{"id":673,"date":"2019-06-24T10:24:49","date_gmt":"2019-06-24T10:24:49","guid":{"rendered":"https:\/\/www.lemnisk.co\/blog\/?p=673"},"modified":"2020-01-16T10:28:10","modified_gmt":"2020-01-16T10:28:10","slug":"buy-or-build-a-customer-data-platform","status":"publish","type":"post","link":"https:\/\/www.lemnisk.co\/blog\/buy-or-build-a-customer-data-platform\/","title":{"rendered":"Should You Buy or Build a Customer Data Platform"},"content":{"rendered":"<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The popularity and importance of data-driven marketing have led many Financial Services companies to implement a Customer Data Platform (CDP) in their businesses. This is because a CDP has the capability to break down customer data silos and create a <a href=\"https:\/\/www.lemnisk.co\/blog\/single-customer-view\/\" target=\"_blank\" rel=\"noopener\">single unified view<\/a> for each customer. <\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The unified view helps marketers in thoroughly understanding customers with respect to their behavior, preferences, buying intent, etc. These insights, in turn, enable financial marketers to drive personalized <a href=\"https:\/\/www.lemnisk.co\/blog\/5-secrets-customer-engagement\/\" target=\"_blank\" rel=\"noopener\">customer engagement<\/a> which results in increased digital conversions.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">However, marketers are often confused about one underlying question \u2013 Should a CDP be bought or built?<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>Factors to Consider Before Buying or Building a CDP<\/b><\/h3>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">To tackle the above question, the following factors should be taken into account by Financial Services companies:<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><b>1. CDP Capabilities<\/b><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Financial marketers should perform an internal assessment to see the type of <a href=\"https:\/\/www.lemnisk.co\/why-cdp\/\" target=\"_blank\" rel=\"noopener\">CDP capabilities<\/a> that they require. They need to ask questions such as:<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>Can their existing rate of innovation meet these CDP capabilities if they go for the build option?<\/li>\n<li>Should they choose a vendor who can meet at least 80% of their CDP requirements?<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h4><b>2. Technology Capabilities and Resources<\/b><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Financial firms must determine if they have the technological capabilities and resources to build a CDP. This includes details such as sufficient IT skills and maturity for the firm\u2019s development teams, enough budgets to develop and maintain a CDP, etc. As per Gartner, companies that spend less than 9% of their revenue on marketing should buy a CDP. Companies with aggressive budgets that spent over 15% of their revenue on marketing can decide to build a CDP.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><b>3. Time-to-Market<\/b><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">How soon does a CDP need to be deployed? This is one primary question that financial marketers must definitely answer. If the deployment urgency is immediate, buying a CDP is the best option. This kind of urgency arrives when marketers realize that their current technology gap, when compared to their competitors, has increased to a large extent. If the deployment urgency for a CDP is less, then companies can invest enough time and resources to meticulously build a CDP.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Once Financial Services companies have considered these three factors, they will have a clear-cut idea of whether they need to a buy or build a Customer Data Platform.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s further explore these two options.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>Buying a CDP<\/b><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-705\" title=\"buy or build a Customer Data Platform - buy option\" src=\"https:\/\/www.lemnisk.co\/blog\/wp-content\/uploads\/2019\/06\/buy-a-CDP.jpg\" alt=\"buy a CDP\" width=\"500\" height=\"353\" \/><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Financial Services companies that buy a CDP will be charged a subscription fee that can be paid on a monthly or yearly basis. The average cost of buying a CDP can range from $100,000 to $300,000 per annum. The cost and the deployment time are subject to the number of system integrations required for the CDP. The average deployment time is around 4 to 5 weeks. The CDP implementation also comes with expert end-to-end support from vendors for both IT and marketing departments.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><b>Pros<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">1. Financial companies have access to the best CDP vendors in the industry<\/span><\/p>\n<p><span style=\"font-weight: 400;\">2. The total cost of ownership is significantly less than building a CDP<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">3. The risk of technology being outdated is less as the vendor makes sure that they have the latest technology<\/span><\/p>\n<p><span style=\"font-weight: 400;\">4. The total time-to-market is significantly reduced as the CDP vendor already has a ready-to-deploy platform.