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Updated on June 1, 2023
CDP vs CRM: The Differences
What is CDP?
What is CRM?
Similarities Between CDP and CRM
Differences Between CDP vs CRM
On the surface, customer data platforms (CDPs) and customer relationship management (CRM) platforms seem very similar: both claim to create comprehensive customer profiles by integrating data from multiple touchpoints and sources.
But calling CDPs and CRM systems the same would be like calling the Mississippi River and the Atlantic Ocean the same – though CDPs and CRMs both manage customer data, CDPs do so on a much larger scale than CRMs. Both systems exist to serve separate goals.
If you’re confused about the difference between CDPs and CRMs, this guide will give full details on the unique aspects of each system and provide guidance on which one may be better for your business.
A customer data platform (CDP) is a software tool that consolidates customer data from various in-house and outside sources to help businesses create comprehensive pictures of their consumers to make data-driven marketing strategies.
A customer relationship management (CRM) system is a software tool that oversees and manages the customer journey, used by all customer-facing departments to record customer behavior and data, personalize customer interactions, and build customer relationships to drive sales and loyalty.
Though both CDPs and CRMs work to build thorough customer profiles by collecting data from multiple sources, CDP systems are much more extensive in sourcing, analyzing, and sharing this information to derive high-level insights, while CRMs gather data mainly to manage customer accounts.
What is CDP?
A customer data platform (CDP) is a marketing software that collects demographic, behavioral, and transactional customer data from different sources, synthesizes it into one cohesive customer profile, and shares it with other software systems.
Using CDPs, marketers hope to personalize the customer experience and enable large-scale data-driven marketing strategies.
CDPs unify information from data sources such as the company’s CRM, point-of-sale technology, mobile apps, transaction records, websites, emails, and marketing automation software.
On top of the company’s own first-party data sources, it can also unpack, integrate, and display data from second-party and third-party sources, meaning that a business can purchase consumer information from other businesses and corroborate it with the business’s own customer data to build a more comprehensive, holistic view of each customer.
With this data, a CDP allows marketers to segment customer profiles, search for trends with machine learning or designated rules, use predictive scoring, and orchestrate the customer journey, all in one platform.
But beyond the CDP’s capabilities, a key feature of CDPs is their native integration with other applications. In layman’s terms, this means that users can easily transfer the data stored within the CDP system directly to another system, such as an ERP (enterprise resource planning system), CRM, or DMP (data management platform system), without involving IT staff.
By easily exporting the data to different applications, a company has no shortage of options for manipulating and presenting the data in new ways to derive unique insights and manage customer interactions.
What is CRM?
Now that you have a solid understanding of CDPs, let’s take a look at CRMs.
Customer relationship management (CRM) is when a business tracks customer-company interactions and creates customer profiles so a company can derive data-driven insights and improve its customer experience through personalized interactions.
Though the term technically applies to all efforts to track and personalize customer experiences, CRM usually refers to a software solution platform that records, stores, presents, and manages all that data in one easily-accessible location.
As a customer progresses through the marketing, sales, and customer service departments on their sales journey, each of these departments use the CRM to manage customer accounts, tracking each customer’s progress, actions, and preferences. This breaks down information silos and gives businesses a comprehensive understanding of their customer journey and customer base, helping to shape overarching marketing strategies, individualized sales tactics, and personalized customer service interactions.
CRMS can also automate routine tasks in the sales process, boosting employee efficiency.
Companies aim to use CRMs to improve their sales conversions and customer retention by using the customer profiles within to personalize their messages and interactions with customers, appealing to them on a personalized level.
On a macro level, a company can also use its CRM to analyze its customer database to segment customers and improve its strategies with data-driven insights.
Similarities Between CDP and CRM
CDPs and CRMs are fairly similar at first glance – both are software systems that create complete pictures of customers by consolidating a customer’s demographic, behavioral, and transactional data into one profile. Plus, both can be used to segment and analyze the customer database, enabling a company to create a data-driven marketing campaign. (That’s a secondary feature for the CRM, though.)
While similar, a CRM system is focused on managing and analyzing customer interactions and relationships with the business, and a CDP is focused on collecting, unifying, and organizing customer data from various sources to provide a more holistic view of the customer.
Differences Between CDP vs CRM
Though what they do is the same, beyond that, the whos, wheres, whys, and hows of CDPs and CRMs diverge. Let’s lay out the differences between CDPs and CRMs in a table to help organize our thoughts.
Customer Data Platform (CDP)
Customer Relationship Management (CRM)
Who uses it?
