Customer Data Platforms (CDPs) are rapidly evolving; customers can now choose whether they’d like to purchase a fully Integrated CDP or a Composable CDP. Any business currently evaluating a CDP is hearing many competing arguments as to why one might be better than the other; however, the strategy behind both options is the same: create customer 360 views, resolve identities, segment audiences, and activate on audiences across the MarTech stack. Below we’ll discuss both offerings and what companies should consider when deciding which CDP to invest in.
Composable CDPs Allow You to Use Existing Data Infrastructure to Drive Audience Segmentation and Activation Strategy
A Composable CDP boils down to the elimination of another tool (an Integrated CDP) to collect, store, and process data. The Composable CDP sits on top of a well-built, already established data infrastructure. It functions similarly to a reverse ETL in that it extracts data from your data storage tool and distributes that data to activation partners. Your organization’s data warehouse is already collecting, storing, and processing scores of information, so why buy an Integrated CDP that does just that? This assumes your organization has a well implemented data warehouse and data engineering team dedicated to the upkeep and continued development of that data warehouse. A composable CDP depends on a data warehouse that has data in a state that is ready to be segmented and actioned on. It’s also important to note that Composable CDPs are not usually built to deal with clickstream data (web data sources, app data sources, etc.), but rather they are built to ingest data from data warehouses, spreadsheets, data bases, or data lakes. Composable CDPs often offer quicker time to value and can require less implementation time and resources.
Integrated CDPs Often Become an Organization’s Centralized Customer Data Collection Point and Customer Data Source of Truth
An Integrated CDP is what most people think of when they hear the term “Customer Data Platform.” It features out-of-the-box integrations with key data sources and data destinations. Integrated CDPs are often known to be tech-agnostic, meaning they will ingest any customer data that you deem essential to create your customer 360 view. These data sources include, but aren’t limited to, websites, mobile apps, POS systems, data warehouses, data lakes, and Lifecycle Marketing tools. Integrated CDPs are also well known for their Identity Resolution capabilities. Successfully deploying an Integrated CDP requires a well-thought-out data strategy, clean/actionable data from all relevant sources, and buy-in from cross-functional teams. Integrated CDP deployments can be lengthy, deployment time can vary but implementations usually take anywhere from 3 to 6 months.
Taking Stock of all Customer Data Sources is Critical in your Decision Process
Is your organization already using a data warehouse as your customer data source of truth? If so, how confident are you in its upkeep and accuracy? Do you have data engineering resources in-house? What data sources are critical to building your customer 360?
The next question you should ask yourself is, do I have an established data warehouse, data engineering team, and accurate and reliable customer data? If your organization is heavily reliant on data from your data warehouse, and your warehouse is kept up to date and clean, a Composable CDP may be an attractive option. If your organization is already routing all your critical customer data to a data warehouse, a Composable CDP may also be an attractive option. Keep in mind, routing source data to a data warehouse first, before making it available to segment and act on can introduce some latency. Your organization needs to be okay with small delays in activation that can be introduced when using a Composable CDP.
On the other hand, if your organization doesn’t actively use a data warehouse, your data warehouse is not your customer data source of truth, or you don’t have in-house data engineering resources, an Integrated CDP may be a better option. As mentioned earlier, an Integrated CDP can ingest almost any type of source data, including data from a data warehouse. If your customer experience is measured through behavioral data on a website or app, an Integrated CDP is a good option as there is little to no delay getting that source data into your CDP. An Integrated CDP ingests data directly from a website, mobile app, etc. bypassing the need to route through a warehouse first, which can reduce latency and enable near real-time activation. If you decide an Integrated CDP is the right fit for your organization, verify that your selected CDP is compatible to ingest all critical source data.
Select a CDP that has the Right Identity Resolution Solution for your Organization
Identity resolution drives the customer 360 view, and without it, a CDP is incomplete. If your organization already employs sophisticated identity graphs in your data warehouse for identity resolution, a Composable CDP may be a great fit. If you utilize multiple identity resolution methodologies within the data warehouse, an Integrated CDP’s Identity Resolution offering might limit you. If this is the case, a Composable CDP may be a better fit. Alternatively, if you do not have a data engineering team to handle Identity Resolution in your data warehouse, an Integrated CDP is likely the better choice, as integrated CDPs usually provide impressive out-of-the-box Identity Graph solutions.
Select a CDP that Integrates with your Downstream MarTech and AdTech
Now that you’ve addressed data sources and identity resolution solutions, you’ll want to ensure your CDP of choice has established connections with your core MarTech and AdTech stack. Any downstream technology that offers access to a critical touchpoint in your customer’s journey should integrate with your CDP. Core downstream integrations for CDP customers include lifecycle marketing, paid social, programmatic, search engine marketing, CRMs, analytics tools, and databases. Of course, there will be instances where custom solutions like webhooks might need to be developed, but a variety of well-established CDPs with robust partnerships already exist. It’s not worth sacrificing hours of engineering resources to custom build multiple integrations when there are a variety of CDPs that likely have out-of-the-box integrations with most of your MartTech and AdTech stack.
Evaluate the Needs and Resources of Your Organization When Making Your Decision
Making the choice between an Integrated CDP or Composable CDP will hinge on your ability to effectively evaluate the needs and resources of your organization. Your decision will largely fall upon the following three critical criteria: data sources, identity resolution, and downstream integrations. An effective assessment of your organizations requirements in these areas will guide you to adopting the right CDP for your business.