How to Choose the Right CDP

One of the key challenges for large businesses is managing massive amounts of customer data. The frequency of orders, consumer reactions to marketing activities — all this information not only needs to be stored but also analyzed to understand the current business situation, build effective processes, and create a development strategy.

To address these challenges, there is the Customer Data Platform (CDP) — a tool for collecting, unifying, segmenting, and activating customer data. Companies with a large customer base actively use CDP to increase their efficiency, as it opens up vast opportunities for personalized communications, improves marketing campaign metrics, and enhances result analysis. Moreover, the average payback period for implementing a CDP in organizations is only about eight months.

In this article, we discuss the five main steps necessary to choose the right CDP based on your business needs. We also share a list of questions you should ask CDP vendors when selecting a customer data platform for your business.

Identifying Stakeholders

Let's consider which teams should be involved in the CDP selection process from the very beginning.

• Marketing Team: Typically, they are the initiators of implementation and the most active users of the CDP. This tool helps them analyze customer behavior and launch marketing campaigns based on that data.
• Sales and Support Departments: They also work with customer data but store it in separate systems like CRMs and customer support platforms. The absence of a unified system complicates finding solutions for effectively handling inquiries, cross-selling, and increasing the average order value.
• Data Analysts: They work with information to find insights into customer experiences. For them, a CDP is an essential tool.
• IT Infrastructure Specialists: Responsible for the business's IT infrastructure, they formulate technical requirements, create integration plans with channels and other data sources, and can help define security requirements.

It's crucial to involve representatives from different teams at the initial stage since this will determine the selection criteria for the future tool.

To make the CDP selection process effective, appoint someone to coordinate the CDP implementation. Depending on the scale of your business, this could be a representative from the marketing team (usually the CMO) or a dedicated Project Manager.

Defining Goals Based on Use Cases

To choose a CDP that will help with your tasks, you need to determine what exactly you plan to achieve. One of the key functions of a customer data platform is data unification. But the purpose and type of data you plan to unify will influence which system you need.

Let's consider the most common use cases for CDPs.

What Businesses Use CDPs For

Improving Business Efficiency

Data from CRMs, websites, apps, and offline points of sale are often stored in different systems. This fragmentation hinders a clear view of your customers' journey and timely responses to their behavior.

By unifying these data into a single system, you can build a 360-degree customer profile and track their purchase journey and behavioral activity. This automated process increases efficiency and reduces the risk of manual errors.

Combining data into a single system simplifies the search for insights to improve customer experience and develop growth strategies.

Process Automation and Performance Analysis

A Customer Data Platform allows you to see a holistic picture of your marketing efforts, automate communications, and assess the effectiveness of various channels. The system generates detailed reports that help your team analyze campaigns and determine the next steps.

Increasing Revenue

The personalization provided by a CDP enables more effective user interactions, increasing the number of conversions.

With data from a CDP, you can create personalized workflows triggered by specific user actions or inactions — from abandoned browsing to product restocking notifications. For example, in the Yespo CDP, you can set up the most common triggers for ecommerce.

Another effective tool that increases customer satisfaction and boosts business revenue is personalized product recommendations. These are generated by AI algorithms and Data Science, which continually train the system to offer more relevant suggestions.

Segmentation based on audience behavior is a highly effective way to utilize a CDP. It enables more targeted campaigns, optimizes costs, and drives more efficient customer engagement and retention.

Cost Optimization

If you have various channels for interacting with clients — website, app, email, messaging apps, and so on — a customer data platform enables you to assess the performance of each one. It also allows you to build effective multi-step interaction workflows, optimizing marketing costs and contributing to the efficient achievement of business goals.

Formulating an RFP

The next step is formulating a Request for Proposal (RFP). While understanding which data you plan to collect and why is essential, it's not the only consideration when choosing a CDP.

