Data-driven organizations are 23 times more likely to acquire customers, six times as likely to retain customers, and 19 times as likely to be profitable as a result. - McKinsey

In today's hyper-connected world, where consumers are bombarded with multiple options, advanced personalization has emerged as a differentiating factor. Their engagement and loyalty depend upon which brand can exactly understand their needs and accompany them throughout their decision-making journey with tailored content and offers. Implementing effective personalization depends on the ability to gather accurate and complete customer data and use it smartly to curate digital experiences that resonate with them. And this is where Customer Data Platforms (CDPs) help. They serve as the backbone of personalized CX by centralizing and organizing customer data from various sources including multiple websites, applications, social media, etc. CDPs provide a unified view of each customer, enabling businesses to understand preferences, behaviors, and interactions across different touchpoints.

Watch this webinar to understand CDPs and the power of activated data.

Importance of Customer Data Platforms

Gathering and maintaining high-quality data requires investments in technology, resources, and data governance practices that some companies may not be equipped for. Look at these numbers:

• Poor data quality costs the US economy up to $3.1 trillion annually. - IBM
• 72% of marketing leaders say that managing data silos is a moderately to extremely challenging task. - Forrester
• Between 60 percent and 73 percent of all data within an enterprise goes unused for analytics. - Forrester
• 86 percent of respondents say their business needs access to real-time ERP data to make smart business decisions, yet only 23 percent of responding companies have systems in place to make that possible. - Businesswire

All this data-silos leads to consequences like inefficient use of data, missed opportunities to personalize marketing campaign, poor decision-making and customer dissatisfaction. CDPs empowers businesses to solve these challenges. While their primary function revolves around collecting and leveraging first-party data, they can also incorporate valuable insights from second-party and third-party data sources to create enriched customer profiles that serve as the foundation for highly targeted marketing campaigns, seamless cross-channel experiences, and tailored product recommendations. This helps businesses orchestrate dynamic customer journeys that adapt and evolve with each interaction, create new products and services, improve existing ones, and reach new markets.

How to choose a CDP that fits business needs for a long time.

The dilemma: build or buy the Customer Data Platform?

Every business is unique, with its own set of customers, platforms, and data use cases, making their CDP requirements distinct that can't be completely met by standard off-the-shelf solutions.

However, building custom software can be time-consuming and expensive. So, the dilemma lies in balancing the need for a tailored solution that has quick deployment and is cost-cost effective for marketing operations. There is no one-size-fits-all approach in this. Instead, businesses should tailor their decisions to align precisely with their specific objectives, available resources, scalability demands, and compliance requirements. To navigate this decision, let's understand the scope of both the approaches:

Scope of building a Customer Data Platform

Building a CDP means designing, developing, and putting in place a customized data framework. This includes customizing the essential elements, features, and integrations needed to efficiently manage and leverage customer data for marketing, analysis, automation, customization, and other specific business goals. Businesses take this approach because of the following advantages:

Flexibility and customization: CDP can be tailored to unique processes and workflows, providing a more precise fit as businesses have complete control over the functionality of the CDP.

Control over data governance: Building a CDP in-house allows businesses to define and enforce data governance policies, ensuring compliance with privacy regulations and maintaining data integrity.

Reduced dependency: Businesses are not reliant on third-party vendors for updates, fixes, or changes. They have the autonomy to make adjustments as needed without depending on external support.

Potential long-term cost savings: Building a custom CDP involves upfront development costs, but it can result in long-term cost savings compared to ongoing licensing fees associated with bought CDP solutions.

Integration with existing systems: A custom CDP can be designed to integrate seamlessly with the existing technology stack without disturbing the infrastructure. Despite the clear advantages, not every business chooses to develop a custom CDP because it typically takes a considerable amount of time, finances and other resources, for different phases of design, development, testing, and deployment, and carries inherent risks, including the potential for project delays, budget overruns, and technical challenges. All this might lead to falling behind competitors who leverage off-the-shelf solutions to gain actionable insights and drive real-time marketing strategies to drive meaningful engagement.

Photo by Luke Chesser on Unsplash

Scope of buying a Customer Data Platform

Acquiring a pre-existing hosted customer data platform from a reputable industry-leading vendor can be particularly appealing for businesses with limited in-house technical resources or those aiming to quickly scale without managing the underlying infrastructure. It is because of the following advantages:

Time-to-market: Implementing a ready-to-use CDP can be faster compared to building a custom solution. Vendors provide pre-built features, reducing development time and accelerating time-to-value.

Advanced features: Vendors invest in research and development to enhance their CDP offerings continually. By buying a prepackaged CDP, businesses gain access to advanced features and functionalities that may not be immediately achievable with a custom build.

Reduced development efforts: Developing a custom CDP from scratch requires substantial time, resources, and expertise. Buying a CDP eliminates the need for extensive development, allowing businesses to focus on utilizing the platform for their specific business needs.

Ongoing support: Vendors typically provide customer support, ensuring that businesses have assistance when facing issues or need guidance. This eliminates the challenges associated with in-house development team to support and maintain a CDP.

Like building, buying a CDP presents its own set of challenges. A significant one is getting a solution that completely aligns with specific needs. This can hinder the ability to address specific needs and processes and reduce the efficacy of the data platform altogether. Therefore, if going forward with this option

• Research potential vendors


• Conduct a detailed analysis of how well offerings align with your needs


• Consult experts who specialize in top Customer Data Platforms’ implementation and management

Photo by Luke Chesser on Unsplash

Making the decision for the best CDP

To make a well-informed decision about Customer Data Platform implementation that aligns with business's specific strategic objectives, constraints, and outlook, consider these five key questions:

• What are our specific business goals and objectives for implementing a CDP?


• What is the depth, complexity and use case of our customer data and engagement requirements?


• What are our available resources, including technical expertise and budget?


• What is our desired timeline for CDP implementation and achieving measurable results?


• How does our decision align with our long-term business strategy and scalability requirements?

Depending on the answers use this table to understand if buying or building a custom CDP would be the right choice:

Conclusion

Buying a CDP or building a CDP, have their unique merits and challenges. The best decision is usually a collaboration between key decision makers as this choice is pivotal in enabling the business to collect customer data effectively and use it to create meaningful customer experience.

At Altudo, we understand that this decision can be complex. That's why we offer expert CDP consultation services to guide businesses in making the right choice for your business. Whether you are leaning towards building a custom CDP but lack the in-house technical expertise or you are exploring off-the-shelf solutions, we can assist you. Our team is equipped to help you build a customized CDP tailored to your exact specifications, ensuring it aligns with your business strategy and growth plans. Alternatively, if you opt for a pre-built CDP, we can assist in selecting the best CDP platform for your data needs and implementing and customizing it to fit your unique requirements.

Schedule a 1:1 no-obligation consultation today and unlock the full potential of your customer data to drive meaningful customer engagements.