Marketing, sales, and customer service teams
Where does the data come from?
First-, second-, and third-party data
When was the data collected?
From past customer interactions from various sources
From current customer interactions with the business
Why does a company use it?
Collecting, unifying, segmenting, and organizing customer data
Track and manage customers, personalize interactions
How else can a company use the data?
Native integration to other apps
Exporting data packages to other departments and apps
Who Uses CDP vs CRM?
CDPs are used almost exclusively by the marketing team to analyze the company’s entire customer base and target audience. A big selling point for CDP: marketers don’t even need IT support staff to help them manage the data!
On the other hand, because they follow and manage the entire customer journey, CRMs are accessed and managed in real-time by all business functions with customer-facing roles: marketing, sales, and customer service.
Where Does the Data in CDPs vs CRMs Come From?
As a quick note, first-party data is data a company collects itself from customers and interactions, second-party data is another company’s first-party data, and third-party data is bought from data aggregators who buy, collect, and sell other companies’ data.
CRMs usually only host and manage a company’s first-party customer data, which is collected in real-time as marketers research a lead, as sales reps pitch to a prospect, and as customer service helps customers. In other words, the data in a company’s CRM comes from the company itself, as it records its own customer interactions.
Meanwhile, CDP data is imported from several sources, such as the company’s CRM, DMP, ERP, website, e-commerce and transaction systems, email, social media, and more.
A main draw of a CDP system is that it stitches together first-, second-, and third-party data, using unique individual identifiers to cross-reference customer interactions and place a name to formerly-anonymous customers, creating in-depth customer profiles that examine each customer from multiple angles based on interactions with different companies and touchpoints.
When Was the Data in CDPs vs CRMs Collected?
CRMs record and collect data on the spot as marketers research leads and employees interact with them. After that, the data is archived within the CRM.
While CDPs also use data from the sales process and customer interactions, the key is that it’s not used during the customer interaction itself: instead, post-interaction, the data is taken and processed to analyze for insights.
In other words, the data fed into CDPs might have beencollected a long time ago – possibly years ago, if the company buys second- or third-party data from other companies. The age range of the data can vary from recent —just a few seconds ago from a customer’s website visit— to data that might be years old, such as historical purchase information.
Why Does a Company Use CDP vs CRM?
Companies use CDPs so marketers can analyze their customers and target audience, driving insights that will allow them to create more appealing marketing campaigns aimed at the most promising potential customers.
On the other hand, companies use CRMs primarily to improve current customer relationships, recording a customer’s direct interactions with the company to give customer-facing employees an overview of what the customer is interested in and what they’ve already talked about to personalize conversations and create a quick, seamless customer experience. By using a CRM, companies hope to present themselves as more friendly to customers so they can improve customer retention and loyalty.
How Else Can a Company Use a CDP vs CRM?
A key feature of CDPs is that they’re more capable as a hub to share and receive data to and from other sources. CDPs usually have native integration with other applications in a company’s technology stack such as its email, project management, graphic design, website, social media, and SEO software, meaning you can manage them all at once and transfer data between platforms seamlessly.
Meanwhile, though most CRMs can integrate with email, calendar, and website applications to track customer touchpoints and manage customer interactions, at their most essential, the best CRMs can do to share data with others is by exporting data sets. Any application integrations beyond that will depend heavily on your software provider.
In short, while the data in a CRM could be imported into a CDP, the reverse isn’t always true.
A big clue on the difference between CDP and CRM is the last word of each: platform versus management. In other words, while the main goal of a CDP is to collect customer data in one location for marketing analysis, CRMs aim to collect customer data to manage each customer account during the sales process.
Though both CDPs and CRMs build a comprehensive view of the customer, CDPs do so on a much grander scale by collecting data from multiple systems, sources, and even companies.
Whether your company chooses to implement a CDP or CRM will depend on your own company’s current customer base and future goals. No matter which of them you choose, you’ll be sure to gain a more comprehensive understanding of your customers, which will help you focus your marketing efforts and sales strategies to drive your business’s success.
CDP vs CRM FAQs
Should I buy a CDP solution or CRM solution?
If you’re a smaller company with only a few customers, you should start off simple with a CRM to improve your sales process and customer journey to build a base of loyal customers.
Then, when you’ve amassed a larger following, you could invest in a CDP on top of your CRM to take your customer analysis to the next level and derive high-level insights from your database to drive your marketing campaigns.
One of them isn’t better or more popular than the other – it’s all a matter of which one fits the size of your company’s customer base and scale of interactions.