Key requirements to include when formulating your RFP are:

• Ability to Track Customer Behavior: The platform should track behavioral data, and customer journeys, and build recommendations and forecasts based on this information.
• Reporting Functionality: It's important to segment data by various criteria and display it in a convenient format for analyzing efficiency, identifying patterns, and making strategic decisions.
• Ease of Use: The tool should be user-friendly and not require much time to retrieve any data or reports.
• Return on Investment (ROI): Ensure that the results from implementing the CDP will exceed your costs.
• Integration Capabilities: Since one of a CDP's tasks is data unification, understand with which third-party systems it can integrate.
• Industry Experience: Look for platforms with successful collaborations in your niche to increase the likelihood of a solution that meets your industry's specific needs.
• Data Security: With data from various systems collected in one place, it's crucial to ensure information security and minimize the risk of data breaches.
• Use of AI and ML: Modern CDPs should incorporate Artificial Intelligence and Machine Learning to automate processes and improve business results.

Searching and Analyzing CDP Providers

Once you've formed a vision for your future CDP, it's time to explore market offerings.

Conduct an independent search of CDP vendors. Resources like the CDP Institute, G2, and Capterra can be invaluable. When analyzing providers, carefully review customer feedback and the technological features of different CDPs.

It may also be helpful to consult with industry peers or marketing agencies to find out if they use CDPs and which ones. Ask about their experiences with vendors, implementation nuances, and any unforeseen challenges they faced during the initial stages.

Determine the functionalities that are crucial for your business when selecting a CDP. We've prepared a list of questions you can ask potential vendors to ensure their product meets your expectations.

Consider the agility of the platforms you're evaluating. Technologies evolve rapidly, so it's important that your chosen tool can adapt to market challenges and remain flexible in both settings and development. Pay attention to how frequently the product is updated, available integrations, and how well the capabilities of different CDPs align with current market trends.

Choosing a CDP Solution and Aligning with All Stakeholders

At this stage, it's important to involve all C-level stakeholders. Presenting several proposals that best meet your requirements can be a clear and convenient approach.

To make a balanced and effective decision, discuss the specific tasks that the proposed CDPs solve. Focus on the solution that best meets the requirements and expectations of all parties.

• For the CEO: Emphasize how the CDP helps achieve the company's strategic goals, both in the short and long term. Highlight why the platform meets current needs and future objectives.
• For the CMO: They aim to better understand customers — their behavior, motivation, and purchase journey. Show how the CDP enables data-driven decision-making and becomes an essential tool for shaping marketing strategies. Emphasize capabilities for improved personalization, segmentation, and more precise targeting.
• For the CCO: Interested in high-quality leads generated by marketing, they also focus on the buyer's journey and opportunities to increase average order value and cross-sales. Explain how implementing a CDP will help achieve sales targets more quickly and effectively, increasing profits.
• For the CTO: Concentrate on the long-term impact of the CDP on the company's IT infrastructure. Discuss how the platform ensures data privacy and security and reduces the IT department's workload through process automation.
• For the CFO: Beyond the cost of the new tool, they're interested in how its implementation will affect the business's financial performance. Highlight how the tool will optimize marketing expenses, increase sales, and accelerate the achievement of business goals.

It's important to consider the interests of all stakeholders. If, for example, the chosen system significantly strengthens marketing but the sales department or support team doesn't see its value, obtaining approval for implementation may be challenging.

Aligning expectations and securing buy-in from C-level executives will ensure the successful implementation of an effective CDP.

To Summarize

The purpose of a Customer Data Platform is to collect, unify, and activate customer data. It helps businesses increase efficiency and manage the customer experience.

Choosing the right customer data platform depends on your business's specific characteristics and requirements. Involving all stakeholders, aligning expectations, and considering both the current situation and strategic development plans are crucial.

Omnichannel CDP Yespo is a modern solution for ecommerce and retail businesses, as well as online services aiming to interact effectively with their audience. Book a consultation to discover how our solutions can elevate your business to the next level.

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