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><b>Cons<\/b><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">1. The evaluation process of a CDP vendor is lengthy. Financial institutions need adequate time to choose a vendor who can support their roadmap vision<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">2. A financial company is completely dependent on the CDP vendor it chooses. Even for the slightest changes and integrations, it needs to consult with its vendor<\/span><\/p>\n<p><span style=\"font-weight: 400;\">3. A vendor\u2019s pre-defined CDP capabilities may not cover all the requirements of a Financial Services company<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>Building a CDP<\/b><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-706 aligncenter\" title=\"buy or build a Customer Data Platform - build option\" src=\"https:\/\/www.lemnisk.co\/blog\/wp-content\/uploads\/2019\/06\/build-a-CDP.jpeg\" alt=\"build a CDP\" width=\"500\" height=\"350\" \/><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Companies that opt to build their own CDP need to have plenty of money and resources to create a platform that can support their business goals. Depending on the number of system integrations and data sets, it can take around 4 to 6 months to build a CDP. This is due to the large reliance of companies on their in-house teams for developing the CDP\u2019s features and capabilities. The cost incurred here in building and maintaining a CDP is much higher (in the range of millions) than buying a CDP.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><b>Pros<\/b><\/h4>\n<p>1. A financial company that builds a CDP has full ownership of its code<\/p>\n<p>2. The company\u2019s roadmap vision isn\u2019t dependent on any external party and is fully concentrated in-house<\/p>\n<p>3. Based on the business model, financial firms can customize a CDP to meet their requirements<\/p>\n<p>&nbsp;<\/p>\n<h4><b>Cons<\/b><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">1. Although there aren\u2019t any subscription or upfront costs, the total cost of ownership for building a CDP is quite high<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">2. Maintaining a CDP involves additional expenses which increase the overall cost<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">3. There is a risk of technology being outdated with time. Financial companies need to constantly update their CDP technology and keep it in tune with the latest specifications<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>Conclusion<\/b><\/h3>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">A CDP has become a crucial digital tool for marketers to manage customer data. According to a recent report, the global <a href=\"https:\/\/www.techsciresearch.com\/report\/customer-data-platform-market\/3338.html\" target=\"_blank\" rel=\"noopener\">customer data platform market<\/a> is expected to reach $3.3 billion by 2023. As companies scramble to implement a CDP, the buy vs. build factor is a major roadblock. The\u00a0<a href=\"https:\/\/www.martechadvisor.com\/articles\/data-management\/the-future-of-customer-data-platforms-needs-to-be-vertical\/\" target=\"_blank\" rel=\"noopener\">future of CDPs<\/a>\u00a0is heading towards a vertical-specific shift where it solves problems for a specific market.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Financial Services companies that are planning to buy a CDP are better off selecting a vertical-specific vendor that caters to their industry. Companies that are planning to build their own CDP should carefully assess their options and create a proper plan that can guide them in creating the perfect Customer Data Platform. \u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>To explore various <a href=\"https:\/\/www.lemnisk.co\/blog\/7-cdp-use-cases\/\" target=\"_blank\" rel=\"noopener\">CDP use cases<\/a> for your business, Read more.<\/p>\n<h5><\/h5>\n<p>&nbsp;<\/p>\n<h5><strong>By Bijoy K.B | Senior Associate Marketing at Lemnisk<\/strong><\/h5>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The popularity and importance of data-driven marketing have led many Financial Services companies to implement a Customer Data Platform (CDP) in their businesses. This is because a CDP has the capability to break down customer data silos and create a single unified view for each customer. &nbsp; The unified view helps marketers in thoroughly understanding [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":704,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,67,58,65,4,75,70],"tags":[16,19,77,84,31],"class_list":["post-673","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-blogs","category-customer-data","category-customer-data-platform","category-financial-marketing","category-financial-services","category-martech","category-personalization","tag-cdp","tag-customer-data-platform","tag-customer-engagement","tag-financial-marketing","tag-financial-services"],"_links":{"self":[{"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/posts\/673","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/comments?post=673"}],"version-history":[{"count":51,"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/posts\/673\/revisions"}],"predecessor-version":[{"id":1309,"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/posts\/673\/revisions\/1309"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/media\/704"}],"wp:attachment":[{"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/media?parent=673"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/categories?post=673"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lemnisk.co\/blog\/wp-json\/wp\/v2\/tags?post=673"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}