To perform their tasks, marketing, sales, and product teams need information about their customers. And to collect and manage this information, two easily confused types of technology have developed: Customer Relationship Management (CRM) systems and Customer Data Platforms (CDPs).
Although they share similar names, each serves a distinct purpose and has tangible impacts on business outcomes. In fact, both are so crucial that, according to Salesforce, CRM ranks as the most popular technology used by high-performing companies to manage their marketing data, while CDPs come in second.
Both rank highly because they don’t exclude each other; they serve different purposes and are often used in tandem to provide a consistent, personalized customer experience.
The difference between CRM and CDP lies in the fact that CRM helps manage customer relationships, while CDP helps manage customer data.
Of course, there are many nuances to this. Let’s delve into it.
CRM vs. CDP: What’s the difference?
While both CRM and CDP collect customer data, the main difference between them is that CRM organizes and manages direct interactions with customers and your team, while CDP collects data on customer behavior with your product or service.
CRM data will provide you with the customer’s name, their interaction history with your sales team, and the support requests they’ve submitted (among other information). On the other hand, CDP data can tell you every specific step the customer has taken since interacting with your company, from the channel they found you through to how they interact with your product.
CRM and CDP are designed for different roles
Most of the differences between CRM and CDP stem from who they’re designed to assist and how they help them. Both are overall teams that face customers, interact with customers and potential customers, and teams that don’t face customers, impacting the customer experience through direct interaction.
CRM is for customer-facing roles
CRM is primarily designed for customer-facing roles, such as salespeople and customer success representatives. According to Capterra’s 2015 industry survey, businesses using CRM reported that their sales teams use it the most.
Sales teams like this because CRM records data on interactions with customers, allowing them to expedite, research, and improve their outreach efforts. They also record things like filling out website forms, support tickets, and more.
The ultimate goal of CRM is to help employees working directly with customers ensure that new business operations run smoothly and maintain existing business operations by making it easier to manage individual customer relationships. With interaction logs in place, CRM excels in achieving this goal. Below is an example of a customer contact log view in HubSpot, a CRM:
Sales representatives can refer to this profile as they work to develop relationships with potential customers. Here, we see that Marc from IMPACT recently had a baby, which the sales representative can then record. The next time they interact with Marc, the sales representative will see this and can refer to it without having to remember it themselves.
Customer success teams can also use CRM to quickly assess the number of support requests that a customer has submitted and the resolution of those requests. This can be used for appropriate follow-up activities to keep satisfied and engaged customers, which is crucial for retaining good customers.
CDP is for roles not facing customers
CDPs help non-customer-facing roles, such as marketing, product, and leadership, not just sales. The goal of CDP is to manage and understand all customer data to make high-level business decisions. CDP accomplishes this by collecting data from every customer touchpoint — everything from advertising to website traffic, to transaction points, to user behavior within your product — in one place.
This data is then used to create a unified view of the customer through a process called identity resolution. Below is an illustration of the DataS product interface:
The marketing team can use this single view of the customer to understand which strategies are effective or to personalize things like drip campaign emails. Technicians can know how users interact with the product and prioritize new features over others. Leadership can use this single view to understand the overall cost of customer acquisition and the lifetime value of each customer.
How CRM and CDP collect and manage data
CRM and CDP serve different roles because each addresses different challenges businesses face when collecting and using their first-party customer data.
CRM data is collected manually
CRM is a response to the need for a centralized record of interactions between customers and representatives of a business. This central record is something that anyone can refer to, but it is primarily used when employees working directly with customers need a summarized notification of the individual customer they are about to contact.
CRM data is typically collected manually, for specific purposes and difficult to automate — for example, recording sales notes from your latest demo.
Each salesperson has their own way of taking notes, making it difficult to standardize. Furthermore, the data collected in this demo focuses only on closing the deal. These two facts combined make CRM data hard to export or use elsewhere.
This data is only used within CRM, meaning the data you put into CRM is controlled by CRM. To get that data out, you’ll have to go through a few steps.
CDP data is collected automatically
On the other hand, CDP is the answer to a dispersed marketing context and the need to understand how, where, and why customers interact with your business.
CDP data is typically collected automatically through integrations and tracking code. This means you can collect customer data from mobile devices, laptops, web, and your own software or applications into one place, clean it up, and send it where it needs to go.
CRM and CDP serve different purposes
Between the people built and how they collect data, CRM and CDP ultimately serve very different and essential purposes.
CRM aims to improve the individual interactions you have with your customers. They provide a historical data record of the relationship between your business and individual customers to inform future interactions with those customers.
This is a useful perspective, but it’s limited in scope because it only considers your interactions. Because of this limitation, CRM is focused solely on managing customer relationships.
CDP is used to understand who your customers are and how they interact with your business. It unifies and manages all customer data across all touchpoints to provide a consistent, unique view of the customer. The aggregate of these “unique views” from many customers will reveal the entire customer journey.
You will know, for each customer, if they:
- Clicked on a Facebook ad to get to this landing page.
- Scheduled a free trial on that landing page.
- Upgraded from a free trial to a paid package a month later.
With this detailed information, all teams can make better decisions based on more data. The marketing team knows which ads work, the product team knows which actions lead to upgrades, technicians know if a feature is broken, and leadership understands the overall cost of attracting customers and their long-term value.
CRM vs. CDP: Which is right for you?
For most companies, it’s not a choice between CDP and CRM.
Use CRM if you need to manage customer relationships efficiently and more personalized. They are very suitable for teams of all sizes and can be invaluable in difficult situations. Typically, businesses start with CRM and realize that, while it’s an effective tool, it’s not enough.
Unlike CDP, CRM cannot provide a unified, unique view of everything you know about each customer. The data is designed to serve a specific purpose, supporting interactions with customers in the future.
Use CDP if you need to understand your customers more deeply, who they are, and how they interact with your business. This provides a
broader perspective on your customers that you can apply in many ways — from marketing to product decisions to larger business decisions.
If you want to start with CDP today, sign up for a free segmentation account.