How much does a Customer Data Platform cost?

The cost of a CDP project can vary from 1 to 10 depending on the level of complexity of the project and the Customer Data Platform solution chosen. We will help you to estimate this cost as closely as possible by reviewing all the investment items.

Let’s be clear: the cost of a CDP project is not just the cost of the software licence. It should be borne in mind that CDP projects often involve a significant investment in services (implementation and operational support) which is more difficult to assess than the cost of the licence. In complex projects, this investment is much higher than the licence budget.

A point we will emphasise in the last part of the article is the importance of relating the cost of the project to the potential ROI from the initial budget estimate.

The cost of licensing Customer Data Platform (CDP) software

The main price drivers

You will not find information on the price of a CDP by looking at the publishers’ websites. It is not the opacity of the publishers that should be incriminated, the reason is much more prosaic: the offers are tailor-made and the price depends on many parameters that we will detail for you.

As you probably know, Customer Data Platforms are software products sold in the form of an annual licence. The amount of the annual licence depends on several factors.

For most publishers, the main variable is the number of contacts, i.e. the size of your contact database. Why is this? Because a company with a large base of contacts will consume more server resources, will generally have a greater need for support, but also and above all because the gains that it can hope to generate thanks to a CDP are greater. We will return to this key subject of ROI in the last part of the article, which must always be linked to the subject of the cost of a CDP. The two subjects must be inextricably linked in your strategic & business thinking if you are considering whether or not to deploy a CDP.

There are other variables that can be taken into account when calculating the price of your CDP:

• The number of events collected from the website or mobile application**. And, more broadly, the number of sources you want to connect to your CDP.
• The number of users of the platform. As you probably know, per-user pricing is very common in the world of marketing and CRM technologies. CDP publishers are no exception to the rule and often use this variable in their pricing model.
• The level of support. We are talking here, of course, about the level of support provided by the publisher. For example: the number of hours of support included per month.
• The number of optional modules activated. Each CDP offers a core of basic functionalities (core features) which can be enriched by additional functional bricks: reporting, web tracking, predictive scoring, etc.
• The main factors to take into account in the budget for your CDP

How can the price of a CDP licence vary from €20 to €200k?

As we said in the introduction, the cost of a CDP can vary from 1 to 10. To be more concrete, the range is between €20,000 and €200,000. Several parameters explain this wide delta.

The publisher’s positioning

Firstly, the cost of a CDP varies greatly depending on the publisher’s positioning: mid-market or large company. Publishers who mainly target large companies offer higher licence costs. Why is this? These publishers offer software that is generally more complete, which partly justifies the higher licence costs. But it is also and above all the cost structure of these publishers that is different:

• A more senior sales team.
• A more experienced customer service and Customer Success Managers (CSM) who are more attentive to their customers.

These higher structural costs are logically reflected in the price structure.

The level of support

This brings us to the second point: the level of support. Most mid-market publishers (who target SMEs & ETIs) do not have the support capacity of publishers who target large companies. And the quality of the support comes at a price, which explains the higher prices charged by publishers targeting large companies.

We define an SME as a company with a single brand or brand name, consisting of a marketing team of no more than 5 people, with a contact base of less than 1 million contacts. An SME may have several brands and trade names, with a marketing team of no more than 10 people and a contact base of 5 million contacts.

Age of the publisher

The age of the publisher is the final factor explaining the significant differences in CDP licensing costs. Young CDP publishers, who are trying to make their mark on the Customer Data Platforms market, are generally more aggressive on price. In a market as dynamic as the CDP market, this parameter plays a major role in explaining the situation.

The cost of setting up a CDP

The cost of a CDP is not just the cost of the licence. In complex CDP projects, the largest part of the investment is dedicated to support during the implementation phase. The cost of implementation is at least 15 – 20k€. If you find a cheaper solution, beware.

The phases of setting up a Customer Data Platform

The implementation of your CDP can be broken down into two phases: the deployment of the tool, then its configuration.

#1 Implementation

The implementation phase generally lasts between 2 and 4 months and includes the following steps :

• Specification of target use cases. These use cases are the functional translation of the business needs defined in the needs expression phase.
• Mapping of existing data. As a CDP is intended to connect a large number of customer data sources (CMS, CRM, ERP, marketing tools, support/ticketing, etc.), the data inventory and mapping of data sources are essential steps. Ideally, this step is carried out when the specifications are drawn up. But in reality, this is rarely the case…
• Specification of the target data model and flows* This stage consists of defining the way in which the data will be organized and presented in your CDP. In plain English, we are talking about the organisation of the tables and columns in your CDP database. The data model is more or less constrained depending on the chosen CDP. The work of preparing the flows depends on the target data model.
• Setting up the import flows. This is the work of connecting the data sources to your CDP. CDP editors offer numerous connectors with third-party sources and solutions, which generally saves a lot of time in this stage. A word of caution: this stage is often poorly anticipated and is a bottleneck in the implementation of your CDP. Be careful to anticipate it well with the IT department.

