A Customer Data Platform (CDP) is a computer system that stores personal data about web users, and gives every individual a unique tracking number to provide more insightful information into the behaviour of each person. Some CDPs can also use AI to automatically analyse this rich data and suggest marketing campaigns and strategic activities.
There are many kinds of CDPs on the market, and those are growing all the time as the fledgling CDP sector becomes more mainstream and lucrative.
But companies face the problem of knowing which CDP is right for their business needs, and sometimes consider building their own CDP that is specialised for their particular field of expertise.
Use the following criteria to decide whether you should build or buy a Customer Data Platform. If you choose to build a CDP in-house, we’ll tell you how to start, and if you prefer to buy a readymade CDP, we’ll show you how to choose a good, low-cost CDP that is adapted for your organisation.
The first and most obvious question on everyone’s lips when considering the decision to invest in something of this magnitude is money. Is it more expensive to build a CDP or buy one?
While the initial investment when receiving a quote for a CDP vendor may be eyewatering, you can be sure that a build will have dozens of hidden costs that won’t be immediately obvious in the beginning.
Building a CDP requires an enormous capital investment and a massive expenditure of peoplepower to go through the project planning, feasibility analysis, design, coding, testing and deployment.
Then, because the CDP belongs to you, you’re responsible for the long-term maintenance and continuous integration and deployment of the platform.
In both the short-term and the long-term, buying a Customer Data Platform is overwhelmingly the most cost-effective option.
Customer Data Platforms are able to do thousands of things with data, and the list is growing everyday as the use cases for CDPs become ever more complex.
If you have a very specific use case that you need a CDP for, it may be better to build your own from scratch that is purpose-built to solve that particular problem instead of buying an out-the-box solution.
Building gives you more control over the specific functions of what your CDP does, and you can modify it to do exactly what you need it to do. It’s like the difference between getting a suit tailor made instead of buying one off the rack at the store.
The other benefit of building a CDP is that at the end, if you’re successful, you will own a marketable product for a highly specific industry need that you can then sell on to others in your sector. This positions you as an industry leader.
If it’s something that’s never been done before, a totally unexplored area for CDP usage, it’s better to build. But actually, chances are there’s something out there that’s similar to what you need or can be adapted to your needs.
Most pre-built CDPs are highly adaptable for a number of cases, whereas if you build your own you run the risk of creating something too specific. Unless you programme into the system the flexibility to deal with multiple situations, you may find yourself with a very expensive one-trick pony.
A Customer Data Platform works by sharing customer databases with other systems. One worry some people have when approaching the idea of getting a CDP for their company is the security risk of exchanging personal data in this way.
With a CDP built in-house, you control not only all your own data but you also manage the way it is shared. Just make sure it’s got a watertight CDP architecture to avoid costly data leaks.
If you buy a CDP, on the other hand, you gain the help of an established company that is often dedicated solely to the integration and management of CDPs. They have more experience than you with data protection, compliance with the law and best practices.
Better yet, your CDP partner will assume the responsibility in the unlikely event that things go wrong and there is a data leak.
When it comes to personal data security, building and purchasing a CDP from a trusted vendor come out even. Neither one is better than the other, and all CDPs are made to protect customers’ private information.
In terms of how quickly you can start using your Customer Data Platform, the best option is undoubtedly buying a pre-packaged CDP from a Software-as-a-Service (SaaS) provider.
It would take just 3-4 weeks from the moment your organisation decides to get a CDP to when it’s ready to use, including onboarding time. The CDP service would be ready to integrate data and orchestrate customer insights to personalise your Omnichannel retail strategy in a very short time.
On the other hand, it would take more than that just to build each single integration of a decent CDP yourself, at least 6 weeks to make each integration. That means depending on the size of the CDP you want to make, it could take 8-12 months or more to have a full go-to-market solution.
[Customer Data Platform Market - Global Forecast To 2023]
As with any high-capital venture involving martech solutions, there is a certain element of risk to be weighed up. What if the CDP isn’t able to do what we want it to do? What if it becomes obsolete soon?
