What is the Difference Between CRM and CDP?
What separates CRM and CDP?
Most small businesses are familiar with the various types of software it takes to run an operation these days. Among the most important are consumer-centric platforms that collect data, analyze behavior and provide businesses greater insight into how, when and why customers buy.
Customer relationship management (CRM) solutions have garnered most of the attention in this area, and many entrepreneurs have used such tools extensively. As businesses of all types and sizes become increasingly digital, CRM has become crucial to keeping track of sales, marketing and other operational intelligence.
However, a new type of software has arrived on the scene: customer data platforms (CDP). While the line differentiating CRM and CDP is a fine one, business owners should brush up on what separates the two and how companies can make use of both.
Is there a difference?
Technically, yes, although there is quite a bit of overlap between CRM and CDP. Both are used as a central repository for customer-specific data points, as well as for various tasks like tracking purchases and visualizing customer history. The distinction really lies in the names. Customer relationship management is used to monitor relationships, acting as an internal ledger and reference for contracts, emails, notes and other vital relationship materials.
On the other hand, customer data platforms are better leveraged to unify a business' sources of customer data, analyze behavior and produce demographic or buyer persona insight. Many organizations actually feed CRM data into a CDP to extract further value from sales data they've collected. In reality, neither is a replacement for the other; each have their place in the modern IT ecosystem.
What is CRM best for?
CRM solutions are a widespread technology. While their use is varied from company to company, in general, CRM tools are often leveraged in sales and marketing, commonly utilized to record interactions, upload documents and share intelligence between teams and departments. The data held within also extends past customers and clients. Supplier and vendor relationships are often managed through CRM.
A salesperson can manage their regional pipeline using CRM software, the same as a purchase manager can oversee supplier performance or a marketing strategist can examine campaign data.
Where does CDP fit in?
While CRM is well-known, CDP is just starting to make a name for itself. Growth has come quickly, however. A recent report found the cottage industry grew 23 percent in the second half of 2018 alone. Now that awareness has risen, more business are wondering just what CDPs do and why they'd need one. While the name is a bit amorphous — customer data platform — these solutions are designed to capture customer data from comprehensive sources, apply analytics, model personas and behaviors, and grant greater customer base visibility.
According to Gartner, there are four criteria businesses should judge a CDP solution by:
- Data collection: The ability to gather and store first-party, individual-level customer data from diverse channels and sources.
- Profile unification: The capacity to build customer attribute profiles, consolidating data observed across devices.
- Segmentation: The flexibility to create and manage rule-based segments customized by users.
- Activation: The execution of targeted campaigns, mobile messaging, recommendations and reporting.
How can the two work together?
CRM and CDP software are closely intertwined. But where the former is a practical solution for operational relationship management, the latter is more adept at generating higher level insight at the individual customer level. Personalization is a major trend in consumerism, and CDPs are one way businesses can better understand who their customers are, what their audience wants and where prospective buyers might be.
A 2018 survey from The Relevancy Group asked marketers what systems and sources they had integrated into a CDP: CRM data was the top response among both B2B and B2C respondents. Other data streams included website clicks, online spending, customer service reports and previous offers.
If your business is looking to prioritize an investment in analytics, talk to Vectra Bank about your plans.