#2 Configuration

The previous steps concern the connection of the data sources to the CDP software. This is followed by the CDP software configuration steps:

• Importing data into your CDP tables, from the software interface and after connecting the sources.
• Design and implementation of deduplication and data normalisation rules. This is a key step in the unification of data. The diversity of data sources inevitably means duplication and a lack of standardisation at the global level (each software package potentially has its own standardisation rules…). Standardisation consists of defining a single target format for each type of data. One usually thinks immediately of postal addresses, but this in fact concerns most types of data.
• Calculated fields and scoring. A CDP is used to unify data and prepare it for target use cases in activation tools. As a basis for unified customer data, a CDP enables the creation of aggregates that meet business needs: field calculation, segment creation, scoring, etc. The construction of these aggregates is a key step in the implementation of a CDP.
• Outgoing flows to activation tools. A CDP is intended to be the pivotal tool in the marketing data stack. It ingests data from different sources, deduplicates it, standardises it, consolidates it and finally creates ad hoc aggregates to feed the applications. In principle, a CDP is not intended to be used as an activation tool, even if some publishers dare to confuse the two. A CDP is rather a data laboratory. The upstream implementation of incoming flows must therefore be accompanied by configuration work on outgoing flows.
• Receipt & release. Any IT project invariably includes an acceptance phase to ensure that everything is working properly, that everything is in place and to adjust if necessary in the event of malfunctions.

Support for the implementation of the CDP

The following is a broad outline of the steps involved in setting up a CDP. It is a series of fairly technical stages that require a certain amount of expertise, and therefore support services that represent a cost that must be integrated into your CDP project.

When we talk about support, we are talking about support staff. Who are the professionals who can support the company in setting up a CDP? The methods of implementation differ greatly according to the publishers and the level of complexity of the projects.

Here is what you need to know on this subject:

• The level of support provided by publishers varies greatly**. We have seen that mid-market CDP publishers generally offer lighter support than publishers targeting large companies.
• CDP publishers often work with partner integrators**. If you are familiar with Salesforce, you will know that the Salesforce solution is usually implemented by Salesforce certified partners. A number of CDP publishers work on the same principle and delegate the implementation to integrators who are experts in their solution.
• Implementation support is sometimes invoiced on a fixed-price basis** for simple projects and always on a time-spent basis for more complex CDP projects. Overall, time-based billing is by far the most common.
• For large CDP projects, there is generally multi-support**, i.e. joint intervention by the publisher of the CDP solution, an integrator for setting the parameters of the solution and the flows, plus project management support (consultancy firms).

Cost of developments and support for a CDP

We have made good progress in our elucidation of the cost of a CDP. You now know what the average cost of CDP software is. We have seen that the cost of licences can vary from 1 to 10. We have explained why. We have seen that in addition to the cost of the software, there is a significant support cost, which is the main investment in complex CDP projects, even if it is necessarily more difficult to evaluate with figures.

Implementing your CDP is not the end of your CDP project. You don’t stop there. Once the Customer Data Platform is in place comes the operational phase. A CDP and its uses are alive and will therefore necessarily evolve over time. It is necessary to provide for a support cost for the operation and evolution of the software which, on average, represents between 20% and 30% of the licence cost.

This budget covers, for example:

• The addition of new data sources(incoming flows) or new destinations (outgoing flows to new applications).
• Updating the data model (i.e. adding new columns to a table in your CDP) or data processing rules.
• Helping to deploy new use cases for your CDP.
• Training new staff. Let’s be clear on this point: your CDP will only become a war machine if users take full ownership of it in their day-to-day actions. It is the level of adoption of the technology that determines the success or failure of a CDP project.

This support for the operation and evolution of a CDP can be carried out by the editor, but in most cases, the support is entrusted to a consulting firm or a data integrator.

Some companies manage to limit the budget dedicated to the operation and evolution of their CDP. How do they do this?

• By choosing a particularly simple and open CDP software. In this case, user training and the addition of new sources or destinations are made easier.
• By increasing the skills of employees who, as a result, are able to do as much as possible on their own – without the need for external support.

Costs to be related to the ROI of the CDP project

The cost of a project must always be compared with its Return on Investment. This is true for any project. So, if we are talking about the cost of a CDP, we must also address the issue of ROI.

