It’s likely that, over the past few years, you’ve heard the hype around Customer Data Platforms (CDPs). It’s also likely that by now you have a basic understanding of a CDP and its capabilities. (If not, here’s the definition set forth by the Customer Data Platform Institute.)
It’s also possible that you’re skeptical about this new technology. Sure, it sounds like it would be exciting to take out for a spin, but how can it drive revenue? The last thing you want is to invest in a fancy new toy that has zero value for your business.
Because it’s still an emerging technology there’s not a ton of data out there, but according to research from Gartner, a 10 to 20 percent revenue lift is typical after implementing a CDP.
Why am I so excited about CDPs? It’s because we’re so passionate about memberships, and CDPs and memberships are a match made in heaven. If you have a membership program or are launching one soon, you’re going to have a clear path to ROI from a CDP investment.
Below, we’ll take a look at the ways you can use a CDP to understand your customer better and leverage that in-depth knowledge to drive revenue, whether you have a membership program or not.
Successfully Launch New Products
The main benefit to CDP implementation is that it better allows you to understand each customer on an individual level. From there, you’re able to create highly specific segmented groups. This means that you can target specific subsets of your customer base with the messaging and offers that they’re most likely to respond to. Because you have a big picture understanding of their behavior, you can infer quite a bit about their needs and thereby create products that are tailored to their wants.
The first step here is to identify your whales and learn more about their behavior. These are your most enthusiastic customers, so you’ll want to understand how they interact with your brand. Find the channels they prefer, the email campaigns they most respond to, and the on-site offers they engage with, and lean into that. Was there an online course series that they attended in high numbers? Create an in-person event that tackles a similar subject in greater depth. Did they sign up for premium membership after a specific email blast? Take a look back and see what you said in that campaign. Then replicate that approach with other customers who have the potential to become whales.
CDPs also provide you the opportunity to hone in on your value proposition. Once you understand what it is about your business that gets your whales really excited, you can fine tune your messaging around that. Create a clear call to action that articulates what it is that you do, and keep an eye on the data coming from the CDP to see how users are reacting to the way you present that value proposition.
Find New Prospects More Efficiently
One of the key advantages of a CDP over older data collection tools, like client relationship management or data management platforms, is that the information you collect is highly personalized to each user and owned by your marketing team. CDP data is first party data. This means your marketers have full access to detailed information about current users, and they can put that information to work in addressing specific prospects.
When you understand your current customers, you can plan your advertising approach to seek out similar prospects. The big players in online advertising, like Google and Facebook, allow you to target certain users with your ads based on attributes like their age, location, interests, and behaviors.
If you have really granular data on your current users, you can direct your ad spend at similar segments of the population. They’re the demographic that are most likely to be interested in your business. Facebook allows you to create “lookalike” audiences to target with your advertising, based on the attributes of your most profitable and engaged customers, and this approach can be applied across advertising channels.
Convert More Prospects
Which channels are most effective in reaching your current user base? Which call to action on your website resulted in the most conversions? What marketing tactics have moved your users from your basic digital subscription to products higher up your pyramid, like online learning and events? How do prospects move across your channels?
When you understand this kind of information, you can use it to tailor your approach to converting prospects. All of this information can help you to formulate the content of your marketing campaigns and the associated user journeys. Once the campaigns are up and running, you can track performance across various channels and apply your own attribution rules.
You’ll be able to see which channel is the most effective at reaching new users and driving conversions. You can gauge if a particular campaign you’ve run has been especially successful. Information like this allows you to redirect your time and money wisely to invest in the platforms and concepts attracting the most new business.
Tradesy, an online marketplace for pre-owned clothing and handbags, put this approach to good use. They noticed that they were getting more high-value conversions through their native mobile app than on their mobile website. Armed with this valuable information, they opted to add a bar to the top of their website encouraging all visitors to download their mobile app.
Spend Time and Budgets More Effectively
Just as valuable as finding prospects and nurturing customers is knowing where you shouldn’t spend your time and energy. Some people will never convert, and some customers will never move beyond the basic subscription model. Having detailed information on these users’ attributes and behaviors will allow you to avoid focusing your efforts on similar people in the future, who are unlikely to generate any real revenue for your business.
As CDPs gather more information on your user base, they can provide information about the likelihood of a given individual to engage, buy, churn, and convert. They can also supply insight into a customer’s lifetime value. That makes you better equipped to understand if they’re a potential whale or just a regular old fish.
Enhance the Customer Experience (and Improve Retention)
Once you’ve acquired a new customer, your job is far from over. You need to continue to prove your own value to move that customer up your product pyramid and convert the average user into a brand-loyal whale.
Because CDPs allow you to see your customer’s interaction with your brand across all channels, you’re better equipped to personalize their experience with your company. For example, say a customer recently logged a ticket with your call center. When you have that information, you can send an email to follow up on their issue. Or, maybe you learn that a customer recently liked your Facebook post about an upcoming event you’re hosting. You can then reach out to them with a discount code to register for the event.
People like to feel recognized and taken care of by a business. Having all the information on your customer’s behavior gathered in one place lets you provide personalized service that makes you stand out from your competition.
Meet New, Higher Expectations
According to a survey from Wantedness.com, 87 percent of all users in the U.S. compare every brand interaction to the treatment they receive from the best and biggest brands around, like Netflix, Starbucks, and Amazon. This means that they won’t tolerate general messaging, misunderstandings regarding how they’ve interacted with your brand on a mobile device when they’re searching for you on a desktop, or content that is repetitive or not tailored to their individual needs.
The information you gather through a CDP allows you to personalize each user’s experience with your business. You can present landing pages with different content to different users based on their traits or prior brand interaction. You can also send highly segmented emails to customers based on subscription status (basic versus premium, active versus lapsed) or send targeted offers to those who have exhibited specific behavior.
Because CDPs take a holistic approach to data collection, you can integrate information that you’re collecting online and use it to get in touch with customers through other channels, such as text messages or push notifications via your mobile app, or vice versa.
Move Your Customers Up the Pyramid
So, you’ve identified your potential whales and have hooked them with a compelling value proposition. Now it’s your job to move them up to the top of your product pyramid. You can do this by analyzing the data on your current product offerings at each level of the pyramid.
Maybe you’ve noticed there’s a specific level of your pyramid where customers drop off. Go back and see what you can learn about those users. If they’re interacting with your company through your mobile app, but you’re targeting them with pop-up offers on your website, they might not even be seeing this messaging. You want to meet your customers where they are in order to ensure the highest possible success rate for yourself.
The sheer amount of data collected across analytics platforms would be overwhelming for a human to analyze on their own. CDPs empower marketers to gather the data in one place and easily understand information about their users.
This wealth of data helps marketers find new customers and enhance their relationships with existing ones. Having this information at their fingertips means marketers can be smart about where they spend their time and money. From there, they can generate the greatest revenue with little wasted effort.
About the Author
Rob Ristagno, Founder and CEO of Sterling Woods, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. He started his career as a consultant at McKinsey. Ristagno holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob is the author of A Member is Worth a Thousand Visitors: A Proven Method for Making More Money Online. He regularly speaks at key media conferences, including at Niche Media events, Specialized Information Publishers Association meetings, and the Business Information and Media Summit.