Getting a Handle on Your Customer Data: Can You Afford to Wait?

Twilio Segment is a Business Reporter client.

Katrina Wong, VP of Marketing at Twilio Segment, explains why the time is now to invest in your customer data infrastructure.

In recent years, there’s been a cross-industry consensus that “data is the new capital.” It’s a prerequisite for personalization, product development, machine learning—the list goes on.  

As the world continues to embrace our new digital-first era—at breakneck speed, partly due to Covid-19—the sheer volume of data being created has skyrocketed. 

More data should be a boon for businesses, right? Well, sort of. 

Today, the average business uses well over 100 software apps, which means data is often trapped in team silos. A recent Forrester survey found that fragmentation was the top challenge companies faced when trying to leverage their customer data for sales and marketing efforts.  

This has made a customer data platform the new necessity in your tech stack. As businesses make a concerted effort to become more customer-centric, there needs to be a scalable data infrastructure in place that not only collects data reliably, but stitches together data points into complete customer profiles to activate downstream in marketing and sales tools.  

But with economic circumstances uncertain, and technology budgets under pressure, many businesses are deciding to delay investing in their customer data infrastructure and to rely on a homegrown solution instead. 

While this approach has some benefits, such as direct control and a customizable feature set, it comes with time-to-value, total cost of ownership (TCO) and capability trade-offs. Building and maintaining an in-house customer data platform (CDP) is an ongoing project that requires a large investment of time and resources.  

Starting out, many companies believe they have the capability in-house to build, for example, an ID graph for identity resolution, or a system that scales and enables real-time data delivery. But this type of work is both complex and costly. While building the first iteration of a data platform may seem easy, it’s just the beginning of the journey to a viable solution for the business—and many soon realize that they’re out of their depth.   

Businesses need to ask themselves:  

• Can we afford to wait while engineers ramp up an in-house platform?

• Will ongoing maintenance distract engineers from working on our core differentiators? What is the cost? What happens when something breaks?

• Will building in-house slow down decision-making? (As systems get larger and more complex, so do the teams working on them, which can be difficult to coordinate.)  

This was the situation that one Twilio Segment customer, a leading fintech provider, found itself in. The fast-growing fintech business found that working with Twilio Segment could lessen the burden on engineers during its high-growth stage. This led to significant cost savings by leveraging Segment’s platform instead of building one in-house. Additionally, 25% of the team’s engineering resources can now be preserved for building and innovating the core product, instead of funding the ongoing upkeep required for a home-grown data system.

“Rather than extracting data from multiple platforms, we now take an ‘integrate once, extract to anywhere’ approach,” says a representative at Twilio Segment. “This reduces the maintenance overhead of gathering data and ensures that quality exists further up the data stream.” 

Complete control comes with complete responsibility 

Maintaining ETL pipelines, setting up new integrations and complying with evolving privacy regulations, along with the burden of operating and hosting costs, will all fall squarely on the shoulders of your engineering team when building a CDP in-house. It’s amazing how many companies think they’ve built an effective data platform, but then realize that key elements are lacking, such as the ability to comply with GDPR/CCPA or handle data deletion requests from users. 

The economic horizon may be uncertain, but perhaps it’s time to reframe the conversation around building customer data infrastructure. It’s not a question of whether your business can afford it. It’s a question of whether you can afford to wait. 

For a more in-depth look into how customer data powers our daily lives, read The Customer Data Platform Report 2023.

This article originally appeared in Business Reporter.

Images: Courtesy of Twilio Segment