create highly personalized marketing campaigns that foster loyalty and increase customer lifetime value.
  • Improved Marketing ROI: CDPs can help you identify your most valuable customers, allowing you to allocate your marketing budget more effectively and improve ROI.
  • Compliance and Security: A CDP can assist in maintaining compliance with data privacy regulations and ensuring the security of your customer data.

Understanding the practical benefits of a CDP, including inventory optimization and stock rotation improvement, will help you present a compelling case to your CFO. By focusing on the concrete advantages that a CDP can bring to your organization, you'll be better positioned to secure buy-in for this investment and take longer term adoption to the next level beyond mere 'omnichannel personalisation' or 'facing the end of 3rd party cookies'.

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