CRM and CDP both seem like two sides of the same coin. Marketers often get confused with both platforms. Because the use of both platforms almost looks similar. Both are utilized for enhancing customer interactions. Both are customer data-collection software. Both are used in providing more personalized interactions with customers to deliver quality assistance to customers.
With so many similar functionalities, anyone can get the idea of both being the same and may use them interchangeably in describing them. But in reality, though they may share many things in common, they are pretty different from each other and vastly used for various purposes.
As a modern-day marketer, it becomes very critical to understand differences between and two and have explicit knowledge of how and where to use both platforms to increase the overall efficiency of the organization’s approach towards customers.
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The idea of CRM came around the 1990s when people started realizing the need to personalize the interactions with the customers. There was an increased demand in keeping and maintaining a seamless record for all communications with the customers in one platform. Not only just details of the existing customers but also prospective customers. It was required to have an accessible, go-through repository at their disposal, which they can utilize whenever there is a requirement.
Fast forward, around 2000, Salesforce introduced their CRM Product with some enhanced capabilities to track and manage customer interactions. It just revolutionized how customers relationships were maintained using cloud-based software. The sales and marketing teams were now empowered with information usually ignored in the past, usually due to data negligence.
CRM to date is used extensively by several organizations to manage and track day-to-day interactions and activities with their customers. But, in early 2010, people started to realize that CRM could not fulfill their needs in many aspects. Many things were missing on the platform. No single unified view of customers, data duplication across all departments within the organization, extensive dependence of IT department for getting required data, personalization was happening but not at the organization level.
By 2013, all issues led to developing a new product as CDP(Customer Data Platform), which can help solve these issues and take a unifying data approach across all departments within the organization. It helped in bringing valuable insights with available data. CDP is an evolution of CRM platform, keeping marketing as the central front. Data analysts and marketers started figuring out ways to utilize this robust first-party data by integrating all customer data into one single source and creating a seamless connected customer journey across all channels used by the marketing team to have better and more personalized interactions with the customers.
Let’s deep dive further to understand more about both platforms :
“technology for managing all your company’s relationships and interactions with customers and potential customers”
Salesforce
CRM(Customer Relationship Management) is software used in tracking all the interactions with the current customers(clients) and potential customers. CRM is primarily designed for the sales team, which helps them handle all communications with the customers and maintain records.
There are three major types of CRM –
There are many uses of CRM in an organization. It helps to streamline all significant activities and identify the issues related to processes or in the departments. Following are the main functions of CRM:
With so many variations of utility, CRM is a must-to-have software for any organization. It can help any organization to streamline their day-to-day activities and valuable insights with rich first-party customer data.
But still, there are many limitations to the CRM systems. Some of them are listed below:-
To overcome all these limitations, CDPs came into play, which helps address all these issues, but can do much more, enhance the overall experience for the customer, and increase the CLV(Customer Lifetime Value).
“a marketer-managed system that creates a persistent, unified customer database that is accessible to other systems.
David Raab, founder of the Customer Data Platform Institute.
As the definition describes, CDP is designed to create a unified customer database used to develop a single view of the customer. It’s an advanced tool that is utilized in creating an efficient marketing strategy. It is used in creating audience segments and personalized messaging across all channels which any customer uses.
There are mainly four different types of CDPs as categorized by the CDP Institute.
So far, you might have got an idea about both platform’s functions, characteristics, types, and utilization throughout the customer journey. And also, understood how they are different from each other. The below table will help further in describing the difference between CDP and CRM.
