The DXP Catalyst Update - Feb 25, 2025

INTRO
Welcome to This Week’s DXP Catalyst Update

In this edition, I dive into some key considerations when selecting a CDP, offering a structured approach to ensure your selection process aligns with your business objectives, technical ecosystem, and long-term scalability. With an overwhelming number of CDP options in the market, narrowing your choices early and defining clear use cases is critical.

From data readiness and stakeholder alignment to evaluating vendor profiles and ROI, this guide walks through the foundational steps necessary before making an informed decision. Whether you’re considering a traditional, pure-play CDP or a composable solution, this update provides key insights to help you navigate the broader CDP landscape landscape.

LEADERSHIP GUIDANCE
Key Considerations When Selecting a CDP

Selecting a Customer Data Platform (CDP) is a critical decision that can shape the success of your digital experience strategy. This isn’t about the entire end-to-end technology selection process - I’ve covered that in a blog post in early 2024. Instead, let’s assume you’ve already defined your business goals for adopting a CDP. Before diving into vendor selection, there are several foundational steps that can help ensure a smooth and effective evaluation process.

Key Preparations Before CDP Selection

Before comparing vendors, it’s essential to assess your organization’s readiness and set the right foundation for selecting the best-fit CDP:

• Assess Data Readiness: Evaluate the quality, completeness, and accessibility of your customer data. Identify gaps in collection, integration, and consistency across systems. Determine whether data is siloed across multiple back-office systems or stored in offline sources like spreadsheets. Assess whether you’re collecting enough data to support your use cases.

• Align Stakeholders Across Teams: Bring together marketing, IT, analytics, and compliance teams to define shared objectives, establish governance, and ensure seamless cross-functional collaboration.

• Map the Customer Journey: Identify key touchpoints where customer data is collected, stored, and activated. Pinpoint gaps or inefficiencies that a CDP can address to improve customer experience and data utilization.

• Validate Success Metrics: Define measurable KPIs and establish benchmarks to track the effectiveness and long-term impact of the CDP implementation.

By addressing these considerations upfront, you’ll set a strong foundation for evaluating CDPs effectively and ensure your organization is positioned to make an informed selection.

Defining Your Primary Use Cases

Once foundational preparations are in place, the next step is to clearly articulate what you want the CDP to achieve. Defining and prioritizing use cases helps ensure alignment with business goals and maximizes the platform’s impact. Some example use cases could include:

• Real-Time Data Activation: Enable real-time engagement strategies by integrating the CDP with key marketing, sales, and customer service channels.

• Operational Efficiency: Streamline workflows across marketing, sales, and customer service teams, reducing manual effort and improving productivity.

• Churn Prevention: Identify at-risk customers through predictive analytics and trigger targeted retention campaigns.

Navigating the CDP Landscape & Narrowing Down Choices

With a very crowded CDP market and varied classifications, selecting the right platform can be overwhelming. A lot of complexity lies in the different types of CDPs and how they’re classified. Understanding the type of CDP your business needs and whether an enterprise or mid-market solution is the best fit can help streamline the selection process. In the early stages, I recommend narrowing your choices to 8-10 vendors before diving deeper into evaluation.

For a detailed overview of CDP types, benefits, and key vendors, check out my blog post from last year where I break it all down.

Understanding CDP Types

• Traditional, Pure-Play CDP: Best suited for organizations at a growth inflection point, seeking to modernize their ecosystem and better understand their customers.

• Composable CDP: Ideal for digitally mature organizations with an existing data warehouse or data lake, allowing them to integrate CDP functionality within a broader enterprise data strategy.

Evaluating Business Complexity and Broader Transformation

Some CDPs are designed to solve highly complex enterprise use cases, while others cater to mid-market businesses with simpler needs. Cost is also a key factor, as enterprise CDPs tend to be significantly more expensive. Composable CDP options are more common in enterprise environments, where businesses require greater flexibility in integrating customer data into their existing infrastructure.

Additionally, consider whether you are solely selecting a CDP or undergoing a broader transformation involving commerce, CMS, and other systems. If your organization is modernizing multiple components of its digital ecosystem, this could influence the type of CDP that best fits your needs. Keeping your options open in the early stages can ensure you select a solution that integrates seamlessly into your long-term digital strategy.

CDP Platform Selection Process

A structured platform selection process ensures that CDP evaluation aligns with business objectives, your technical ecosystem, and long-term scalability needs. This process involves gathering requirements, defining an evaluation framework, and executing a structured selection approach. For a broader look at my technology selection methodology beyond CDPs, check out this blog.

Gathering Requirements & Key Considerations

To make an informed decision, businesses need a thorough understanding of key requirement categories. When working with businesses on this, I typically cover the following areas over a couple workshop sessions, depending on the organization’s size and complexity:

Functional Considerations

• Data Collection: How will customer data be ingested, and from which sources? Do you need real-time integration, batch processing, etc.? What types of data (demographic, behavioral, transactional) do you need to support?

