So, You Need a CDP Now?
Written by Gary Marcotte – Senior Vice President – Customer Engagement Innovation
Everywhere you turn, you read an article or hear a presentation that concludes that every dealer needs a Customer Data Platform or CDP. You read announcements and articles that this large dealer group or this OEM has selected a CDP. Vendors in the dealer ecosystem are rushing to integrate this or that data with this or that CDP. Confused? You should be. Concerned? You should be concerned also. What CDP is right for your dealership? Do you even need a CDP? What data do you need to integrate if you install a CDP? Will you get a return on this non-trivial investment? There are a lot of things to consider before making this large investment. It is time to take a step back and ask some basic questions.
To be clear, taking the step to consolidate, cleanse and integrate your first party data is a “no regrets” action. There is no disagreement that a CDP is a great way to gain a 360-degree view of customer and prospect data. Good CDP’s provide an effective way to bring in outside data and send data to other potential partners. Clearly, a dealer or dealer group can get significant value from the right CDP used effectively.
There are two key concepts here that every dealer needs to grasp. We will explore each of these concepts further.
- What is the right CDP for the dealership or group? There are many factors that determine the “right” fit. Some relate to the store or Group. Others relate to the CDP itself and its features.
- What does it mean to “use the right CDP effectively?” As with most technology in the dealership, too little time is spent answering the question, “What are we going to use this for?”, and/or “How will this improve our dealership market share, profitability or customer retention?”
Remember all those books on processes and KPI’s that dealers, groups and OEM’s built several years ago? How many of them sit on shelves today? How many tools and processes are actually integrated into daily operations and make a real difference in the customer experience and store bottom line? Make yourself a promise not to let that happen with a CDP. Having a CDP may not be right for you. Having a CDP is also not enough. The right CDP may be a very good start. It is, however, just a start.
Let’s discuss each of the key questions above but we’ll start with #2 first. Deciding how you plan to use a CDP, determines, in large part, what CDP is right for you. What are you going to use your CDP for? Having all your data collected, cleansed, and organized in one place is admirable, but now that you have it, what are you going to do with it? How are you going to use the data? Are you going to change decisions based on what the data says? How are you going to measure the impact of using this data to improve your profitability or retention? What metrics will change and how will they change? The real value of a CDP in today’s dealership is what it enables you to do. Here are the essential elements required to use a CDP effectively and pay it off on your bottom line.
- Commit to making decisions informed by the data and insights that come from your CDP. The phrase “informed by” does not mean “governed” by. Dealer experience still plays a large role in using data to make better decisions. Ignoring, discounting, or not having the processes to use the data or resulting conclusions identified by the CDP defeats part of the purpose and value of getting a CDP to start with.
- Use Machine Learning to help create proven audiences. Most CDP’s say they can standardize dealership first party data. Experience has shown that many CDPs are not able to interpret this data without middleware or significant dealership work to define the meaning of the data. Many CDP’s say they can create audiences. Few have the automotive experience, automotive data, and the sophisticated machine learning models that tells your CDP who to communicate, with what message, and on what channel. This is not simple “if-then” statements in Excel. Machine Learning that is trained to interpret and use data makes audience creation much more effective. A CDP that depends on the dealership to create audiences and/or does not have the experience to create effective audiences is a waste of good money. One cannot engage if one does not create relevant audiences easily. There are many more dimensions to creating “effective” audiences, but that is a 201-level course.
- Use the CDP to “Engage” with customers and prospects personally. Audience creation is a key step. The payoff is, however, using those audiences to engage. The value of a good CDP is to help dealers engage with customers throughout shopping, purchase, and ownership. Engagement, though, is not “flinging” out random communications or “email blasts” like some do with CRM’s. Up to 40% of customers say they will NOT SHOP at a dealership that over communicates. Engagement needs to be customer-centric, relevant, and disciplined. A CDP without the ability to use it to engage with customers is a waste of money. This does not mean snow in the winter and wheat fields in the Midwest. It does not mean 6 coupons in every communication. It does not mean, “Hello John…” It means personally relevant messages, timing, offers, and information. Customers engage with dealers who “know” them and provide information that is helpful and relevant. Up to 50% of customers say good, relevant communication can even overcome at bad experience. Personalization takes data. It takes good content. It takes a system that can manage it. It takes discipline. A CDP without a personalized engagement system is a waste of money.
- Be skeptical of “other data sources.” There is no shortage of companies out there who will sell you data that is the magic answer to this or that. Most of it is inaccurate. Some are impermissible. Much of it makes no difference at all once you use it. It all adds cost. Much of it adds complexity. Ask the question, “Why do I need this?” Ask, “Can you show me the data that drives actual provable results for businesses like mine?” Most of the time you will save yourself money and time. Sure, CDP’s can integrate data in and out. The key questions are 1) what data, and 2) for what benefit?
So is a CDP right for you? If so, which one is a good fit? It all starts with the 4 questions above. What are you going to use it for? How are you going to use it? The right CDP is the one that allows your dealership or dealership group to accomplish your needs effectively and efficiently. If a CDP does not support or enable the things listed above, pick a different one. If you don’t plan to take the 4 actions described above, you don’t need a CDP.
Do these things effectively and you are way ahead of most of your competitors. You are well on your way to doing the kinds of things you admire about Amazon and other retailers. The power of a CDP is in the hard work you do to pay it off. The power of your CDP is to showcase the kind of personalized experience you provide in sales and service. Show your customers that doing business with you is their best choice. The selection and installation process will save you anguish and from wasting money. The results will impress you.