The “whatever works” mindset serves early-stage customer acquisition and growth hacking well, but it’s tough to scale. As a company’s growth accelerates, the marketing team hits a point where “Whatever works” no longer works like it used to, especially as its customer data reaches a critical mass.
That’s naturally when the marketing team also begins to get serious about its martech tools – and these days, there aren’t many marketing technologies hotter than the customer data platform (CDP). It’s a great piece of technology whose time has come in a world where data is more important than ever.
By Jeff Haws
The general promise of a CDP hits home for a growing brand: it’s going to help you better organize your data at precisely the point when it begins to seem unwieldy. There are a ton of options, and they’re all going to show you a slick UI and flashy features that promise to do wonders with your customer data – music to the growth-minded marketer’s ears.
That doesn’t mean a CDP is always a good fit for your organization and its martech stack. Here are four signs that should give you pause before making an expensive, time-consuming commitment.
1. They don’t have a direct data connection.
The first reason to reconsider whether a CDP is right for your martech stack is fundamental: data. Pretty much every CDP will require you to ship your customer data out to the vendor. They’ll tell you this is fine – everyone does it this way.
But that papers over the reality that this means you have to copy and ship your valuable data to another provider, where it will sit outside your firewall in another siloed environment. This is a requirement for you to be able to see your data in that slick UI.
For brands that are already tired of doing this with their email service provider (ESP) – copying and shipping their data out to that ESP’s cloud – you are effectively signing up for this same process again with a CDP.
That also means you’re paying to store your data not once, not twice, but three different times: First in your own database, second in your ESP’s cloud, and third in your CDP. You’re paying to store the same data three different ways, in three different locations, none of which integrates directly with the other.
2. Brands discover they still have the same data management issues.
As companies hit that inflection point in their growth curve, one reason “whatever works” stops working is because data management challenges hinder their ability to scale. They struggle with data silos, data latency, stale data, and other common issues.
They turn to a CDP in the hopes of solving those problems, but they find out later that those same issues persist. That’s because, again, they still have to copy and ship their data outside of their own firewall and into the CDP’s environment.
The brand discovers that they can do all of these new things with the CDP’s UI and features, but they’re still experiencing data lag issues, stale data and customer profiles, and so forth – the bidirectional sync doesn’t work fast enough or well enough to mitigate the challenges that come with creating yet another copy of your customer data and storing it in yet another environment.
3. The CDP provider owns your data.
Any organization or CMO that places a premium on control over their data is probably going to realize that a CDP is not the best fit.
Technically, it’s still your data – you collected it, you’ve stored it in your database. But once you move it out to the CDP, and their environment is now the only place where you can do anything with that data and act on it – what control do you really have?
You’ve surrendered so much of the competitive advantage gained from consolidating your information in your data warehouse, and you’re locked in with the CDP – you no longer have direct control over how you use it. You’re now playing in their sandbox – and by their rules. They effectively own your data once it’s in their environment.
This is also an issue in any industry or organization where data privacy and security are critical – which is most companies these days. Once the data leaves your firewall, you’re forced to trust the privacy and security protocols of the vendor. If they have a breach, your customers won’t care that it wasn’t your fault.
4. They lack flexibility.
Most CDPs are built around a rigid data model that isn’t going to be a good match with your own data architecture. Their schema is their schema, and you’ll have to conform to it if you want to use them.
That likely means a lot of late nights for your data team because you essentially have to re-architect your data to fit the CDP’s particular model. The square peg/round hole metaphor applies here. You’re asking your team to jam your data into the CDP and make it work, which can cause problems – an irritated and overworked team among them.
If you have your own proprietary objects or hierarchy within your data set, you’re going to have a really hard time reconciling that with a CDP. It’s probably not going to work, or certainly not all going to work.
It’s a conversation that needs to be had in advance with your data team. The CDP will tell you it can stream customer events to bridge the gap, for example, but that’s still going to require a ton of up-front work and maintenance for your data team. You’ll be writing SQL against your own data warehouse – that’s not something you want to put on your team, and it’s not even going to solve every problem.
All of this boils down to control and flexibility. There are midsize and even some large companies where those aren’t actually priorities, in which case a CDP is just fine. They just need a better way to organize, analyze, and visualize their data compared with what they’ve done in the past. Lots of teams have used CDPs and used them well.
If a direct data connection, data control, and data flexibility are major priorities, then be sure to do your due diligence. A CDP might not be the right fit, which can be a costly and time-consuming mistake. You have the ability to do what you want to do – in a manner that preserves control and flexibility – in your own data warehouse, with the right set of tools that puts it at the center of your marketing universe.
This article originally appeared in Venture Beat. Jeff Haws is the senior content marketing manager of MessageGears.
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