These are valid concerns, and the truth is that many of the problems and risks of using Customer Data Platforms can be solved better by buying a CDP solution than building one.
For example, if you program your own CDP and it ends up being incapable of doing what you intended it to do, or if your business needs change in the middle of the build project, it’s hard to change course. You either cut your losses, or are locked into keeping on building a substandard product.
This is not a problem if you buy a Customer Data Platform solution. If the CDP you’ve bought isn’t living up to expectations, most service providers will be happy to talk about the problem and will work their hardest to try and accommodate your needs. Even in the worst-case scenario, you can drop out of a short-term partner contract with a CDP company that doesn’t suit you more easily than you can discard a solution you’ve built yourself.
As for obsolescence, a dedicated CDP provider is far more likely and able to keep their star product up to date and viable than your company is if, as is likely, building a CDP for in-house use is only one small part of your business operations.
Overall, buying a Customer Data Platform is less risky than building one.
Finding a CDP vendor is easy – as of 2020, there are as many as 121 CDP companies worldwide according to a report by the Customer Data Platform Institute. Choosing between this multitude of CDP partners can be made a bit easier with the help of a choice path like the one offered by DataEM.
On the flip side, finding someone to help you build a CDP is near impossible. If anyone were going to do it, they’d do it for themselves and already have one ready to sell you… so they would be a vendor! Which is to say that if you decide to build, you’ll have to go it alone.
The final thing you have to consider when deciding whether to buy a Customer Data Platform or build one is how difficult it will be due to the level of expertise and technological resources you’ll need. To buy a CDP, you only need an internal IT department; to build a CDP, you need IT, Development, Operations and Maintenance teams to make it work.
If your organisation is already expert at building solid, successful IT solutions internally, and has a team dedicated solely to this, building a CDP may be a realistic option for you. If building tech solutions is not your main line of business, or you’ve had some harsh losses trying to do it in the past, or you normally get the help of a SaaS partner when developing new releases, then it’s probably best to stick to buying.
When you buy a Customer Data Platform, just as with any software or app deployment, you don’t need to have the same level of in-house knowledge specific to that area. You also save on a lot of your tech assets being diverted into the build project.
On the whole, it’s just easier to buy a Customer Data Platform than to build one.
Once data collection, cleaning and delivery layers of the data stack are taken care of, you will need to program the software to process the normalised data in the specific way you want so that data scientists and analysts can engage in advanced analysis, and marketers can extract practicable insights. Remember that all these departments should be just as involved in the project creation process as the IT, Development and Maintenance teams are, because at the end of the day the CDP is being built for their sakes, to provide them with a 360-degree customer view on which to make business decisions. The programming languages you write the code in will depend on what makes the most sense for your use cases, and the more use cases you have for your CDP, the more languages you are likely to need to use, the longer it will take and the more complex it will be to start building.
If you want to buy a CDP, these are the main factors to consider when making a decision between vendors:
Is the CDP able to ingest and integrate data from a variety of sources?
Can it create a shareable, persistent database?
Does it segment customers and create a holistic single customer view?
Can it suggest personalised engagement strategies for each customer?
Is it integrated into a delivery system to process the end result and not just the data?
Depending on what you want the CDP to do, you may need all or just some of these capabilities, plus any extra industry specifics related to your business’s unique selling proposition (USP).
Asking about the level of support the CDP will give you could mean the difference between getting a simple Meiro-style “Data” CDP, or a more complete “Delivery” model alternative like Antsomi CDP 365. It’s always possible to talk to a good CDP vendor to negotiate the kind of Customer Data Platform you want, and see whether they can modify their product to create a customised solution to suit your needs.
In this sense, there’s an element of building involved in buying a CDP, as it will have to be personalised and applied to your particular company. At the same time, even if you build a CDP you’ll have to buy some sort of services, such as a cloud platform, the data storage system you use, the workflow engine that helps you build etc.
In the end, then, you’ll be doing a bit of both to come up with the CDP solution your company needs to fill the gaps in your data management and analytics, customer segmentation, or campaign delivery.
If you’re in the market for a CDP, feel free to drop us a quick message to see how we can help.