Buying vs Building: Why a DIY CDP May Cost More Than You Think
By William Sears, Group Vice President, Solution Strategy. In today’s precarious economy, it’s crucial for companies to gain a competitive advantage and better manage their resources. A key strategy is developing a better understanding of your customers, which enables marketers to curate more personalized experiences thus increasing sales. Customer Data Platforms (CDPs) have been around for quite some time, but now more than ever it’s critical to leverage the potential of your customer data. The value of CDPs is undeniable, but how do you know whether to build an in-house solution or opt for a pre-packaged CDP?
We’re admittedly biased in this argument, but our goal with this post is to help you understand the complexity of building a secure, real-time CDP, and why investing in a pre-packaged solution like Zeta’s makes the most sense for your business.
Keep in mind that when considering whether to build or buy, you’re not buying a platform, or pieces of a platform; rather, you are buying answers, something that solves key business needs and answers pressing questions. Investing in a platform that can more reliably deliver those results and answers quickly and efficiently means better information, and in turn, more sales.
Building Or Buying A CDP: What Does It Mean?
Building a CDP
Building a CDP means creating and assembling all the necessary components in-house. This approach typically requires a dedicated development team who’s proficient in data engineering, backend and frontend development, security, and data science.
Building a CDP allows for complete customization but requires a substantial budget, as well as the willingness to invest time and resources—often up to 1-2 years before it’s fully operational. Once operational, there are ongoing costs associated with not just maintenance, but also building new features and functions as your needs and the marketplace continue to evolve.
Buying a CDP
Buying a CDP means purchasing a ready-made solution that’s optimized for specific use cases. When CDP shopping, it’s critical to establish clear uses up front so you know what strategic objectives you’re addressing. By purchasing a CDP, companies can quickly onboard the solution and start leveraging its capabilities without the need for extensive development or ongoing maintenance and development efforts.
Pre-packaged CDPs typically provide ready-made integrations, connectors, and APIs, making it easy for businesses to connect and activate data across their tech stack. This option is best for companies that prefer to focus their resources on core business activities rather than building and maintaining a CDP in-house.
The 4 Core Capabilities That Your CDP Solution Should Fulfill
Data Ingestion and Integration
A CDP should be able to seamlessly process, integrate, and share different types of data across your tech stack. This includes event-level behavioral data from websites and apps, demographic data, transactional data, as well as offline and modeled data like RFM models and propensity scores. This means ingesting both structured and unstructured data streams to ensure a comprehensive, unified view of the customer and sharing data in usable formats.
It’s important to realize that there is no one-size-fits-all solution. No one system is going to be able to account for all your data. What you need is a system that can wrap around your existing tech stack and seamlessly fill all the necessary gaps. This is where Zeta excels. Not only does Zeta come with myriad pre-built integrations and connectors, but we also offer the flexibility to easily create custom connections that meet your business requirements. A custom DIY solution would require you to build these connections from scratch and maintain them over time, which is not only time consuming, but incredibly difficult as data, technology, and your needs will all change over time.
Customer Profile Management
The value of a CDP lies in its ability to connect and consolidate multiple identifiers from various platforms and devices in real time. By using deterministic and probabilistic matching techniques, the CDP creates universal consumer profiles that ideally encompass both known and unknown visitors. This enables marketers to recognize and engage customers on an individual level and create stronger experiences that drive real growth.
Furthermore, your system should be able to enrich your customer profiles to create a more robust view of your buyers. Zeta’s AI-Powered Marketing Cloud layers Zeta’s proprietary data and intent signals on top of your first-party data to help you identify prospects who look like your best customers, as well as recognize opportunities to grow your existing customer relationships. Many organizations struggle to build an effective first-party data pool, and creating a broader third-party data set is an even larger challenge. Home-grown CDPs simply do not have access to this unique data and insight, creating blind spots for marketers that lead to missed opportunities.
Real-time segmentation enables marketers to define and manage rule-based segments on the fly. By instantly identifying and adapting to changing customer behaviors and preferences, businesses can create logic and rule-based campaigns in real time, fostering relevant and timely interactions that resonate with their audience.
Piecing together point solutions or building this capability from scratch requires technical expertise that most companies either don’t have or can’t afford. There’s also the added complexity of keeping pace with the rapidly changing market. Just because your segmentation solution works today, doesn’t mean it will be sufficient tomorrow. Automated, AI-based segmentation is the new norm, and platforms like Zeta are the only way to take advantage of these powerful features in a cost-effective manner.
To capture customer attention, you need to connect with them at precisely the right moment, through relevant channels, with a resonant message. To do this, marketers need to be able to act on real-time data to deliver timely and targeted communications, promotions, and advertisements tailored to individual customer behaviors and preferences.
