CDPs build or buy?

A CDP serves as a centralised repository for collecting, organising, analysing and distributing customer data from various sources to provide valuable, actionable insights for marketing, sales, and enhancement of the customer service experience, all in real-time. While many businesses opt for third-party CDP solutions, some may consider building their own platform to tailor it to their specific needs. However, embarking on such a quest requires careful consideration and shouldn’t be undertaken lightly; if you’re thinking of taking the leap on your own, here are some key points for consideration when composing your own CDP. 

1. Data Integration and Collection: One of the primary challenges in building a CDP is integrating data from disparate sources. Businesses must ensure that data from various touchpoints, such as websites, mobile apps, social media, CRM systems, data lakes and other 3rd party data sources, can be seamlessly collected and consolidated within the platform. This involves designing robust data pipelines and implementing APIs to facilitate effective data flow. 

2. Data Quality and Governance: Maintaining data quality and ensuring compliance with data governance regulations are critical aspects of a CDP. Businesses must establish processes for data cleansing, deduplication, and normalisation to ensure the accuracy and reliability of the data stored in the platform. Additionally, adherence to the Data Privacy Act, and other global data management standards such as GDPR and CCPA, is paramount to protect customer privacy and avoid legal repercussions. 

3. Scalability and Performance: As the volume of customer data grows, scalability and performance become key concerns for a CDP. Businesses must design the platform to handle increasing data loads efficiently while maintaining optimal performance. This may involve implementing distributed computing architectures and leveraging cloud-based infrastructure to scale resources dynamically based on demand. 

4. Analytics and Insights: The ultimate goal of a CDP is to derive actionable insights from customer data to inform business decisions and downstream events/ actions. Businesses need to implement robust analytics capabilities within the platform to perform advanced data analysis, segmentation, and predictive modelling. This requires integrating machine learning algorithms and visualisation tools to uncover meaningful patterns and trends in the data. 

5. Customization and Flexibility: Every business has unique requirements and objectives for leveraging customer data. Building a CDP offers the flexibility to customise the platform according to specific needs, such as creating custom data models, defining user personas, and tailoring marketing campaigns. However, it’s essential to strike a balance between customisation and maintaining the platform’s agility and ease of use. 

6. Security and Compliance: With data breaches and cybersecurity threats on the rise, ensuring the security of customer data is paramount. Businesses must implement robust security measures, such as encryption, access controls, and monitoring tools, to safeguard sensitive information stored in the CDP. Compliance with industry standards and regulations is crucial to mitigate risks and build customer trust. 

7. Total Cost of Ownership (TCO): Building and maintaining a custom CDP can entail significant development, infrastructure, and ongoing maintenance costs. Businesses need to carefully evaluate the TCO and weigh it against the potential benefits of owning a bespoke solution. This includes considering factors such as resource allocation, opportunity costs, and long-term scalability. It is here that most businesses underestimate the long-term commitment needed, which is often a key point of failure for a self-built CDP.   

Why? Because buying a CDP offers numerous advantages over building one internally. Firstly, it saves significant time and resources by providing ready-to-use solutions and avoids the need for extensive development, testing, and maintenance. Additionally, CDP vendors and their partners often offer specialised expertise and support, ensuring optimal functionality and integration with existing systems. Purchasing a CDP also provides access to advanced features, updates, and scalability options that may be challenging to replicate in-house. Finally, leveraging a pre-built CDP can accelerate time-to-market, enabling businesses to achieve early operational success and realise positive ROI more quickly, all while mitigating the risks associated with developing and managing a bespoke solution. 

However, if you already have many of the features and benefits offered by an off-the-shelf solution through other technologies, needing only a unified data layer and a few other requirements, then building your own could be best for your business. 

Focus on what’s important! While building a custom Customer Data Platform may be an exciting prospect for your data architects, solution engineers, analysts and data managers, offering your business greater control and customisation over its data management, analytics processes, and value delivery, it also comes with significant challenges and risks. Taking the right path to achieving the Holy Grail of Real-Time customer data management to drive growth and innovation within your business is within your grasp, but you must choose wisely. 

Written by Andrew Pink. Commercial Director, Anchora. 14.02.2024