The rise of Composable Customer Data Platforms (CDPs) is changing the game in digital marketing and data management. Nowadays, businesses are swimming in customer data, from website visits and shopping habits to app interactions and face-to-face encounters. They need a smart way to use all this info to make their customer experiences really personal. While traditional CDPs have been the go-to for organizing and using customer data on a big scale, composable CDPs are now stepping in, offering more flexibility and a better fit with the data systems businesses already have.
What is Composable CDP
Composable CDPs represent an innovative approach to activating customer data. Unlike traditional packaged CDP that operate as separate entities and store data externally (whether it is a local data warehouse or cloud data warehouse) , it function as an activation layer atop your existing data infrastructure. They empower businesses to curate audiences, orchestrate customer journeys, and channel data into frontline marketing tools without the need for a standalone platform. This model leverages your current data reservoirs, allowing immediate activation and utilization (differently for each use case).
What is Traditional CDP / Packaged CDP
A Traditional Customer Data Platform (CDP) is a software that consolidates customer data from multiple sources into a single internal warehouse without the ability to utilize the existing data infrastructure. This platform facilitates the aggregation, organization, and management of customer information across various touchpoints and channels, enabling businesses to gain a 360-degree view of their customers.
Traditional CDPs have fewer integration requirements, simplifying the setup process and reducing the complexity typically associated with merging multiple data sources and systems. This can lead to quicker implementation times and lower initial technical barriers for businesses looking to consolidate their customer data into a single platform.
The Shift from Traditional to Composable Customer Data Platform
The transition from traditional to Composable CDPs addresses the core challenge of data activation without necessitating the acquisition of a new, separate tool. Composable CDPs enable businesses to start with their existing data—regardless of its location—and activate it directly. This approach offers extensive capabilities and flexibility, eliminating the need to conform data to another platform’s requirements and instead capitalizing on existing data assets.
Core Benefits of Composable CDP vs Traditional CDP
Modularity and Flexibility: Composable CDP is characterized by their modular architecture, granting businesses the freedom to select best-of-breed components for each use case. Allowing access to data stack, click streams, and other behavioral data plus access to internal system events bus, API ,etc. This flexibility ensures that organizations are not confined to the limitations of a single CDP vendor ecosystem.
Integration with Internal and External Data Ecosystems: By building on the existing data infrastructure, Composable CDPs facilitate seamless data activation, audience building, and personalized marketing execution. Seamless integration with external systems enables the enrichment and consolidation of data with information from other available systems. This integration significantly reduces the complexity and costs associated with managing separate data platforms.
Agility in Responding to Evolving Data Practices: The ability to adapt to changes in data collection, storage, and activation practices without overhauling the entire CDP architecture positions Composable CDPs as a future-proof solution for data-driven businesses. This also includes mitigating the risk that comes form evolving data compliance regulations.
Open Source Advantages: Open Source Benefits: Leveraging the open-source model, Composable Customer Data Platforms (CDPs) amplify their advantages by providing solutions that are not only extendable—particularly through an API-First approach—but also circumvent vendor lock-in, grant unfettered access to data streams, and enhance cost efficiency. This approach encourages innovation and enables businesses to customize the CDP to fit their unique requirements with minimal financial outlay. Furthermore, it mitigates the risk associated with evolving data compliance regulations, ensuring businesses can adapt without facing compliance breaches.
What Composable Customer Data Platform Consist Of
Composable CDPs are built from components that can include:
– Data Ingestion and Integration Tools: For pulling data from various sources into the platform.
– Data Storage Solutions: Secure and scalable databases to store customer data in flexible customer data models (SQL or NO-SQL).
– Data Processing and Management Layers: For cleaning, organizing, managing data, automating customer journeys.
– Analytics and Business Intelligence Tools: Ability to orchestrate data to external BI Tools.
– Engagement Platforms: For executing marketing campaigns across different channels based on data insights.
Implementing Composable CDPs
Deploying a composable Customer Data Platform (CDP) taps into the power of your current data practices, including collection, storage, and modeling, while integrating a robust layer for data activation and audience management. This integration often involves utilizing reverse ETL technologies to merge data seamlessly. Acting as a bridge between your data assets and marketing strategies, this layer facilitates the delivery of tailored customer experiences across multiple channels.
With the agility of composable CDPs, marketing and data teams can now activate first-party customer data more effectively, enriching the customer experience without the constraints of packaged CDP solutions. This flexibility supports a wide range of use cases, from identity resolution to the implementation of data science models, all within the framework of a modern data stack.
Solving Industry Issues
Composable CDPs address several issues inherent in traditional CDP solutions:
– Rigidity: They move away from the one-size-fits-all approach, offering bespoke solutions that truly fit a company’s needs.
– Rapid Technological Change: They allow businesses to stay agile in the face of fast-evolving tech landscapes.
– Data Silos: By integrating diverse data sources into a unified platform, they break down silos that can hinder customer understanding and engagement.
Why Choose Composable CDP Over Traditional Types?
Choosing a composable CDP over traditional types allows businesses to tailor their customer data platform to their exact requirements, adapt to changes swiftly, and optimize their investment in technology. This bespoke approach results in better data management, improved customer insights, and enhanced marketing effectiveness.
The Case for Open Source Composable CDPs
Open source composable CDP take the benefits a step further by offering transparency, community-driven innovation, and cost-effectiveness. The open-source model encourages collaboration and sharing of best practices, accelerating problem-solving and the development of new features. Additionally, the absence of licensing fees makes open-source composable CDPs an attractive option for businesses looking to maximize their technology investment.
In conclusion, the shift towards composable CDPs represents a significant evolution in the way businesses approach customer data management. This modular and flexible approach, especially when combined with the benefits of open source, offers a powerful and adaptable solution that can meet the unique needs of any organization, ensuring they are well-equipped to navigate the complexities of today’s digital landscape.