Over the last few years, many organizations have transitioned to a Cloud Data Warehouse (CDW) to meet the resource-intensive reporting needs of today’s digital businesses. Compared to legacy databases, CDWs provide near-unlimited storage and speed and enable the collection, analysis, and reporting on all facets of the organization. Business teams, however, need to not only report on customer data, but to activate it to deliver personalized and relevant marketing journeys and experiences.
Until recently, companies required a Customer Data Platform (CDP) to make data activation work. Like a CDW, CDPs collect and organize all of an organization’s data, but instead of producing reports, the data enriches and improves the marketing and sales campaign performance.
Although CDWs and CDPs address different needs — reporting vs. activation — their core components are similar. Both collect data from across an organization but store it in different databases. CDW and CDP deployments similarly overlap, requiring the same integrations with the point systems and applications spread across the business. Given these redundancies, many have asked why they can’t use their CDW as a CDP?
Enter Reverse ETL, a new type of technology, which enables organizations to activate data from its CDW to any marketing or business application. For these data-mature companies, adding Reverse ETL to their existing CDW, can be a better alternative than deploying a CDP.
What is Reverse ETL
Put simply, Reverse ETL is the syncing (copying) of data from a central data warehouse to software-as-a-service (SaaS) tools the business teams use for growth, marketing, sales, and support. That simple definition obscures both the business and technical value Reverse ETL provides.
Business value: Marketing, sales, and finance teams use dedicated SaaS applications to do their day-to-day work. These applications need external data to perform. Typically, this data is delivered via internally developed integrations, often prone to breakage, or simple CSV file uploads. Reverse ETL automates these processes, so data shows up reliably even as it frequently changes.
Technical value: Developing and maintaining integrations to all applications is beyond the scope of any internal data engineering team. Reverse ETL provides a library of integrations so that data teams don’t have to devote engineering resources to send data to all the SaaS applications in use.
Reverse ETL is the Data Activation Component of a CDP
Functionally, the data activation services provided by a CDP are no different than those provided by Reverse ETL. Both categories provide tools to define and push user segments — audiences — to any number of business application destinations. And likewise, CDPs develop and maintain their library of integrations.
The key difference is that Reverse ETL is a standalone software service and can be integrated with whatever CDW your organization uses. CDP activation only works within the proprietary data storage included in the CDP itself.
Benefits of Reverse ETL
Now that we know what Reverse ETL is, let’s cover some key benefits of this new to market solution and how it’s advancing marketing capabilities.
Leverage Original Customer Data
Reverse ETL tools allow an organization to action on the single customer repository they’ve already built in a cloud warehouse. Rather than recreating, replicating, or storing data in a siloed SaaS solution, Reverse ETL tools give organizations total ownership of their data and the data model within their existing cloud environment. Similar to a CDP, Reverse ETL tools aim to create a centralized hub for audience creation, but in this case, Reverse ETL tools utilize the cloud warehouse as that hub. The key value add is its integrations to activation channels and other data consumption points right out of the box. With Reverse ETL, you can query through the customer’s entire history, as well as add in different data attributes like product information or unstructured data.
Democratizing Data
One of the biggest challenges we see across clients is getting access to customer data. With Reverse ETL tools, marketers have direct access via a user-friendly interface to a real-time customer profile for segmentation, analytics, and activation. This reduces operational latencies and provides better experiences for customers, as segmentations and messaging can be refreshed in near real time.
Time to Value
There are many choices in the marketplace when it comes to tools for audience selection and management, however, most of them are major technologies that take months to implement. Since Reverse ETL tools leverage an existing customer database, there is less time spent re-piping in data sources from the data warehouse to an audience tool while also savings costs on duplicating data storage. Clients have been able to connect their data to activation channels in as little as days while utilizing their existing stack.
Is this a Fit for My Organization?
How Does This Compare to CDPs?
Reverse ETL is a subset of functionality provided by CDPs. As such, it requires the organization to have these capabilities and technologies in place:
- Cloud-Based Data Warehouse
- Digital Streaming Data
- Identity Resolution Capabilities
A Cloud-Based Data Warehouse
Reverse ETL tools are built on top of your existing customer data models within the cloud, so it’s critical that any customer data that marketers need exist in this environment. Many organizations already use a CDW for reporting and analytics.
Digital Streaming Data
Reverse ETL tools do not collect/ingest any data sources, so if marketers want to lever-age any of that real-time digital data, it will need to exist in the Data Warehouse.
Identity Resolution Capabilities
Organizations need their ID resolution processes in place upstream of the Reverse ETL tool. Many organizations manage Identity Resolution internally to meet unique requirements of their business.
Furthermore, organizations should ensure that they are not attempting to fill too many gaps.
Reverse ETL tools are not replacements for identity resolution solutions, multichannel journey orchestration tools, an environment for the customer 360, or a prospecting tool to target via cookies.
If you have those items and are looking for a purpose built, data activation solution, then Reverse ETL might be for you. Here are some of the vendors in this space:
We’ve partnered with Hightouch, an early player in the Reverse ETL industry.
Hightouch is the World’s Leading Data Activation Platform
Hightouch syncs data from warehouses directly into your SaaS tools. All business teams, from sales and marketing to support and customer success, need relevant, accurate, and real-time customer data to add critical context inside the software they already use. Whether you’re enhancing communications with customers via CRM, optimizing ad copy, or personalizing email, Hightouch makes your data actionable —all with SQL, no scripts or APIs required.
Want to learn about the common challenges of a CDP? Learn more here.
