Data, today has a direct correlation to improved customer experience and fostering better customer relationships. It also plays a crucial role in engaging customers seamlessly and a well engaged customer always drives higher revenue and positive business growth.

Data-driven marketers understand the complex and strategic role that customer data plays. Yet, they lack a combined, clearly defined strategy for having a seamless data infrastructure. Having a data strategy that cuts across all online, offline channels and marketing campaigns is extremely crucial. It is core to not only reach more people, but also to tie your campaigns back to business goals, and opportunities.

For businesses, customer data is the foundational asset that drives decision-making for multiple teams. Having high-quality customer data enables them to understand their customer journeys, execute targeted personalization campaigns, improve the product experience, and much more. Hence a customer data platform (CDP) is a must have for any business today and acts as a critical piece of your modern data infrastructure.

Whether you are buying a CDP or building one, it is important to have a realistic expectation of time and budget needed to successfully implement, roll out, and provide ongoing support. Before exploring both options, you should know the architecture and the key components of an enterprise-grade CDP

CDP Architecture:

Customer Data Platforms (CDPs) have become increasingly popular in recent years. They allow non-technical teams such as marketing to perform data ETL (Extract, Load, Transform)  tasks by accessing high quality customer data. This is done through a strategic and easier workflow in the UI while connecting that data to the tools they’re already using. 

CDPs help organizations save crucial engineering resources that can be expensive and time draining while allowing non-technical teams to get the data they need, when and where they need it, faster.

Here’s a visual depiction of a typical CDP’s architecture:

CDP Components:

Since CDP is a functional and most important piece of data infrastructure, and maintains and processes your most valuable assets, customer data, many businesses have thought about building their own solution. However, before we delve into the critical aspects of building or buying a CDP, it is important to know what are the functional components of a CDP?

  1. Data Connectors
  2. Profile Unification 
  3. Segmentation
  4. Audience Activation
  5. Analytics 

Data Connections:

To build a unified customer profile, CDPs must be able to collect customer data from multiple sources, such as a mobile app, websites, OTT devices, systems, and applications, via native SDKs, API connections, and webhooks. To deliver a consistent customer experience, appropriate recommendations, personalized messages across multiple channels you need to collect different types of customer data. Today, customers have many digital touch points and paths to purchase your product. 

Let’s say you have customers who purchase products from you on various channels (Multi-channel Shoppers) and then there are customers who have adopted the click and collect model (Hybrid Shoppers). The data is scattered across multiple channels and gets difficult to collect, organize and unify.

Hence, it is important to have data connectors in place that can help you collect data from various sources in real-time. 

Here are the key questions you should ask while evaluating this component:

Profile Unification:

Once all your data is ingested into the platform it needs to be tied to build unique customer profiles that can be easily accessed from within a UI. Now this can be done programmatically using a REST API. These profiles should contain events, attributes, device information, user consent and more.

Since you operate on multiple engagement channels, you will be tracking users with different kinds of identities (identifiers). However, all the user events need to be unified to respective customer profiles. One other key thing to remember is your customer profiles will be compromised if the data ingested is not accurate and inconsistent.

Here are the key questions you should ask while evaluating this component:

Segmentation:

One of the key functions of Customer Data Platforms, especially for marketing teams, is centralized audience segmentation. A CDP should provide segmentation capabilities within the UI that make it easy for non-technical users to build audience segments using any customer-associated data you have collected. 

Developing a segmentation engine can get complex when building your own CDP. As data becomes more accurate so does segmentation with much greater data accuracy. And a more accurate segmentation such as RFM segments and tactical segments such as “All women shoppers who purchased red dress in the last 14 days” becomes an integral part of your targeting strategy. 

Here are the key questions you should ask while evaluating this component:

Audience Activation:

Once you have your segments ready, you need to put this audience data to use by activating them across multiple channels. 3rd-party integration connections make it possible to get the customer data out of the CDP. The connections that a CDP has, as well as the type of integration built for each connection, depend on the use cases. In order to activate your audience through different channels in realtime you need respective APIs.

Here are the key questions you should ask while evaluating this component:

It is important to consider the integration needs for different channels over time. With this you need to ensure the following things:

Analytics:

Once you’ve engaged your audience it is crucial to your outbound marketing efforts. It is extremely important to get customer insights to understand how they will behave when interacting with your organization, your marketing campaigns, etc. so you can engage them accordingly. 

The more you understand your customers’ behavior, preferences and buying habits, the more accurate your predictions of future purchase behaviors will be – and the more successful you will be at engaging them with individualized and contextual messages that turn ‘at risk’ customers to ‘active and loyal’ customers.

Hence having an analytics suite to measure the efficacy of your marketing campaigns. It also plays a crucial role in deriving data and insights from your customers interactions from different channels and also enriching your existing customer data. 

Here are the key questions you should ask while evaluating this component:

Now that you’ve understood all the components of the CDP and their importance, you can choose a CDP based on two aspects. 

  1. To build your own CDP (Developing In-house)
  2. To buy a CDP/partner a CDP vendor (Outsource) 

Here’s a table that you could use to enable yourself and your key stakeholders to make the right decision i.e. To Build or Buy a CDP. 

Bringing it all together, CDPs have proven to be one of the most effective technology platforms to empower data-driven marketers in an era of complex, multi-channel, personalization-led experiences. 

Most organizations, both enterprises and startups, that turn to Customer Data Platforms consider working with a leading CDP vendor. There are several benefits to doing so.

1.Time to Value: One of the biggest benefits you get when you partner with a CDP vendor is faster time to value, the speed at which you can have it up and running. Instead of allocating valuable resources to build your own CDP, you are able to integrate packaged SDKs in your digital properties or set up API connections. 

Also, some CDP vendors will offer professional services support to assist your engineers with the implementation. Insider offers implementation support designed to help you go from briefing call to execution in 90 days or less.

2. Cost: Partnering with a leading Customer Data Platform vendor can be cost effective. As mentioned in the above framework, building a CDP internally is expensive, as it requires dedicated hours from developers and engineers and alignment of multiple stakeholders across the organization for a long period of time. Any delays in the build process will only make the project more expensive. 

Whereas, working with a CDP vendor will allow you to access all the capabilities you and your team need at a specific subscription cost (based on your requirement).

3. Ease of Use: Different teams are able to collect data from various new sources, such as a POS system, with little-to-no engineering dependency, and trial or A/B test new platforms by sending limited data sets to them in just a few clicks.

No matter what your final decision is, build or buy a CDP, we hope that you have all the information needed to make the right decision for your business. To explore Insider’s CDP and experience its capabilities, schedule a personalized demo with our product expert.