Attributes | Customer Relationship Management(CRM) | Customer Data Platform(CDP) |
Data Sources | Structured Data such as Name, Email Addresses, Phone etc. are collected using CRM’s. It collects only Online data. | Structured and unstructured data such as cookies, IP addresses, and Mobile IDs are also collected in CDPs. It can also collect data from both, Online as well as Offline data. |
Data Activation | Data is majorly used for Message delivery and Personal interactions with the customer. Customer interactions are manual. | Data in accumulated from various sources, and unified for a single customer view. That data is used by marketing across all channels. Customer interactions are primarily automatic. |
Objective | They are majorly used for Automation, Record Maintenance, Lead Management, Contact Management, Task Management, Reporting & Analysis, Purchase Tracking, etc. | Majorly used for Omnichannel Marketing, Personalized Messaging, Building Customer Journey, Predictive Analysis, Identifying Customer Lifetime Value(CLV), Creating Buyer Personas, Audience Segmentation, and Profile Mapping. |
Scope | CRM is meant to help perform tasks related to operational activities in the organization, such as supporting marketing, customer support, and sales teams to simplify their day-to-day business activities. | CDP is mainly for analytical purposes, such as helping upper management identify best marketing channels, insights on customer behavior and customer loyalty, and staying with the company, which will churn out. It helps in identifying valuable insights and taking actionable steps. |
Built For | CRM is mainly built for Sales teams within the organization to track and maintain a record on prospects and existing customers. It helps them in maintaining communication and have much deeper personalized interactions with their customers. | CDP is mainly built for Marketing teams to identify actionable items by creating effective marketing strategies which can help in upselling or cross-selling to existing customers. It also allows marketers to gain in-depth insights into their customers’ behaviors to effectively identify new ways of engaging with their customers. |
Data Duplication | In CRM, there are multiple instances of the same data present. There is no direct way of integrating data from all departments. Data is recorded differently in various departments. | In CDP, there is no issue of data duplication, as data is brought from multiple sources and integrated into one system. That data is linked to a single user identity(it can be an email address, phone number) and made available throughout the departments. |
IT | The help of IT department is adamant with the CRM systems for setup and maintenance. Business Processes are complicated and can be pretty messy for a regular CRM user who does not have an idea or proper understanding of how to set up CRM effectively across the organization. | In CDP, the use of IT is very minimal. IT help is required only at the initial setup. CDP is designed keeping in mind the primary users of the product, the marketers, who are usually not very technical. Its built-in modules can handle complex processes at the backend, and marketers can directly input data of their use to get the output. |
CDPs are nothing but the evolution of CRM platforms but from the marketer’s perspective. Following are similar characteristics of both platforms –
Not at all !! You can take advantage of both CDP and CRM strategically together to get maximum results. Though they may have some similarities, that doesn’t mean that they both can be interchangeable. As you have gone through already, the core functionalities of both platforms differ a lot. CDPs are majorly meant to be used by Marketers, while Sales and other departments use CRM.
If you are starting with these platforms, the right thing will be to start with CRM first because this will help begin with data collection and take initial steps towards being data intelligent. CRM data is used as a data source for the CDP platform.
Once you have enough data on your customers, you can start leveraging that robust enriched data with the help of CDP to understand your customers at the macro level and get deeper insights into your customer’s behavior.
You can then move ahead and create marketing strategies, which construct on customer insights derived from CDP. You will be able to reach out to customers with more personalized communication across all channels.
Both can work as an integral part of your communication and marketing efforts. It depends on what type of work you are looking to accomplish within your organization. Suppose you want to collect and manage data about your prospective customers and existing ones. And want to enhance your relationships with customers, then CRM will work best for you. But it won’t help you get the single unified view of the customers.
On the other hand, CDP will help you better understand your customers with a single unified view. If you want to know your customers better and gain better insights for more informed decisions, you should go with CDP.
CDP and CRM both are having their place in the organization. It entirely depends on your use case on what you are trying to achieve in your organization at this point. Both are having some overlapping functionalities, but both are used for distinct purposes. CDPs are a little costly compared to CRMs but can be a beneficial investment.
As a growing business, you will mainly start with CRM, which will be utilized extensively in the company. But at some point, you will realize it’s just not enough. Then you should move ahead and opt for CDP to bring scalability and improved performance to your business.
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