The marketing world is full of acronyms — SEO, CMS, and DXP to name just a few — so you’re forgiven if you’ve mixed up CDP with CRM in the past. You’ll want to straighten out the terms, though, because a customer relationship management (CRM) system and a customer data platform (CDP) are each distinct solutions that help organizations reach important but different goals.
Let’s compare and contrast the two to ensure your business objectives are supported by the technology that best meets and exceeds your targets.
What Are the Business Goals of a CRM and CDP?
While CRMs and CDPs have overlapping similarities and key differences that we’ll dig into below, the critical distinction between them is how they affect your bottom line. Developed first and long considered a B2B tool, CRMs are meant to help teams win new clients and retain existing customers by making it easier to manage direct, personal interactions. Their primary users are in customer-facing roles — think salespeople and customer success or support teams. Lastly, much of the data found in a CRM is entered manually.
CDPs, on the other hand, were developed to fill an unmet need among B2C companies that wanted CRM-like systems that could operate at market scale and leverage high levels of automation. The retail sector in particular has benefited from CDPs, where they unify data from multiple sources, producing customer profiles that optimize marketing efforts in real time.
And unlike CRMs, the primary users of CDPs are not customer-facing. They sit on marketing, product, and leadership teams, and the information they review is gathered from a wide variety of sources: display ads, social media profiles, point-of-sale systems, and so on. The data is compiled automatically via integrations and code snippets, which means it’s pulled from apps, websites, and devices like cell phones and tablets.
These are broad-stroke descriptions of the technologies, however. Let’s look at each one in a little more detail, so you have a complete picture of where they dovetail and where they diverge.
Designed to improve personal interactions with customers, CRMs feature contact information for leads and existing customers, as well as historical data, like past customer-support tickets and notes entered by a salesperson, such as the pain points a prospect raised at a demo or a client’s hobbies. Maybe they like to golf or garden, or maybe they continue to have trouble with an issue that one of your products solves — any tidbit that could help your colleagues better connect with a customer or prospect may be included in a CRM. This data is used only within the CRM. Extracting it requires work.
CRMs are also employed in the management of manually executed workflows, like problem resolution and managing the sales process for individual deals.
CDPs are all about scale and automation. The data they collect is more broad than what a CRM captures. Information from every customer touchpoint or source feeds into a CDP, such as:
- Customer loyalty programs. Who are your repeat customers?
- Social media tags or check-ins at brick-and-mortar locations. Which stores attract high-net-worth individuals versus Gen Z shoppers?
- Email service providers. Which links did customers click on, and what are their email addresses?
- E-commerce platforms. Did the customer list more than one shipping address?
- Product-review platforms. What feedback have customers left on underperforming products? What do they say about your latest launch?
- Digital ads. Which ad did they click on to get to your product page? Was it one shown on Instagram, or were they hooked by a QR code at an event?
That’s not an exhaustive list — even data from a CRM can flow into a CDP. Behavioral, transactional, structured, unstructured — the data types that a CDP collects are far-ranging, with its compilation of unstructured data a differentiator between it and CRMs.
And, as we mentioned earlier, a CDP consolidates all that customer data in a central repository. Then, through a process called identity resolution, it connects the dots to link multiple online and offline interactions to a unique individual, standardizing and deduplicating the information. This process enables a unified view of every customer, whether he signed up for emails under the name Joe Smith or shopped in-store under the name Joseph Smith.
CDP users are also interested in communicating with customers and prospects in targeted groups called segments. With that complete and unified profile available for each of your customers, you can aggregate them to better understand their behavior, allowing you to more effectively segment and analyze audiences to improve your targeting and engagement efforts.
So, to sum up, CDPs yield rich customer profiles and clusters that can be used in a number of ways by a number of different teams. Segmentation can help marketers better target priority audiences, while in-product behavior and product reviews can guide engineering and product development. The C-suite can also use a CDP to better understand the lifetime value of their customers and the overall cost of acquisition. Sales teams aren’t left out in the cold, either — CDPs can be used for highly personalized, account-based sales. (Here are more examples of CDP use cases.)
CRMs vs. CDPs: Which One Is Right for You?
Good news: Businesses can have both a CRM system and a CDP. In fact, you may already have a CRM system. Many companies start with a CRM before realizing it doesn’t quite meet their broader marketing needs. For instance, CRMs don’t always feature a campaign development environment or flexible integrations for the collection of inbound data and for passing target audiences along to downstream activation tools like email service providers (ESP). In other words, they can’t deliver a holistic customer experience. CRMs also don’t support real-time marketing nor do they compile unstructured data.
So, the next question becomes how do you choose a CDP? And, for buyers who want to conduct more research, there may be other topics to resolve (like the difference between a CDP vs. a DMP) or to learn about (like types of CDPs).
There are numerous resources available to aid your search, but to get a sense of the return on investment (ROI) that a CDP can provide, check out the free Total Economic Impact™ study that we commissioned Forrester to conduct. The third-party consultancy looked at the gains that enterprises can enjoy with the Acquia CDP, which is certified with the CDP Institute, so you get an idea of the considerable ROI a CDP can net your business.