Customer Data Platforms (CDPs) have emerged as powerful tools for businesses to centralize and leverage their customer data. The term “CDP” was first coined in 2013 to describe a new class of systems that facilitated the management and utilization of customer information. However, the rapid growth and popularity of CDPs has led to various challenges, including the misuse of the term by vendors and the abandonment of core CDP features. In this article, we will explore the evolution of CDPs and the hurdles they face in terms of defining their core features and clarifying misconceptions.
In 2019, the Institute introduced the RealCDP Checklist to provide more specificity to the definition of CDPs. This checklist aimed to help buyers ensure that a system claiming to be a CDP could actually support the desired use cases. By outlining the key capabilities of a genuine CDP, potential buyers could make informed decisions and avoid investing in misleading solutions.
The Adoption and Misuse of the CDP Label
The increasing popularity of CDPs has led many vendors to adopt the label, regardless of whether their solutions meet the true definition of a CDP. This phenomenon has created confusion among buyers who may not receive the expected functionalities and benefits from their supposed CDPs. It is crucial to distinguish between vendors who genuinely provide CDP capabilities and those who merely use the term as a marketing tactic without delivering the necessary features.
Abandoning Core CDP Features: A Troubling Trend
One of the greatest challenges faced by the CDP industry is the abandonment of core features by certain vendors while still claiming their solutions as CDPs. These vendors argue that traditional data warehousing projects can incorporate the missing features, resulting in a diluted version of a CDP. However, this approach often leads to significantly higher costs, longer implementation times, and less optimal outcomes compared to implementing a separate CDP.
The Rise of Data Preparation Modules
An interesting development resulting from the interest in warehouse-based profiles has been the emergence of modular CDP systems. Some CDP vendors are now breaking their solutions into modules, allowing users to purchase the data preparation functions separately from the rest of the CDP. This modular approach provides flexibility and customization options for businesses, enabling them to tailor their CDP to meet specific needs.
Shifting Perception: From Building to Delivering Profiles
As vendors begin to offer separate data preparation modules, there has been a subtle shift in perception regarding the purpose of a CDP. Initially viewed as a system that builds and manages customer profiles, CDPs are now seen as platforms that primarily deliver these profiles to other systems. While this change in perspective offers new possibilities for integration and data utilization, it risks shifting the focus away from comprehensive customer profile management, which is the core function of a CDP.
Arguments for Redefinition: Is a CDP an Activation System?
Some individuals advocate for redefining the CDP, suggesting that it should be considered an activation system that retrieves profiles from external sources. While this argument emphasizes the importance of leveraging data from diverse platforms, it disregards the fundamental need for a separate database or software dedicated to building and storing customer profiles.
Defining the CDP: Distinguishing Configurations
Amidst the evolving landscape of CDPs, it remains crucial to define the primary distinction between configurations. The key decision-making factor lies in determining whether the primary customer profiles are built and stored within the company’s data warehouse or in a separate CDP database. This differentiation between CDPs that operate independently and those integrated within existing infrastructures ensures clarity for businesses evaluating their options.
The evolution of CDPs has brought both opportunities and challenges. While the RealCDP checklist aims to guide buyers in selecting genuine CDP solutions, the misuse of the term by certain vendors and the abandonment of core features threaten the integrity of the CDP label. As the industry moves forward, it is essential to maintain a clear understanding of what constitutes a CDP and the primary functionalities it should encompass. Ultimately, businesses must carefully evaluate their requirements and consider whether a dedicated CDP or integrated solution is better suited to their customer data management needs.