Pre-built solutions like Zeta render data readily accessible to other systems and channels. Zeta takes it a step further with out-of-the-box omnichannel capabilities so that, rather than piecing together multiple platforms, you get everything you need to engage your customers in a seamless, intuitive UI. Zeta also makes it easy to turn features on and off at your discretion so you only pay for what you use, can tailor the platform to your specific needs, and don’t need to re-platform when new features are needed. Need website personalization? Flip a switch and you’ve got it.
If you build a solution from scratch, you’re forced to anticipate what you’ll need one, two, or even three years down the road. Often by the time you’re finished building your in-house solution, it’s already obsolete. Investing in a solution and technology partner that makes it easy to add features as you need them future proofs your investment and makes it easy to grow and scale.
6 Factors to Consider When Deciding to Build or Buy
Cost and ROI
Building a CDP in-house is expensive and distracting. Development team salaries, third-party tool licenses, infrastructure costs, and ongoing maintenance expenses all add up quickly. Today’s highly competitive job market makes it difficult to find and retain talent, especially engineers. If you choose to DIY your own system, plan on hiring or augmenting your team with Data Scientists, AI, and NLP engineers, as well as software engineers, UX strategists, and project managers. All these costs decrease your profit margin and make it more difficult to generate positive ROI.
On the other hand, buying a CDP requires soliciting the right people during the shopping stage to ensure you purchase a solution that delivers on your use cases and requirements. Once the right decision is made, CDP ownership involves a one-time implementation fee, recurring technology cost, and, in some cases, costs based on usage or records under management. Instead of building a dev team or pulling valuable resources away from other projects, you can focus your effort on selling more products and generating more revenue.
Business Strategy and Alignment
Make sure to align your build vs. buy decision with your long-term strategic goals. If processing customer data is your company’s specialty, building a CDP might be the way to go, as you have full control over the process. However, if your focus is to manage and activate data more effectively to meet and exceed your company’s business goals, buying a pre-packaged CDP will be more cost-effective and beneficial.
Data Security and Privacy
Building and operating a CDP means bearing the responsibility of constantly evolving data and privacy regulations. You also need to maintain strict security standards, which can be complicated and costly. Before building, honestly assess your willingness to manage emerging consumer regulations and the potential liability risks associated with an in-house solution. Buying a pre-packaged CDP means offloading all these considerations to a third-party that is well versed in consumer privacy.
Deployment Scope and CDP Features
The scope and required features of the CDP play a significant role in the build vs buy decision. If you need a system with unique features, you might find that building an in-house CDP makes the most sense. However, if your vision involves advanced features like AI and generative content, buying a pre-built solution is typically a quicker, more scalable, more competitive approach.
As we touched on earlier, the feature set you need today is not the feature set you’ll need next year. Building an in-house solution is not a one-off project with a set start and end date, it’s an ongoing process that requires a team that is always innovating. Otherwise, your technology runs the risk of being obsolete before, or soon after launch.
Building a CDP from scratch can take 1-2 years to achieve basic functionality and even longer for advanced features. Internal projects also typically suffer from budget and timeline overruns, which can push the project back even further. Buying a CDP can expedite the implementation process, especially if the vendor offers in-house onboarding resources and support. You need to evaluate whether you can afford the time and resources to manage in-house development without falling behind and going over budget. Don’t forget, there may be an opportunity cost involved in waiting.
When building a system in-house, you’re reliant on your internal engineering and IT team for support. This not only depletes internal resources but can result in long turnaround times for requests and missed campaign opportunities. Expertise also comes and goes. If a critical team member leaves, who steps in to take over management of the in-house system? By buying a pre-packaged solution like Zeta, you get access to a dedicated success team that can onboard and train your employees, as well as offer 24/7 support. You also get access to a suite of professional services including data science, campaign management, deliverability, and more to deliver on your KPIs and maximize your CDP investment.
Wrapping it up
We’ve covered a lot today but if there’s one takeaway that we can leave you with it is this. Don’t underestimate the time, resources, and commitment it will take to DIY your CDP. For some businesses with very specific use cases, building will make more sense, but for most companies, taking on a project of this magnitude will create more problems than it solves. If you would like to learn more about our point of view, please don’t hesitate to reach out. We would love to discuss.
Zeta’s Modular CDP: A Flexible and Scalable Solution for Managing and Activating Customer Data
Zeta’s modular CDP is a game-changer for businesses that need a fast, effective, user-friendly platform to manage and activate their customer data. Our flexible data model built on Snowflake can wrap around your existing technology stack, enabling you to maximize the value of your current investments and ensuring that you can make the most of your data, channels, and touchpoints, without the need for a complete technology overhaul. Our flexible approach allows you to choose the modules and features that best suit your needs, tailoring the platform to your unique business requirements.
Want to see Zeta in action?