The difference between a customer data platform (CDP) and customer relationship management (CRM) solution may be difficult to determine at first, because both options collect, store, and put customer data to use in support of business goals. While their functions may overlap, the CDP vs CRM debate becomes easier when you get clarity about the people, processes, and use cases for each option.
How to make the CRM vs CDP decision
1. What is a CDP?
A CDP unifies and standardizes large and detailed data sets from a wide variety of sources, resulting in robust customer profiles that enable real-time personalization.
The CDP Institute defines a CDP as “packaged software that creates a persistent, unified customer database that is accessible to other systems.” Additionally, a CDP must have the following capabilities:
- Ingest data from any source
- Capture full detail of ingested data
- Store ingested data indefinitely (subject to privacy constraints)
- Create unified profiles of identified individuals
- Share data with any system that needs it
Through the process of identity resolution, the CDP can match, merge, and deduplicate data into a single customer view that can be segmented and analyzed — by human analysts or with the assistance of machine learning.
2. What is a CRM?
A CRM and a CDP are both software solutions that handle customer data, but they differ in how, why, and who for. The difference came about organically, as organizations adopted different use cases for their customer data over time.
“CRM solutions were often proposed to tackle customer data management problems. The idea was that you could get ‘all of your data in one place’ to use for sales, marketing, and customer service. The promise was they’d break down silos in enterprises and design a view of the customer that wasn’t specific to sales or marketing or customer service. That sounds familiar to the promise of CDPs, doesn’t it?”— Lizzy Foo Kune, senior director analyst at Gartner
A CRM helps organizations manage customer relationships by consolidating what is known about customers from one-to-one touchpoints and transactional details into a single database, giving sales and service teams personal and actionable insights.
According to the Microsoft Dynamics 365 website “CRM systems help you manage and maintain customer relationships, track sales leads, marketing, and pipeline, and deliver actionable data.”
Sound similar to a CDP? There’s a key difference: CRMs only apply to known customers and contacts. Moreover, they don’t cleanse, combine, standardize, or deduplicate the customer records, so they can’t give a business a “single customer view” across channels.
3. What data is collected in a CRM vs CDP?
That key difference reflects the two business silos that CRMs were developed to unite: marketing and sales.
Marketing needs a high volume of customer data across touchpoints in a single, unified view to understand your customers and their behavior. CDPs collect digital data automatically using integrations and code snippets embedded in digital touchpoints, gathering customer data from websites, laptops, mobile devices, apps, and even CRMs into one place. The CDP then cleans it, and produces consolidated customer.
Sales needs customer data to help manage the customer relationship. CRMs store historical data about customer interactions in order to inform future interactions. The data CRMs collect is usually entered manually and its purpose is tightly focused on logging an interpersonal or transactional interaction — for example, notes from the latest sales call – to inform future interactions. The data inputs are simple, although difficult to standardize or automate, and are usually done manually by sales (and service) people to track the progress of the relationship.
4. Who uses a CDP vs CRM and for what purpose?
Your organization’s CDP vs CRM discussions may come down to who needs to use the system to accomplish critical business tasks.
As we’ve said above, marketers need a unified view of the customer’s entire experience of the brand over time. A CDP’s ability to ingest, cleanse, manage, and analyze large volumes of data from many digital sources makes that task easier.
But for sales and support teams, the key driver is managing customer relationships. In these customer-facing roles, contact management is critical, so a CRM’s ability to capture notes and manual inputs about one-to-one interactions facilitates that function.
5. What do we need: a CRM, CDP, or both?
While choosing between solutions isn’t easy, it’s not necessarily an either/or decision. You might find a both/and solution serves your business better. How do you make the call?
If your business primarily needs to manage customer relationships in a more detailed, efficient, and personalized way, you might choose a CRM. In fact, over the last few years, CRMs have been innovating and evolving to function more and more like CDPs so it might be prudent to wait and/or choose vendors carefully. Gartner predicts that 70% of independent CDP vendors will be acquired by larger technology vendors or will diversify by 2023.
“CRM systems have seen the competitive threat that CDPs brought to the table,” Gartner’s Foo Kune said. “As CRM technologies recognize that they need to update their aging databases to meet the needs of modern business functions, including marketing, augmenting your CRM with a CDP may be unnecessary.”
If your business primarily needs to have a broad view of who your customers are and how they engage with your business, you may opt for a CDP. “Companies seeking a new strategy to form personalized customer experiences through data will need a CDP as it offers the resources to create a comprehensive view of the customer across each platform they interact with in real-time — whether it’s social media, apps or mobile,” says Heidi Bullock of Tealium, a CDP provider. “CRMs, on the other hand, help manage sales-focused customer data rather than collecting data across different channels.”
And, if your business is broad you can choose both a CDP and a CRM. While CDPs and CRMs offer two different marketing and sales data management solutions with differing strengths, you don’t necessarily have to choose between them. “CDPs and CRMs can actually operate simultaneously, as they work to fulfill different business goals,” Tealium’s Bullock notes. It’s possible to use a CRM as an input and output channel to a CDP, and, in turn, use a CDP to provide a 360° customer view data set within the CRM.
Choosing both a CDP and a CRM can deliver both an amazing customer experience and tremendous business value: achieving high marks in customer satisfaction and providing integrated tracking and engagement.
The CDP vs CRM choice depends on your roadmap.
Fusion works with clients to define a customer data strategy that fits each organization’s unique strategic objectives, operational needs, and timeline. From there, our team creates a tactical roadmap to define actionable steps toward those goals. Whether you’re just getting started or trying to get your digital transformation back on track, we can help.