Organizations collect data from a wide range of sources and store it in any number of solutions, which can be spread across the business. For marketing departments trying to deliver personalized customer experiences, those silos present a problem, and a customer data platform (CDP) can seem like an easy answer.
That could be the right conclusion, but it also might be premature. If you’re wondering how to choose a CDP, it makes sense to start with the basics.
The CDP Institute defines a customer data platform as “packaged software that creates a persistent, unified customer database that is accessible to other systems.” This simple definition goes a long way toward unpacking the pros and cons of CDPs.
PRO: A CDP is prebuilt and doesn’t require as much help from IT to implement and maintain as other solutions like custom platforms and data warehouses.
CON: Because it’s packaged software and not a platform, a CDP will be less customizable and less efficient than adding customized functionality to an existing architecture.
PRO: A CDP ingests data from multiple sources across the business, standardizes it, and uses it to build an identity graph to enable real-time customer identification that fuels targeted multi-channel marketing efforts.
CON: A CDP overcomes some of the difficulty of identity resolution but obscures the methodology. You get a unified customer view, but not a lot of certainty that it’s accurate.
PRO: You can use the aggregated data and outputs from a CDP with your downstream systems.
CON: The CDP you select must either come with the API connections you need for the rest of your martech and enterprise tech stacks or you’ll need to factor in costs for custom APIs.
Today’s martech stacks are growing fast, and it’s not always clear whether the functionality your marketing team needs already exists in the broader enterprise architecture. Overlapping features and blindspots are a problem — but also an opportunity.
Gathering a cross-functional group that includes marketing, IT, data, and product teams can help you figure out how to get the most from your technology investments across the business.
If you’re wondering how to choose a CDP, you might be surprised to find that many of the core functions you’re looking for in a CDP are already available in your CRM, MDM, data warehouse, analytics, and BI solutions. For example:
Some analytical CRMs can track real-time online events like website browsing, adding to cart, and the like, much like CDPs.
Your data warehouse may allow for an identity graph overlay and machine learning algorithms that can play a key role in enterprise-wide customer identity resolution.
Your IT and data teams may already have identity and access management processes in place, and that single source of customer data truth could be integrated with your existing martech stack.
So, how do you know if your organization needs a CDP? Your cross-functional group can explore potential use cases in light of departmental needs, budget, and existing functionality. While every organization is different, here are some ways to frame the conversation.
As you meet with your cross-functional team and discuss your need for a CDP, you can also surface requirements and use cases for a CDP solution. From your larger list, choose 3-5 top priorities to help you choose a CDP.
After you identify your top 3-5 use cases, map those core requirements to features you need in a CDP. For example, if one of your core requirements is enabling more targeted multichannel marketing campaigns in the EU, you might need to look for a CDP that offers GDPR-compliant identity resolution processes.
Be sure to note which systems and solutions you’ll need to connect to your CDP both in terms of data ingestion and output sharing with downstream systems. Your CDP will need integrations and APIs to enable those connections. Common CDP integrations include CRMs, analytics tools and dashboards, advertising platforms, BI tools, data warehouses, and data lakes.
Meet with your cross-functional group again to confirm your conclusions and assumptions. This meeting is a good time to clarify any security and data governance implications for your CDP selection as well.
Your next step is to get stakeholders on board for the CDP acquisition and to establish funding to make the purchase. Leadership needs to know the full report from your cross-functional team, but they’ll also have questions about what kind of return the organization can expect from the investment
As you frame up the value story, consider thinking about what not having a CDP costs your company:
The vendor selection process doesn’t have to be painful. Your team can feel more confident about choosing a CDP because you’re going into the process with defined use cases and requirements, as well as support from the organization. That said, with an ever-growing CDP vendor landscape, it helps to have a process for narrowing down your choices.
To accomplish that task, many companies use an internally framed selection matrix or decision tree, customized to fit CDP-specific needs and requirements. These tools can help you think through solution options using your own criteria.
However you handle the vendor review, plan to bring a short list of possibilities back to your cross-functional team for a final discussion before making a purchasing decision.
Figuring out how to choose a CDP and where the solution fits into your larger customer data strategy isn’t easy. Fusion Alliance helps companies navigate changing customer data environments with a unique methodology that fosters collaboration, transparency, and shared ownership of digital transformations.
Whether you’re just getting started or stuck in the messy middle of a CDP selection process, we help you unpack your processes and partnerships to identify risks and opportunities so you can take the right next steps toward a future-focused customer data strategy. Let’s talk.
Keep reading: The Ultimate Guide to Creating Your Customer Data Strategy