As marketing technology trends go, the Customer Data Platform (CDP) has certainly been a hot one. The hype peaked around five years ago. Marketers were feverishly looking for new and improved ways to mine their growing stores of customer data for new insights and business value.
So, the question remains…should enterprise consumer brands plunk down a big bucket of dollars for a CDP solution? It all depends. Here are five reasons why a packaged CDP is not a good choice for most enterprise brands – and one good reason why a composable CDP is the right way to go.
Avi Bhatnagar
Before I start, though, let’s define what I mean by packaged and composable customer data platforms.
- Packaged CDP: An all-in-one CDP solution with multiple capabilities included.
- Composable CDP: A set of integrated tools that’s built using different types of software to perform all the functions of a CDP.
(For a deep dive, check out this article by Arpit Choudhury on the differences between the two.)
OK, back to it –
Five reasons enterprise brands should steer clear of packaged CDP solutions
Cost
Packaged CDP solutions are INSANELY expensive. For many of these solutions, organizations have to buy the complete package – whether all features are used or not. Additionally, companies must pay big dollars to store and move data. Which leads us to #2.
Moving data
CDPs are dependent upon moving data between systems, causing latency, synchronization issues, and bottlenecks to get new marketing initiatives up and running. Additionally, marketers don’t have direct access to customer data and strategies and must compete with other teams’ resources and priorities (such as IT).
Real-time…is not real-time
Once data has been moved to a CDP, latency becomes an ongoing problem. There will inevitably be limitations to how often marketers can refresh that data with new information – whether once a day or any other time interval.
Customer data, which is always growing and evolving, is stale while stored in the CDP. For many industries, like travel, this makes the data nearly unusable. No customer wants to know their plane changed gates two hours after take-off.
Loss of control
The packaged CDP approach creates challenges that come from disparate data sources and silos. It also gives the IT team yet another tool to learn and support – when they’d much prefer the fine-grained governance enabled by a centralized data warehouse and the self-service capabilities that it enables for marketers and other stakeholders.
Houston, we have a problem
More touches and more moving parts significantly increase margin for error. To keep CDP data as current as possible, marketers want to refresh it as often as possible. But this creates an infinite loop of copying and moving data – which introduces more and more opportunities for error that have downstream impacts on your campaigns and other activities. Additionally, the effort to clean up such errors is tremendous.
Cecilia Dones
But it’s not all doom and gloom!
A composable martech stack made up of best-in-breed solutions (i.e., a composable CDP) will help enterprise brands save money, reduce technical debt, and offer the freedom to invest in the approach that makes the most sense for each organization.
Some of the most successful enterprise brands (think Expedia, T-Mobile, OpenTable) have already discovered the massive benefits of composability. And while you may not realize it, your company is probably already building the foundations to find the success they have.
So, to answer my earlier question: To CDP or not to CDP? While it’s often fine at the SMB level, most enterprise consumer brands dealing with millions of data points will find a packaged CDP to be incredibly expensive with constant limitations and obstacles to achieving their marketing goals – whereas a composable CDP gives marketers the control and flexibility to adapt and adjust as needed.
In five years, packaged CDPs will (hopefully) be a line item that marketing and data teams can finally leave behind.
FAQ
Q: Who needs a customer data platform?
A: Enterprise consumer brands dealing with massive volumes of customer data - we're talking millions upon millions of data points - will likely find immense value in implementing a customer data platform (CDP). However, not just any old CDP will do.
Packaged, all-in-one CDP solutions are expensive beasts that often create more problems than they solve for large organizations. The costs are astronomical, with companies essentially paying for capabilities they may not even use. Then there's the endless hassle of moving and syncing data across disconnected systems, leading to latency issues, data staleness, and error-prone processes.
Instead, enterprise marketers should forge their own composable CDP path. This approach leverages best-in-breed solutions and a centralized data warehouse to enable true self-service capabilities and governance. It puts marketers in the driver's seat with direct access to real-time customer data, rather than waiting on IT's bandwidth.
Some of the biggest brand names have already embraced the flexibility and cost-savings of a composable martech stack over cumbersome packaged CDPs. If your company juggles overwhelming data volumes across disparate sources, building your own composable CDP may be the wisest strategy for fueling insight-driven marketing at scale.
Are you struggling with making the right choices for your martech stack? Never fear, the CMO Alliance Community is a global network of marketing leaders, ready to share their advice and insights.
