3 reasons why your company needs a Customer Data Platform to keep growing
Yuri Kaminski
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Let's face reality, there's literally only one element responsible for a company's existence and success. The client. As Sam Walton once said,
"There is only one boss: THE CLIENT. And he can fire everyone in the company. From the employee to the Chief Executive, simply by taking his money somewhere else”
And, truth must be told: The majority of the companies have been neglecting the only reason for their existence, their clients. I'm not saying that the majority of the companies don't care about their clients, but definitely, they are leaving money on the table by not exploring the full value of their customers.
Except for signature businesses, whose key to growth is maximizing retention, most companies only think about growing their client base, while the real gold is hidden in unleashing the current clients' potential value.
Exponential growth can be translated into good English to:
The larger you are, the faster you grow.
How can you grow faster by only relying on new customer sources and not making your customer loyal to you and, even better, ambassadors to your brand?
That's where a CDP or Customer Data Platform comes to the scene. A well-structured CDP allows you to easily identify patterns and, even more important, design and customized buying journeys depending on your clients' behavior.
This is the first of a series of articles from my newsletter Data4Growth, covering Growth Analytics: The field of the growth science in the intersection of data, growth, and decision science that we have been "forced" to create due to the lack of good, deep content on it. I hope you enjoy!
1. Digital marketing won't get any cheaper
This absolute focus on digital customer acquisition has a good reason to be. When online advertising showed to be more cost-effective than offline, all the big advertisers started switching their budgets to this new (cheap) source of clients. But by 2020, the world's digital marketing ad spend equaled offline budgets (1).
The pandemics accelerated the process, and well... it's not cheap anymore. The golden ages of digital marketing are getting to an end. I explain to you why. Digital media platforms are, above all, auction platforms. Guess what happens when you have much more bidders bidding at higher tickets? Yes, prices get higher. As simple as that.
Besides that, we have the oligopoly of Google, Facebook and Amazon, which together concentrated 64% of the US digital ad spending in 2021 (2).
But marketing unitary costs are not rising only due to the auction system and tech giants oligopoly, but also...
2. Finding your customer online will get even harder in the cookieless world.
The cookieless world is nearer than never. And it will hit hard companies and marketers who are not prepared for it. As every contemporary change in technology, security and privacy are accelerating to become top priorities for users in a couple of years. Apple would not make this ad ?? if privacy had no value for its users.
More privacy turns marketing more challenging for us marketers but more interesting too. The truth is if you don't create and nurture your own audience and start developing more advanced segmentations than you have today, your Customer Acquisition Costs in the cookieless world will be prohibitive.
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Even with our advanced tools, most of our segmentations are still based on pure demographics: "Women, 30-45 years old, living in Kentucky..."
Guys, c'mon, we are not the Mad Men in the 60s anymore! We can do better than that.
A Customer Data Platform will help you find the most interesting clusters of your current clients, based on behavior (the most powerful segmentation method). Find the most engaged clients in your platform, those with the highest Lifetime Value, and not only that: It will allow you to make experiments to move customers from a lower value cluster to a higher value cluster, making your marketing ROI skyrocket.
3. Your sales teams will become more effective.
In sales as in comedy, timing is EVERYTHING.
With the real-time behavioral tracking available in CDPs, your sales team can know exactly when your prospects are engaging with your digital assets, and not only that, which kind of content they are consuming.
Let's suppose a lead has downloaded a top-of-the-funnel e-book a month ago, and now is watching a middle-of-the-funnel workshop about application cases of your solution. That may be the right timing to your sales team to reinforce the contact showing availability to answer further questions about it try to schedule a demo.
Not only your conversion rates will increase, but your sales team will become more efficient by acting exactly where they need to and giving time to clients who are still in the discovery process. Cool huh?
Now that you have this information, doing nothing is not an option
Although it looks like the kind of project restricted to big companies with tons of servers and dozens of people in the data team, you'll be surprised about the requirements to start a CDP.
In practical terms, if your company generates more than 1,000 leads per month and/or invests more than USD20k/month in advertising, start building a CDP now can generate 3x to 10x ROI in the next 2 years both by lowering your Customer Acquisition Cost (especially after third-party cookies banishment from the internet) and by increasing Customer Lifetime Value. And investments can start as low as USD4,5k/month comprising all costs: Platform, data lake, consulting, and implementation!
A CDP is the best way to create a real strategic advantage over your competitors and prepare your company to survive the cookieless world that's officially starting in 2023.
At Saga Solutions, we are experts in growth analytics that help you design the ideal roadmap for your CDP in a way that maximizes the value captured by meeting your current and future needs and prioritizing the most impactful features.
Do you want to deepen your understanding on this matter? There are three ways:
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