To assess the ROI of a CDP project, you need to take into account the various gains generated through the deployment and operation of a CDP. If you are reading this article, it is very likely that you are wondering whether it is worthwhile or appropriate to deploy CDP in your organisation. Now that you have a fairly clear idea of the cost of an ARC, let’s look at the ROI. With this overall picture (cost and ROI), you can get a better idea of whether or not it is worth deploying this technology in your organisation.

The ROI of a CDP is measured on 3 dimensions.

#1 Customer Relationship Performance Increment

Deploying a CDP allows you to better exploit your customer data to enrich the customer experience and develop customer relationship performance. That’s the value proposition of CDP boiled down to its simplest elements, expressed in one sentence. If you are considering deploying a CDP in your organisation, these are certainly the objectives you have in mind. This is also what the CDP publishers clearly put forward. They all share case studies that highlight the benefits in terms of customer relationships, smooth customer journeys, enhanced customer experience and, ultimately, increased customer revenue. Better use of customer data > better relational, marketing and sales practices > financial gains.

Some people do not hesitate to share figures, especially when they are impressive. For example: client XYZ managed to lower its acquisition cost by 20% by leveraging CRM data in its acquisition campaigns.

Of course, the reality is more nuanced. A CDP can have a major impact on all stages of the customer journey when used properly, but it is difficult to obtain +20% performance at each stage. You have to be honest and realistic, even if the gains are real. It should also be noted that Treasure Data offers a fun ROI CDP calculator, which allows you to calculate the ROI according to three variables, but here again, caution and realism are required.

• To calculate the ROI of your CDP as closely as possible, take a pragmatic approach.
• Define the top 3 or 4 use cases for your CDP with a target figure for all three. Let’s take an example.
  • Use case: Re-engage first-time buyers at the right time with the right offer.
  • KPI: the share of new customers who have actually made 2+ purchases in X months.
  • This pragmatic approach is the best way to anticipate the ROI of a CDP project in terms of increased customer performance.
• Consider that Customer Data Platforms will enable you to improve performance by 5-10%. This is a rather pessimistic assessment, but it avoids disillusionment and favours good surprises in the future. For Octolis clients, the average range is between 10 and 20%.
• Evaluate the financial impact of this performance increment**. Get your calculators…

Keep control of your customer data.

A CDP should not lock your customer data in a black box. Some vendors, through the constrained data models they impose and data access limitations, reduce your control over the data. To learn more about this key data governance topic, read our article “Why it’s important to keep control of your data”

#2 Productivity gains

A CDP makes it possible to automate, or at least make more fluid, some of the processes and treatments carried out by the IT department and the business users. In concrete terms, this translates into productivity gains that are synonymous with a reduction in human costs. Cost optimisation is, in the same way as the generation of additional revenue, a generator of ROI. A CDP makes it easy to perform actions that sometimes take weeks, such as adding a data source, calculating an ABC score and sending this score to the CRM tool.

It is difficult to estimate what this can mean in terms of time savings. So let’s keep it simple (but simplicity often touches reality): identify the people who work with customer data on a regular basis and, for each of them, estimate how much time they spend cross-referencing, cleaning and scoring data. Assume that a CDP saves 50% of the time (again, a rather pessimistic assessment).

Let’s take an example. The CRM Manager spends 30% of his or her time on customer data issues, the Data Analyst about 30% of his or her time and the IS Project Manager about 20%. In the end, this represents 80% of a full-time equivalent. Assuming that a CDP saves 50% of the time, we can save 40% of an FTE.

#3 Speed of project deployment

This is one of the major benefits of CDP, although difficult to assess financially. Typically, when you have a CDP, deploying a new marketing scenario takes much less time. In the end, instead of deploying 3 projects in a year, you will deploy 10. Whatever your CDP use cases, whatever projects you want to implement, a CDP will definitely save you time.

The simplicity of CDPs, user-friendly by design, designed to be used directly by business users, allows the imagination of the business to flourish and encourages initiative. How many projects have been sketched out and quickly abandoned because of the demoralising prospect of having to make 10 trips back and forth to the IT department to deploy them… Since it requires almost no technical skills (and, when they do exist, the “technical” skills needed are easily assimilated by non-technical profiles), a CDP can be used and managed by the business teams, without going through the intermediary of the IT team. This really makes a difference…and accelerates projects. This dimension of ROI is probably the most important, even if it is difficult to estimate financially.

We’ve pretty much covered what we wanted to share with you about the cost of a CDP. So there are three dimensions to the cost of a CDP: the annual licence, the setup and the operation (one). At the same time, there are three dimensions of ROI that we have just described.

Beyond the strictly speaking subject of this article, which was the cost of a CDP, we really and strongly encourage you to evaluate the Return on Investment from the initial phase of the project. From a business-driven perspective, it is absolutely necessary to evaluate the cost of your CDP and the ROI in parallel. This will allow you to assess whether the ROI justifies the investment.