Embracing composability: What do your CDP, cloud data warehouse and headless architecture have in common?

Gone are the days of generic demographic targeting.

Women over 30 living in a metropolitan area are not the only cohort interested in baby strollers. And if, as a baby stroller retailer, you’re targeting audiences based solely on demographics, you’re missing out on targeting audiences whose intent and behavior —not their location, gender, or age— make them likely to buy. But then, why do so many organizations still lean on this approach to customer engagement? And what’s changing?

The way we use data.

What’s the big fuss over customer data-centricity?

The world is becoming more privacy-centric, data-centric, and customer-centric by the minute — or at least, brands are certainly trying to be.

Part of the change we’re seeing comes from consumer evolution. As buyers, we don’t just want — we demand and expect — experiences curated to our preferences because it’s become what we’re accustomed to in our everyday lives (think: Netflix or Amazon). And somewhere along the course of this evolution, concerns around data privacy and security have skyrocketed. Google is doing away with third-party cookies by 2023, while other giants in the space are actively evolving privacy policies (Apple, Mozilla).

To pile on, marketing tactics are also evolving. Cold outbound sales, list buys, and other old marketing tactics are ineffective. Enter influencer marketing, TikTok, customer obsession, D2C, and… what’s next?

How does a business stay competitive? How can you clean, unify, organize, segment and activate your customer data to drive growth? How do you pivot away from the third-party data-driven strategies you know to first-party data-driven, consent-positive ones?

You master privacy-, data-, and customer-centricity.

But can you check all three boxes without compromising efficiency, consumer trust, or business results? You can, if you start with knowing your customers — deeply and in meaningful ways, not just on the surface. If you’re a brand looking to be insight-driven, customer data is your most valuable asset, and a customer data platform (CDP) can help you action on it.

Why the future of CDP is composable

CRM and marketing automation systems were once a marketer’s holy grail for lead, contact and account data (and their activation) in the past. Now, businesses are embracing customer data platforms (CDPs): a technology that some argue is more effective. Why?

They are machine-led rather than human-led. Unlike human-created lead scoring and lifecycle stages, which are truly arbitrary, there’s no bias in a computer analyzing first-party data on your customers to power product recommendations, for example.

At Lytics, we believe that your CDP should work with your cloud data warehouse, not against it. One of our co-founders, James McDermott, made this claim last year and has pivoted our product focus to enable decoupling data ingestion and profile stitching, from audience segmentation, decisioning and activation.

In a nutshell, this decoupled, or composable offering we have today is a “headless CDP.” And while headless architecture is nothing new, many are unclear on just what that means.

The evolution of headless architecture

Let’s start with the basics. What does “headless” mean?

Headless software decouples two or more parts while still allowing for functionality between them without being connected. And historically, this approach has been adopted anywhere from content management systems (CMS) to e-commerce.

Content management systems took this leap early on. The “headless CMS” serves as a back-end repository intended to house content that can be rendered to an output (head) via API. One reason this approach may be useful is for omnichannel experiences. Per CMSWire, with a headless CMS, marketers can author content in one place and developers can build a variety of presentation layers out of that to display content on a website, app, digital kiosk screen, and so on.

Ecommerce came next. Just like headless CMS, headless commerce decouples the front and back end. Again, you may wonder – why would a business want this? The answer is similar. Ecommerce isn’t monolithic – it’s omnichannel. Headless ecommerce allows content to be managed in one place with the flexibility to render that content to different shopping experiences: an open, front-end web store vs. a dealer portal, for example.

The key in both examples is flexibility, and headless solutions allow organizations to embrace agility and scalability in graceful ways.

Headless CDPs and why businesses want this level of composability

First-party data is more valuable to organizations than ever before, not only because third-party cookies are on their way out. But because your first-party customer data fuels your CDP. And with the world’s shift toward consumer data privacy and security (GDPR, CCPA, cookie deprecation), what better place to house your customer data than in your cloud data warehouse?

In fact, Gartner estimates that by this year, 75% of all databases will be on a cloud platform. Some noted benefits of cloud data warehouses include security, serving as a single source of truth, accessibility, performance, capacity for data storage…the list goes on.

With a headless CDP, your data lives in one place – your cloud data warehouse. From there, profile stitching can occur along with querying your data to build segments for activation via the CDP.

How to get started with a “headless” CDP

As mentioned earlier, we believe your CDP should work with your cloud data warehouse, not against it.

And, we think you know the basics – data hygiene, the value of a cloud data warehouse, etc. But are your teams ready for this evolution? And have you fully embraced the demand for a first-party data strategy? Work with your team to answer these questions:

• Who are our stakeholders? Hint: not just marketing, but IT and data analysts are highly encouraged to fuel a successful project.
• What are your business objectives, or use cases? Think: I want to create a single view of my customers, or I want to improve return on ad spend (ROAS).
• What are your technical requirements? Think: What does your tech stack look like? Who is your cloud data warehouse provider? Or, what technology does your CDP need to integrate with?
• What are your business-side requirements?  Think: marketing wants to leverage data science to measure propensity scores, or broader behavioral scoring to make more informed marketing decisions.

So, in conclusion, what do your CDP, cloud data warehouse and headless architecture have in common?

The three together are your solution to today’s market challenges around customer data – privacy and security being paramount, and a first-party data strategy as the only path forward in the long term.

Need help? The Lytics team is here for you.