Customer data platforms (CDPs) have become increasingly popular recently as businesses look for ways to collect and manage user data more effectively and accurately. One of the key benefits of a CDP is that it allows companies to collect data from various sources, including website interactions, email campaigns, mobile apps, and social media. This data can create a comprehensive view of each customer, including their demographics, interests, and behavior.

However, there is a growing debate around the traditional all-in-one CDP, such as Segment and mParticle, and a newer approach known as composable customer data platform (CCDP). This article will explore the differences between the two approaches and explain when you should and shouldn’t use a composable customer data platform.

What is a Composable Customer Data Platform?

Proponents of the “composable” CDP see the CDP itself as a software platform that could be broken up into components. They argue that companies should not buy an all-in-one CDP to handle everything from data collection to integration to profile unification. Instead, they should purchase separate components for each function.

This is a similar argument to the overall all-in-one vs. best-of-breed discussion – that a CDP built from components can be easier to deploy, maintain, and operate.
But is this true? According to the CDP Institute, a CDP is “package software.” The CDP is a full suite, not a collection of modules. In that case, can a composable CDP be called a CDP?

Composable CDP advocates argue that the core of the CDP, the customer database, does not need to be there, as many companies already have various data warehouse solutions. They argue that brands should supplement their legacy data warehouse solutions with modules to expand their functionality.

Unfortunately, most companies do not have any type of data warehouse, and even fewer have data warehouses with complete customer information. Even less have data that is properly cleaned, unified, and formatted in the way that marketers need. In fact, only 39 percent of businesses have a data warehouse in place, according to the Harvard Business Review.

Unless a data warehouse was created specifically for marketing operations, it’s unlikely it will have the functionality that is needed to do things like flag inactive customers and calculate customer value.

What are the Benefits of a Composable Customer Data Platform?

The main benefit of a composable CDP is the flexibility it provides. Businesses can select and integrate the specific technologies and features they need, rather than being locked into an all-in-one solution. This allows businesses to use best-of-breed technologies and only pay for what they need, rather than having to purchase an all-in-one solution that may include unnecessary features.

Benefits of a composable customer data platform compared to an all-in-one customer data platform include:

  • Flexibility: A composable platform allows businesses to select and integrate the specific technologies and features they need, rather than being locked into an all-in-one solution.
  • Cost savings: By only paying for what they need, businesses can save money compared to purchasing an all-in-one solution with unnecessary features.
  • Scalability: A composable platform can be scaled up or down as needed, allowing businesses to adapt to changing needs and growth.
  • Easier to upgrade: Since a composable platform is made up of individual components, it’s easier to upgrade or replace specific components as needed, rather than having to upgrade an entire all-in-one solution.

A composable CDP can also be scaled up or down as needed, allowing businesses to adapt to changing needs and growth.

When Should You Not Use a Composable Customer Data Platform?

There are several situations where a composable customer data platform may not be the best choice:

  • Limited technical expertise: Building and maintaining a composable customer data platform requires certain technical expertise. If a business does not have the necessary resources or knowledge, an all-in-one solution may be a better fit.
  • Limited resources: A composable platform requires more resources to set up and maintain than an all-in-one solution. If a business has limited resources, an all-in-one solution may be more cost-effective.
  • Simplicity: Composable customer data platform is more complex than an all-in-one solution. If a business is looking for a simple solution that can be set up and maintained with minimal effort, an all-in-one solution may be a better fit.
  • Limited budget: A composable platform can be more expensive than an all-in-one solution. If a business has a limited budget, an all-in-one solution may be more cost-effective.
  • Limited scalability: A composable platform may not be able to accommodate a large volume of data or high traffic. If a business has high scalability requirements, an all-in-one solution may be more suitable.

In general, if a business has a small or straightforward data management requirement, it might not want to go with a composable platform as it requires more technical expertise and resources to maintain.

Conclusion

Customer data platforms (CDPs) have become increasingly popular as businesses look for ways to collect and manage user data more effectively and accurately. While traditional all-in-one CDPs offer a comprehensive solution, there is a growing debate around the use of a newer approach known as “composable” CDP.

The main benefit of a composable CDP is the flexibility it provides, allowing businesses to select and integrate the specific technologies and features they need, rather than being locked into an all-in-one solution. Other benefits include cost savings, scalability, and easier upgrading.

However, there are certain situations where a composable customer data platform may not be the best choice, such as if a business has limited technical expertise, resources, budget, or scalability requirements.

In conclusion, businesses should carefully weigh the pros and cons of the traditional all-in-one CDP and the newer composable CDP before deciding. By understanding the differences between the two approaches and their benefits and drawbacks, businesses can make an informed decision about which solution is best for their needs.