Across the globe, big data and AI have become central factors that drive business performance. In fact, almost 98% of all businesses are investing in big data to some extent, demonstrating the huge appeal this industry holds. From generating real-time analytics to helping create data-driven strategies, data in business is absolutely everywhere.
With the need for data at an all-time high, many companies are now using more than just one singular data platform to manage all of their data. Two common data architectures are data warehouses and customer data platforms. While both of these platforms are popular, people in business commonly mix them up – or simply think that they’re the same thing.
In this article, we’ll turn toward these data infrastructures. We’ll discuss what each one is, what they’re used for, and how data warehouses are distinct from customer data platforms.
Let’s get right into it.
What is a Data Warehouse?
Think of a data warehouse like a huge online storage facility. Data is a digital currency, and must be stored electronically. To house all of your company data, you’ll create a massive warehouse where each individual file can rest securely. This is what a data warehouse does, acting as an integrated source of information.
Alongside just storing data, employees are also able to query information within a warehouse to build up analysis, with this acting as one of the most fundamental business tools that companies will rely on in the modern age.
Commonly, businesses will partner with a leading cloud data warehouse to outsource this element of their company. Instead of having to construct the infrastructure themselves and pay the ongoing upkeep. If we look at a comparison of two of these services, Apache Pinot vs Druid, we can instantly see the range of benefits partnering with a cloud data warehouse offers.
With how accessible these businesses are, cloud data warehouses are now a go-to tool for companies across the globe.
What Is a Customer Data Platform?
On the other hand, a customer data platform (CDP) is a singular piece of software that pulls in data from many sources at once. A typical CDP will collect data from different areas of a business, focusing on any data that is directly to do with the customer. This could mean that it takes data from the company’s website, Facebook ads, and email marketing statistics.
Instead of having information about all three of these things in different areas, a customer data platform will integrate absolutely everything into a singular location. From there, data analysts are able to use this collected data to create insights about customers.
Whether it be finding what marketing works with your audience or segmenting users into different groups, a customer data platform will pave the way in terms of customer-related data insight.
What’s the main difference between a customer data platform and a data warehouse?
Looking at these two data infrastructures, it can be easy to assume that they both do the same thing. While they do indeed collect many forms of data into one location, they focus on slightly different things. A customer data platform even has a hint in its title, only wanting to collect customer data. It doesn’t care about other metrics, only collecting information that is directly related to the customers and how they relate to a business.
Data warehouses, on the other hand, collect absolutely everything. No matter whether the customer is involved or not, a data warehouse will contain everything a business comes across. As a catch-all service, a data warehouse could contain industry trends, business financial data, user information, and even customer data as well.
In short, customer data platforms are much more specific forms of data warehouses, focusing only on the customer-facing side of the business. Due to this, they have a limited functionality when compared to data warehouses. While an analyst could use a data warehouse to come up with the same insights as one using a customer data platform would generate, the opposite is not true,
With this in mind, it’s much more common to see businesses using data warehouses rather than customer data platforms. While customer data platforms are useful, their limited utility in comparison is slightly less impressive.
What are Customer Data Platforms typically used for?
With the limited utility of customer data platforms being restricted to customer-facing analysis, they can’t do nearly as much as a data warehouse. Yet, what they can do is actually incredibly impressive.
There are three main uses for a customer data platform:
- Unification – Customer data platforms are fantastic at incorporating many sets of data into one location. Considering customers could be accessing a business from mobile, desktop, or laptop, there are many different streams of information to manage. CDPs unify all this customer data into one place, making analysis much easier.
- User Segmentation – Marketing campaigns work much better when they’re personalized. In fact, 72% of customers say they want to see products that are specifically catered to their interests. By collecting customer data into a CDP, marketing teams can find user segments, then create individual groups that they can launch highly-targeted marketing on.
- Marketing Information – CDPs also provide a stable platform from which businesses can launch marketing efforts. With integrated data, this is the perfect place to conduct real-time outbound marketing, mostly in the form of email marketing. With all the customer data in one place, teams can create highly-specific marketing emails and send them directly from the CDP. This saves time and allows businesses to become even more efficient when it comes to interacting with their customers.
Across these areas, marketing teams can actually get a lot out of CDPs, making them far from a useless tool. As customers are the lifeblood of B2C businesses, tools to track engagement and interest are vital for ensuring a company’s long-term success.
While these data tools are both vital for businesses that want to collect, store, and engage with the data they generate, they are far from the same thing. Although both collect data, a customer data platform only focuses on data related to customers and their activity within a business.
A data warehouse will focus on every data type and set that you send its way, with this being a much more comprehensive form of data collection and storage. While both are popular, data warehouses have more utility and are therefore used more in modern business.