Personalized customer interactions and communications do more than deliver engaging and profitable customer experiences. They also allow marketers to optimize campaign performance and omnichannel marketing, which reduces the costs of customer interactions. In fact, marketers who use personalization can reduce their acquisition costs by as much as 50 percent and can increase the efficiency of their marketing spend by 10 to 30 percent, according to Harvard Business Review.
A customer data platform (CDP) is the engine that can help you decrease costs through fined-tuning operations based on deeper customer understanding. As a result, you’ll be able to drive growth by monetizing your customer data and save money by improving operational effectiveness and efficiency. The insights and actions you can drive from a CDP will help you to:
• Lower customer fatigue, churn, and service costs,
• Shift your channel mix to lower-cost channels,
• Reduce the number of customer interactions required to drive results, and
• Improve marketing, IT, and data science resource utilization.
CDPs support these outcomes by creating a single source of true information for each customer. A CDP ingests customer data from all sources across an organization in real time to create a holistic, always up-to-date golden record that supports effective and profitable data-driven marketing activities such as personalization.
Simply put, using a CDP to get a clearer understanding of customers’ channel and interaction preferences enables you to personalize the customer experience and, as a result, reduce the number of customer interactions required to drive results. Further, by using a CDP to access cross-channel data at the customer level, you can vastly improve attribution and channel mix. By assigning truer values to your marketing activities, you’ll be able to better assess channel performance and then shift activities and budget to the most effective and cost-effective channels.
Additionally, by using a CDP for data-driven marketing techniques such as advanced matching and householding it’s possible to achieve outsized results even within specific channels. These techniques, for example, can put an end to over-mailing, which, in turn, reduces physical direct mail budgets by 20 percent on average.
Optimizing marketing can help reduce costs in other ways. For instance, using a CDP to support progressive profiling and dynamic customer journeys provides a better customer experience by allowing you to respond to customers in their moment of truth, no matter where they are. As a result, customers are more likely to convert. The ability to be wherever customers are as they consider a purchase is not only prudent, it’s essential. According to McKinsey & Company, 50 percent of customer interactions today happen during a multichannel, multi-event journey.
A CDP also reduces operational costs by creating privacy-compliant persistent customer records that are accessible throughout the enterprise, and available in real-time when needed. CDP’s provide a single point of control over data, empowering both applications and users to access it from across the organization to ensure the best customer experience, which improves efficiency. IT, data science and marketing resources are then able to spend their time creating powerful analytic models and customer experiences rather than struggling with inconsistent, inaccurate and inaccessible data. A CDP should also provide a single point of control over its data to achieve the best ROI. This allows you to leverage your existing IT investments without having to rip & replace systems that are in place today, another cost-saving operational benefit for the organization.
Overall, using a CDP to support personalized marketing can lead to double-digital savings. According to McKinsey, data-driven personalization generates a marketing-budget saving of 30 percent.
One company seeing operational improvements and related savings through personalized marketing is Xanterra Parks & Resorts. The company consolidated dozens of sources of customer data from across its properties and systems, including transactional and management systems each with unique characteristic and complexities. Xanterra used that integrated data to create rich 360-profiles for nearly all of its customers and prospects. Using those profiles, Xanterra’s marketing team was able to identify key customer segments, craft detailed personas and journey maps for each, and use them to deliver personalized communications at scale — throughout the entire customer lifecycle. The company reduced its marketing costs by an astounding 40 percent through personalization and now sees percentage improvements in marketing performance that routinely reach three figures.
Even when you consider the direct costs of implementing and running a CDP — software license, professional services and training, infrastructure, and support, maintenance, and data enhancement — you still clearly see a return on investment from the revenue growth and cost reductions you’ll gain by using one.
Industry leaders are capitalizing on this opportunity. Currently, 22.4 percent of executives polled by systems integrator Dimension Data for its “Global Customer Experience Benchmarking Report” say customer experience is a top strategic indicator of operational performance. Those companies and others like them have an advantage because they understand the cost-savings potential of CX and the data-driven marketing that underpins it.
Plus, increasing personalization across channels to deliver that stellar customer experience not only reduces operational costs, it also drives revenue — a potential 500 percent overall boost in consumer spending when marketers take an omnichannel approach, according to The eTailing Group and MyBuys. The research also found that 40 percent of consumers buy more from companies that personalize their experience across channels.
Investing in a CDP not only reduces costs by improving operational effectiveness and efficiency, it also drives additional revenue. The result is a double dose of profitable marketing practices.
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There are four primary ways marketers and martech professionals can use a CDP to drive immediate and long-term business value. One is operational effectiveness and efficiency. The others are:
• Innovation – Increased market value through breakthrough innovations
• Revenue lift – Increased revenue through improved customer experience
• Risk avoidance – Decreased risk through a holistic view of data
You can read more about innovation in “Increase Market Value Through Customer-Led Innovation” and about revenue lift in “Increase Revenue Through Improved Customer Experiences.”