• Profile Unification & Identity Resolution: Can it merge disparate customer records into a single profile? I should hope so! What type of identity resolution methods are supported - deterministic, probabilistic? Do you need to distinguish between multiple users in a household?

• Segmentation: How dynamic and scalable are the segmentation capabilities? Can you do dynamic segmentation or look-alike modeling?

• Data Activation: How seamlessly does it connect with marketing channels and platforms? What channels are most important for your audience?

Technical, Integration, and Non-Functional Considerations

• Integration Capabilities: Will your back-office systems and activation channels connect directly to the CDP, or will you use middleware/iPaaS? If connecting directly, are pre-built connectors available for key platforms and systems, or will custom integration be necessary?

• Scalability & Performance: Can the CDP handle increasing data volumes and scale with your business growth?

• Cost & Licensing Model: What are the subscription costs and total cost of ownership (TCO), including licensing fees and implementation effort?

Vendor Profile and Market Conditions

• Support & Roadmap: Does the vendor have a well-defined product roadmap that aligns with your long-term needs? What level of customer support is provided, and how responsive is the vendor to issue resolution and ongoing enhancements?

• Partner Ecosystem: Does the vendor have a robust partner network for implementation and continued support?

• Industry Focus: Is the vendor specialized in specific industries, or does it offer a more generalist approach? Does its platform include industry-specific capabilities or compliance measures that align with your business requirements?

• Regional Presence: If your organization is based in North America, does the vendor have a strong local presence? Some CDPs are dominant in EMEA or APAC but have limited adoption in North America, which may impact support availability.

Shortlisting Vendors

With a clearer understanding of your requirements and business needs, it's time to narrow your vendor list to 3-4 finalists for a more focused and detailed evaluation. This allows for deeper analysis, ensuring the selected vendors align closely with your objectives and technical ecosystem.

Evaluation Framework & RFP-Driven Approach

The evaluation framework I use follows a weighted scorecard model, grouping similar requirements across functional, technical, and non-functional categories for a more efficient assessment. I recommend an RFP-driven approach, involving key stakeholders early in the process to build consensus and generate excitement about what’s possible. The RFP package I put together typically includes:

• Comprehensive Requirements: A detailed breakdown of functional, technical, and non-functional criteria. Vendors can respond to this on a per-line basis.

• Evaluation Framework: Defines key assessment criteria without disclosing specific weightings to ensure objective vendor comparisons.

• Digital Scenarios: Real-world scenarios relevant to your business that vendors must execute to showcase their platform’s capabilities in action.

Structured Selection Process

• Vendor Demonstrations:  Vendors present structured demos based on predefined digital scenarios, allowing participating stakeholders to assess solutions for functional and technical fit.

• Consensus & Holistic Analysis: Stakeholders contribute to scoring and platform rankings, while a consultant or specialist performs an independent analysis and broader evaluation considering architecture, infrastructure, vendor profile, non-functional considerations, cost, and licensing model.

This structured approach ensures that stakeholder insights inform the decision-making process while expert analysis delivers a well-rounded final recommendation. Next steps involve gaining overall consensus, perhaps another round of shortlisting and further analysis.

Evaluating ROI & Implementation Considerations

Once a CDP recommendation has been made, the next step is assessing its potential ROI before finalizing the vendor selection. This discussion is often necessary at the C-Suite level, particularly for VP-level stakeholders preparing a business case for leadership. In smaller companies, such as PE-backed consumer brands, this conversation often occurs directly with the C-Suite.

However, simply acquiring a CDP won’t automatically solve data challenges. Many organizations face underlying data issues that must be addressed before they can fully leverage a CDP’s capabilities. While initial data collection might be possible through a CMS or commerce platform, realizing the full value of a CDP requires a broader data unification and activation strategy.

Key Factors in Assessing CDP ROI

• Expected Business Impact: How will the CDP enhance customer engagement, retention, and revenue growth?

• Operational Efficiency Gains: What level of manual effort reduction and process optimization will be achieved across teams?

• Total Cost of Ownership (TCO): Consider licensing, subscription fees, implementation efforts, and ongoing maintenance.

• Data Readiness & Implementation Roadmap: What foundational data infrastructure and integrations need to be established for the CDP to deliver its intended value?

Ensuring Measurable Business Value

A successful CDP implementation must demonstrate tangible business value by considering:

• ROI Metrics: Measure cost savings and revenue growth (i.e. increased conversion rates). Use quantifiable metrics such as incremental revenue from improved targeting.

• Implementation Timeline: Develop a phased implementation plan, achieving quick wins while gradually building toward high-impact use cases.

• Vendor Support: Ensure the vendor provides comprehensive onboarding, training, and ongoing support to drive adoption and long-term success.

By carefully evaluating these factors, businesses can ensure their CDP investment translates into measurable benefits and sustained growth.

Final Thoughts

Selecting a CDP is a strategic investment that demands careful evaluation of your current architecture, data readiness, and long-term objectives. Success is not just about choosing the most advanced technology - it’s about ensuring the CDP aligns with your business needs, integration ecosystem, and overall digital strategy to drive meaningful outcomes.