May 20, 2022 | 4 min read

The Hidden Costs of Building Your Own Profile Database

The pitfalls of a do-it-yourself Customer 360 can be avoided by using tools specially designed to handle customer data.

Radiating lines and nodes in pink, yellow, teal and green on a black background.

If you know it, use it. That’s the principle behind Customer 360 systems — databases of profiles that pull together every piece of information a company has about customers and prospects from marketing, sales, product, service, and even physical stores. Customer 360 systems take the data your customers have shared with you and use it to drive targeted campaigns and personalized experiences that boost sales, increase satisfaction, and lower costs. Many companies build their Customer 360 systems using commercial software designed to manage customer profiles, often (but not necessarily) bundled together and packaged as a Customer Data Platform (CDP). Others try to build using their existing Enterprise Data Warehouse (EDW). After all, the EDW is already meant to gather data from other company systems.

Despite the superficial similarities between a CDP and EDW, anyone trying to design a Customer 360 system using general-purpose database tools quickly confronts their limitations. Data warehouses are general-purpose tools that don’t have the specialized capabilities to collect and merge data about people into comprehensive profiles. And since EDWs are meant for analytics, they often don’t update frequently enough to drive dynamic experiences. Even a capable and ambitious IT department will likely conclude that matching these capabilities will require time and resources better spent on more strategic initiatives. And they still may not notice additional pitfalls of a do-it-yourself Customer 360 that can be avoided by starting with customer profile tools specifically designed to handle the unique challenges of people data.

You’ll need a lot more computing power than you think

A Customer 360 is the ultimate big data project. You aren’t just extracting and summarizing records. You keep every transaction, server log, and customer service chat transcript. Today, you’ll apply advanced algorithms to distill insights from all the detail you collect. Tomorrow, your algorithms will have gotten a little smarter, and your profiles will have a few more interactions with customers. And the system will produce even better insights. Repeat every day, and your business will see enormous benefits. But it will use even more computing power to crunch data along the way. 

Most general database tools charge based on consumption, so a homegrown project that seemed very cost-effective at the start can get quite expensive as it grows. If you’re designing your own algorithms, you’ll also need high-level data scientists who aren’t put to better use on other projects at your company. 

It may be difficult to get IT and business teams to work together

Building a Customer 360 in a large company is less like connecting dots than herding cats. The systems to be integrated are more than likely controlled by different teams, each with its own priorities and methods. Not all of them will do the work needed to support the integration with the same level of commitment and urgency. After the system is deployed, each of these teams still must be responsible for some of the data elements and analytics that make up the Customer 360. When something goes wrong for an analyst or other user— and things always go wrong —it will be difficult for your internal support desk to figure out the problem. A software vendor specializing in customer profile tools, by contrast, has a support team familiar with the entire product, monitoring tools to identify problems throughout the system, and access to the team responsible for all integrations.

You are underestimating the resources needed for ongoing maintenance and upgrades

All the applications of Customer 360 systems — marketing, customer experience, personalization, etc. — are highly competitive and evolving constantly, so the one thing you can count on is change. Even if you have the budget to build a Customer 360 today, will the resources always be available to keep the system up to date? In contrast, the business model for specialized tools requires vendors to ensure that their products keep up with the state of the art.

Another overlooked feature of some CDPs and suites of customer profile tools is their support for change management. Since Customer 360 systems are part of the company's ongoing marketing and service activities, any upgrade needs to be tested and implemented carefully to avoid disruptions. A do-it-yourself solution needs to have the sandbox capability to run and test new code and connections in parallel to the live system, which effectively doubles the complexity of the project.

Some companies may be exploring building their own Customer 360 system because they are concerned that commercial software won’t offer the flexibility or control they need. It's important to remember, though that specialized tools for handling customer profiles provide a foundation on which further applications can be built and customized, just like data warehouses. Customer profile tools, however, come with many of the necessary components and capabilities already built-in.

For a detailed guide to comparing approaches to building a Customer 360 system, download “Building the Customer 360 Stack: How to Select the Ideal Technology to Understand and Delight Customers.” It could save your company a lot of time and effort.