The customer data platform (CDP) industry has been thriving over the past few years and will continue to grow. Its market share hit USD 2.4 billion in 2020 and is estimated to touch USD 10.3 billion by 2025, per research conducted by MarketsandMarkets.
Despite such statistics, some consumers can’t differentiate between a CDP vs data warehouse. Some even argue that they are interchangeable. Let’s examine how CDPs and data warehouses compare.
Deciphering the customer data platform
A CDP is a packaged software built to ingest different forms of data. This can include any form of data—from non-structured to structured data.
This kind of data structure allows business analysts to quickly transform, develop, reformat, and unify the stored data for better analysis. The biggest benefit of a CDP is that it presents a unified view of user data—data is organized by customer “profile.” This enables marketers to understand various details and draw meaningful insights for designing and running different campaigns.
Some CDPs are also adept at segmentation, predictive modeling, analytics, and campaign management—features that make them an excellent choice for data storage. In simpler terms, the function of a CDP is somewhere between your company’s CRM and various other marketing automation tools.
Customer data platforms stand out for a few reasons:
1. Bid adieu to data silos
An organization tends to create data silos whenever they scale operations too quickly. A lack of technology accompanies this, and the result is that not everyone can access essential data for decision-making. CDPs, on the other hand, unify data procedures and make them equally available for everyone.
2. Accurate, up-to-date data collected from the source—customers
CDPs are proficient in managing first-party data directly from customers, site visitors, subscribers, and social media followers. This type of accurate, up-to-date data inspires marketing decisions, as it comes straight from the “horse’s mouth.”
3. 360º view of customer profiling
Having a 360º view of a customer’s profile allows companies to identify different stages of a customer’s journey, ranging from its products to their transactions. As soon as customer data is captured within CDP, full profiling is possible, which enhances a brand’s effort to customize its marketing campaigns to enable deeper market penetration.
4. Campaign optimization and long-term learnings
Marketing is about understanding your customers and realizing what suits them best. By driving insights and monitoring the performance of specific campaigns, marketing analysts can track the efficiency and outcome of campaigns via their customer data platforms. Such attempts can be aimed at reducing and removing unnecessary procedures and concentrating on what’s more relevant and fruitful for increasing market traction.
Are data warehouses worth investing in?
Data warehouses, like Snowflake or Amazon Redshift, are central repositories where large amounts of business data is stored and integrated at regular intervals. These repositories contain data from different sources, such as Sales, Finance, Marketing, Purchasing, IT, and more.
The data stored in data warehouses is accessed by different departments, teams, or people within the organization, provided they have the proper access levels. On the other hand, non-technical people might often face redundancy, as they struggle to get this data out of their technical containers, without the proper know-how and technical access.
Since so much data needs to be ingested and integrated regularly, data warehouses rely heavily on maintenance and regular upkeep. Add the levels of technical skill sets required to access this data, and you’re no better off.
To get access to this data, Marketing and other teams reach out to IT teams for access, data requests, and insights, so that they can make well-informed decisions. However, this is not a feasible solution in the long run, as it leads to the creation of unnecessary procedures that form hurdles in the information flow process from one end to another.
CDP vs Data Warehouse
Let’s unpack a few ways that data warehouses and CDPs differ.
|Differentiators||Data Warehouses (EDWs)||Customer Data Platforms (CDPs)|
|Data Storage||Data warehouses store corporate data, making them large, expensive, IT-driven monoliths, each of which is designed to meet the needs of the whole enterprise.||Customer data platforms only store customer-centric data, as these are built to cater to the needs of marketers without much IT involvement.|
|Design||EDWs are designed to cater to reporting and analysis needs. They are equipped to clean, deduplicate, and store data, to ease out dependent processes.||CDPs are quipped to create Single Customer Views to support real-time updates. This way, marketing teams can initiate wider business reporting, in a faster manner.|
|Normalization and usage||EDWs do not transform, standardize, or normalize the data for a specific purpose, like marketing.||Data normalization within such repositories is a little different. Data is stored in a way, so as to make it meaningful for marketing teams, beneficial to the customers, and readily usable in the personalization of campaigns.|
|Focus-oriented approach||With EDWs, there is no focus on marketing intelligence as the use cases. These could range from giving appropriate level access to marketing data to reduce the strain of IT requests.||A CDP primarily benefits Marketing; the use cases are focused on delivering additional revenue from customers through improved personalization and segmentation.|
|Data contributions||Data warehouses are sourced through various departments, each of which would have access to their respective repositories.||CDP mainly processes first-party customer data which owned by Marketing. All customer-level accesses are retained and managed through one centralized location.|
Making your data warehouse work as a customer data platform
Who says one repository can’t function like another? As an enterprise, all you need is good data infrastructure, a decent data team, and stable technology to make ends meet.
Curious about how to use your EDW as a CDP? Kloudio’s platform allows you to sync your data from different data warehouses into any segment, including Sales, Marketing, and Support. This can be done by using simple, pre-written SQL queries so that even non-technical people can work seamlessly with real-time data.
Sometimes, Marketing may need to drill into customer data to build and distribute audiences from a shared location. In addition to the primary SQL interface, Kloudio also offers various add-ons that connect your data repositories directly with your internal data warehouses. You can create reports, draw insights, and make meaningful decisions while enabling real-time data refreshes.
With the ease of data extraction, report building, and other functionalities, Kloudio prioritizes data availability and accessibility, making the whole process work like a well-oiled machine. Create a free Kloudio account today to see how your data warehouse can function as a CDP.