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In today’s hyper-connected word, customers interact with brands across multiple touchpoints – websites, apps, emails, social media, and more. They expect seamless, personalized experiences at every steps. However, many businesses struggle to meet these expectations. Research shows that 70% of millennials are frustrated with irrelevant emails, and 74% of consumers feel annoyed when website content isn’t personalized. This gap between customer expectations and brand delivery highlights the need for better data management solutions.
The Customer Data Platform (CDP) is a powerful tool that consolidates customer data from various sources, empowering businesses to provide tailored experiences. However, as marketing technology advances, our perception of CDPs is also changing. In this article, we will delve into the conventional CDP model, the difficulties it presents, and the potential of adopting an unbundled CDP approach for the future of personalized marketing.
What is a Customer Data Platform (CDP)?
A CDP is a software platform that collects, organizes, and activates customer data from various channels into a unified customer profile. It enables businesses to:
- Gain a 360-degree view of their customers
- Improve personalization by using first-party data
- Ensure compliance with data privacy regulation
- Activate data across marketing channels for targeted campaign
How does a CDP Work?
A typical CDP has 4 key layers:
- Data Collection : Ingests data from multiple sources like websites, apps and CRM systems
- Data Transformation: Cleanses and organizes raw data into usable formats
- Data Storage and Modelling: Stores data in a structured way to create unified customer profiles
- Data Activation: Sends data to marketing tools for personalized outreach
Off-the-Shelf CDPs: The Current State
Off-the-shelf CDPs are pre-built platform offered by various vendors like Segment, Tealium, Adobe Experience Platform, mParticle and Salesforce CDP. These solutions promise a quick path to unifying customer data and activating it for marketing purposes.
| Vendor | Category in Gartner Magic Quadrant | Key Strength |
|---|---|---|
| Salesforce Data Cloud | Leader | Seamless integration with Salesforce ecosystem; AI-driven insights and automation |
| Adobe Experience Platform | Leader | Advanced analytics and robust data integration capabilities |
| Tealium | Leader | Real-time data activation and strong privacy |
| BlueConic | Challenger | Privacy-by-design approach and ease of use for marketers |
| ActionIQ | Visionary | Strong focus on customer experience orchestration and enterprise scalability |
| mParticle | Visionary | Specializes in real-time data collection and customer journey management |
| Segment (Twillio) | Visionary | Extensive integration and developer-friendly platform for data collection |
| Optimove | Niche Player | Focused on predictive analytics and retention marketing |
| Zaius (Acquired by Optimizely) | Niche Player | Combines CDP capabilities with experimentation and optimization tools |
Challenges with Off-the-Shelf CDPs
Despite their popularity, off-the-shelf CDPs often fall short:
- Data Silos: Many organizations already use cloud data warehouses (e.g. Snowflake), but off-the-shelf CDPs create duplicate datasets instead of leveraging existing infrastructure
- Limited Flexibility: These platforms may not support complex or unique business use case
- High Costs: Licensing fees can be expensive, especially when paying for features you don’t fully utilize
- Slow Time-to-Value: Implementation can take months or even years without delivering immediate ROI (This is also subject to the maturity of the company)
According to the CDP Institute, only 58% of companies with deployed CDPs report significant value, and just 23% complete their projects on time.
The Rise of the Unbundled CDP
To address these limitations, many organizations are turning to unbundled approach – a modular alternative that uses best-in-class tools for each layer of the traditional CDP stack. Instead of relying on a single vendor solution, businesses build their own CDP using components like cloud data warehouses, ETL tools, and marketing automation platforms.
What is an Unbundled CDP?
An unbundled CDP leverages modern stack technologies in a “Lego-like” architecture:
- Data is centralized in a cloud data warehouse (e.g. Snowflake or BigQuery)
- Specialized tools handle specific functions like identity resolution or campaign activation
- Teams have full control over their tech stack and can swap out components as needed
Benefits of Unbundling Your CDP
- Single Source of Truth : Off-the-Shelf CDPs often duplicate data already stored in cloud data warehouses. An unbundled approach eliminates this redundancy by using your warehouse as the central source of truth. This ensures all teams work with consistent datasets.
- Full Use of First-Party Data : First-party data is critical for personalization but often underutilized in traditional CDPs due to security or integration limitations. With an unbundled stack, marketers can fully leverage first-party data stored in their warehouse.
- Flexibility & Scalability : Unbundling allows you to choose tools that fit your exact needs:
- Use Fivetran or Stitch for ETL (data extraction)
- Leverage dbt for transformation and modeling
- Activate campaigns via Braze or Iterable
- Faster Time-to-Market : By decoupling components, you can iterate quickly without overhauling your entire system. For example:
- Swap out an underperforming tool without disrupting other layers
- Add new features as soon as they’re needed.
Challenges of Unbundling
While unbundling offers many advantages, it’s not without challenges. The following are some challenges in building your unbundled CDP:
- Integration Complexity: Ensuring seamless communication between tools require robust APIs and technical expertise
- Resource Demands: Building and maintaining an unbundled stack requires skilled teams
- Data Governance: Managing privacy compliance across multiple systems can be more complex than with a single platform.
Choosing the Right CDP Approach: Off-the-Shelf vs. Unbundled
Off-the-shelf CDPs are pre-built platforms designed to provide an all-in-one solution for data collection, unification, and activation. They are ideal for businesses looking for a quick way to get started with customer data management without needing extensive technical expertise – leveraging on vendors to provide on-going support and updates, reducing burden on internal teams.
An unbundled approach involves building your own CDP using best-in-class tools for each layer of the data stack – data collection, transformation, storage, and activation. This modular strategy is particularly suited for organizations with existing cloud infrastructure or unique personalization needs.
When it comes to selecting a Customer Data Platform (CDP), there’s no one-size-fits-all solution. Where you choose an off-the-shelf CDP or an unbundled CDP, the decision ultimately depends on your company’s digital maturity, existing data infrastructure, available resources and personalization strategy. Both approaches have their strengths and weaknesses, and understanding of these trade-offs is key in making the right choice for organization.
