Your sales, product, and marketing teams need to gather insight about their customers to do their jobs effectively. How an organization collects that information varies, but customer data can be managed through one of two software systems: the CRM or the CDP.
Customer relationship management systems (CRM) and customer data platforms (CDP) both accumulate and manage customer data. But CRMs and CDPs are often mistaken for each other. There's a simple way to tell the difference between these platforms:
- CRMs help manage data on a customer's relationship and interactions with your company
- CDPs collect comprehensive data about a customer's behavior with products, services, and more.
That's the simplified version, but it's worth looking into the differences between a CRM and a CDP. We'll explain why, ultimately, a CDP addresses a broader need than a CRM can.
What Is a CRM?
A customer relationship management (CRM) system is a program that collects and stores personal customer data. It provides a centralized log of interactions, which serves as a record of the relationship between your business and the customer.
Interactions can be collected from phone calls, live chat, email, your company's website, social media, or marketing/sales materials. Some CRMs are specialized for an industry or niche, but they can also be tailored to a company's needs within their purpose. CRMs frequently require input and involvement from a company's staff to provide the information to the CRM.
What's the Purpose of a CRM?
A CRM provides one multi-customer platform to eliminate miscommunications or duplicated interactions. Customer-facing employees must have a view of the customer's history to have better informed and more personalized future interactions.
For example, a miscellaneous note from your colleague in sales last week says the customer got married. Now you, in customer support, can open the call by congratulating them on their wedding. A record of support tickets will help you in sales to set the right tone and avoid repeating yourself.
The wider goal of a CRM is to help your company secure new business and retain existing business. When implemented correctly and kept up to date, a CRM offers a personalized customer experience.
What Are the Limitations of a CRM?
CRMs focus on their role of managing customer relationships. Tracking customer relationships makes a CRM a good tool for a salesperson or customer service rep who directly interacts with your customers to develop and get the most from each relationship. Managers often love CRMs because they can analyze and improve their departmental outreach efforts through support tickets and call logs.
But this means CRMs have a narrow scope of what they can achieve. A CRM usually only records person-facing interactions, and often these must be manually inputted by employees. Both limitations create a restricted view of your customers' experience as they use your brand.
What Is a CDP?
A customer data platform (CDP) is software that collates data collected from every customer touchpoint, often using API integrations. Once information is gathered from internal and external data sources, including CSV files, the CDP stores, organizes, and presents it. Each piece of data is amalgamated into a single view of the customer, producing advanced identity resolution.
The CDP is an automated system that creates a timeline of every action at each stage of the customer lifecycle. It can go further and analyze the data collected in real-time, offering insight into when and why a customer makes purchasing decisions. The CDP can then predict which customers may buy a particular product or service.
What's the Purpose of a CDP?
You can't manage what you can't accurately measure. With a CDP, for a single customer, you'd be able to see if they reached one of your landing pages via a Facebook ad, signed up for a free trial on that landing page, then upgraded to a paid plan a month later. This data could help you offer specific and enticing rewards to retain the customer further down the line.
But more than that, the single view a CDP provides allows every team across the business to access the same information. Once the data is understood using the CDP, you can all work to serve each customer better.
Customer data platforms make omnichannel marketing possible, providing a customizable journey for the customer. Until now, almost all marketing strategies were multi-channel marketing based. Multi-channel marketing is achieved across most platforms and is centered around the brand or product. The future of marketing, omnichannel marketing, goes across all platforms and is centered around the customer. CDPs make this possible with their automatic tracking capabilities, allowing companies to know every step of the customer journey in real-time.
In a 2018 Forbes survey, 93% of marketing executives anticipated employing and analyzing customer data in decisions, and campaigns would create a noticeable shift in their ability to meet competitive challenges. With a CDP, leadership can make high-level business decisions about their customers with all the information they need to stand the best chance of getting it right.
CRM vs. CDP: Where Does CDP Data Excel?
Range of Data
A CRM stores data from manual entries inputted by members of different teams within your company. A CDP, however, can automatically gather and analyze data, including:
- Website visits
- Demographics
- Interaction with ads
- Campaign results
- Social media behavior
- Content performance
- In-product user habits
- Customer journey analysis
Notably, a CDP can pull data on interactions from CRM software and incorporate this into a more comprehensive picture of the customer's activities and preferences. This encapsulates why a CDP has superior functionality to a CRM. It can see so much more data than within the CRM alone, allowing companies to customize the customer's journey, ultimately allowing the business to provide stellar customer service.
Data That's Usable by Many Teams
Another benefit of a CDP is that it can be used by many non-customer-facing roles across the business, unlike the CRM, which is oriented toward sales and customer service departments.
Now, the marketing team can understand which tactics are more practical to personalize a customer's drip email campaign messaging. Engineering can determine how users engage with the product to prioritize some new features over others. Senior staff can gain better insight into each customer's acquisition costs and lifetime value.
Advanced-Data Management
A CRM contains notes written in each salesperson's unique style and intended only for use in the CRM. This unstructured data is often challenging to format for a data set and further analysis.
A CDP automatically gathers data from mobile devices, laptops, the web, apps, and your software platforms. The data is easy to cross-reference and manipulate in your central location before sending it elsewhere.
CRM vs. CDP: The Bottom Line
Often businesses start with a CRM system, enabling them to capture customer interactions in one centralized location. But a few years later, they realize it's not enough. This is where a good CDP comes in, enabling you to get the most from your data.
For businesses to adapt to omnichannel marketing, centralizing marketing strategies around their customers, they must transition to a CDP. Doing so will allow companies to stay ahead of their competitors and create increased margins, profitability, and customer loyalty.
Fortunately, Prodigitude can help. We offer the whole package, providing AI-driven, digital marketing services that will set you apart from your competition. We can get your CDP up and running. We also analyze the detailed data to help you best serve your customers. Find out more about what we can offer.