Alice in wonderland at the tea party with the mad  hatter
PHOTO: John Tenniel

“Who in the world am I? Ah, that’s the great puzzle!” ― Lewis Carrol, "Alice in Wonderland"

Eight thousand solutions; six disparate categories; 49 subcategories; what an analyst I recently co-presented with jokingly referred to as the “clash of the clans” diagram. Scott Brinker’s 2020 Martech Landscape Supergraphic sometimes puts me in mind of Alice, passing through the looking glass in the Lewis Carrol fantasy novel. Stepping through the martech mirror can feel like entering a twilight zone, a strange parallel world where it's almost impossible to distinguish between capabilities and functionality. Where the different types of technology span virtually every application needed to run a company (minus only keep-the-lights-on infrastructure as far as I can tell).

I am not denigrating the supergraphic. If the provision of consistent and contextualized customer experience touches virtually the entire company, the tech that fuels them must do so as well. It’s the “who in the world am I” that is difficult. In the surreal environment of 8000 distinct solutions, figuring out what applications a marketer really needs, setting the boundaries between applications with overlapping functionality and integrating specialized components can become a full-time job.

CDP and DXP applications are a prime example of this puzzle. CDP at least has its own subcategory in the landscape under Data. DXP does not. Depending on your definition of DXP, the included functionality could slot into numerous subcategories across Social & Relationships, Content & Experience, Commerce & Sales, and maybe even Data (my personal interpretation). An added complication is that many CDPs have strong adjunct capabilities that could theoretically spread them across categories just like the DXPs.

So how do we draw the line or set the boundaries between these applications?

Related Article: Operational Efficiency and Strategic Value: The New Currency of Martech Evaluation

CDP and DXP: Definitions and Origins

Let’s start by looking at the basic capabilities of each — and because neither category is dominated by pure-play vendors that started life as CDP or DXP, understand how each application type evolved.

CDP Definition

From the CDP Institute: “Packaged software that creates a persistent, unified customer database that is accessible to other systems." CDPs typically have four common characteristics: integrating audience data from multiple sources, managing customer identities, supporting real-time customer segmentation, and provisioning customer data to other systems.

Additional CDP capabilities: While the common characteristics of a CDP focus primarily around unifying customer data and making it actionable, activation capabilities are becoming more prevalent in CDP vendor marketing. This is partially because vendors offering CDP solutions have come from areas as varied as tag management and DMP, campaign management, multichannel marketing hubs, web analytics and data integration. Many of these vendors bring native activation and orchestration capabilities to the party. Others, albeit a smaller group, bill themselves as “pure-play” CDPs, touting stand-alone customer database capabilities more akin to a supercharged MDM solution.

Some of the extended capabilities brought about by this diversity include:

  • Guided predictive analytics and reporting that extend well beyond segmentation and can incorporate AI and ML.
  • Multi-step and multichannel campaigns that can deliver contextualized next-best offer messages in real-time as well as cross-campaign arbitration.
  • Connection of online and offline data in real time for detecting and reacting to digital events.
  • Generation of ready-to-deliver content using templates that select different items (text, images, offers, etc.) for different individuals based on fixed rules, predictive models or both.

Related Article: What Does the Arrival of Enterprise Players Mean for the CDP Market?

DXP Definition

From Gartner — “An integrated set of core technologies that support the composition, management, delivery and optimization of contextualized digital experiences.”

Some definitions include an architecture component for the construction of the digital infrastructure as well: “DXPs provide an architecture for companies to digitize business operations, deliver connected customer experiences and gather actionable customer insight.”

Both definitions lack the precision of the common CDP definition, so it is not quite as easy to rattle off a list of common DXP capabilities. Many DXPs list content management, personalization and journey optimization, omnichannel marketing, managing net promoter scores (NPS), facilitating customer self-service, and developing and managing a landscape of digital applications as expected functionality. Some DXPs also extend to providing digital experiences for employees and partners.

As with the CDP market, DXPs originated from different types of applications which impacts the functionality and makes it difficult to settle on a single set of DXP capabilities. Points of origin include:

Web CMS — DXPs that started as CMSs are generally targeted towards acquisition of customers, targeting offers, and generating awareness and interest, stimulation purchases and cross-sales. These tend to be strong in areas like web-based analytics, user segmentation, advertising campaigns and email campaigns.

Ecommerce — These DXPs have very strong online shopping capabilities including product-related content delivery, ecommerce-specific web interfaces, inventory management, shopping cart, payment integration, check-out and fulfillment.

Portal — These originally focused on after the sale activities, providing customer service (both self-service and representative-assisted issue resolution), and helping to create and track satisfaction measures like NPS and retention. Many were also used to facilitate employee digital experiences.

Regardless of origin, many DXPs are branching out and starting to incorporate capabilities across all three categories.

Related Article: What Should Your Digital Experience Stack Look Like? It Depends

Drawing the Line Between DXP and CDP

While there are differences between these applications, there are also many overlapping capabilities, particularly when you consider the “beyond capabilities” offered by some of the major vendors in both categories. Some analysts say that CDPs are or will be absorbed into the DXP world to provide the data needed to deliver great digital experiences, but this is far too simplistic. Some also label the CDP as analytical in nature and the DXP as operational. Again, too simplistic. 

The question should not be DXP or CDP. Instead, try these needs-based questions:

  • Do our needs focus more on deep transformation of our business operations (operations layer), or more on marketing and brand awareness (experience layer)? Operations may steer you towards a DXP while experience based questions could indicate a beyond CDP vendor.
  • Do we have a comprehensive view of customer that enables us to link online with offline information across a variety of sources, associate known and unknown digital activity, detect digital events and stream this information in real-time? Needs here may point to a CDP.
  • Can we easily manage spin-up, govern and manage multiple sites and digital applications? DXP.
  • Do we need specific ecommerce capabilities? DXP.
  • Are we supporting employees as well as customers, or is the requirement heavily customer service oriented? DXP.
  • Are we striving for AI/ML driven analytics capabilities to use in optimizing contextual personalization across multiple channels? DXP or CDP strong in beyond CDP capabilities. I lean toward beyond CDP vendors here because many vendors offering the data capabilities of a CDP also provide stronger analytics, contextual personalization and journey optimization capabilities than do the DXPs, particularly the multichannel marketing hubs. Pure-play CDPs will not meet these needs well.
  • Do we have an established martech stack that we would like to connect to? Look closely at the out-of-the-box integrations associated with both. CDPs are specifically designed for provisioning data and segments to other martech. DXPs may take more effort to integrate to applications outside the DXP platform. Edge (depending on other needs) CDP and beyond CDP.