CDPs vs. CRMs: What Marketers Need to Know

Primary purpose: CDP vs. CRM

CRM: Customer Relationship Management systems, or CRMs, centralize all of your customer interaction and transaction information. These platforms were originally built for B2B sales and customer-facing teams, but they have since been adapted to support B2C use cases. This has led to the rise of marketing positions like CRM Manager, who specifically oversee either the software or the overall customer journey and use the CRM as a hub for all their customer data.

Customer Relationship Management systems support direct customer engagement by managing and connecting customer accounts, attributes, and touchpoints at the user level. CRM systems capture all historic customer engagement and transaction data for known customers generated across customer interactions. This includes data from brand touchpoints such as their website, email, mobile, offline channels, social media, order management systems, and payment data.

CDP: According to the CDP Institute, a CDP, or Customer Data Platform, is “packaged software that creates a persistent, unified customer database that is accessible to other systems.” Essentially, this means that a CDP is a tool that aggregates data from across the business to form a Single Customer View. The CDP enables businesses to no longer have to look at their data channel by channel or department by department. Instead, you have access to holistic, cross-departmental, holistic views of your customers that goes beyond the more simple demographic data stored in the CRM.

CDPs were purpose-built to provide marketers with data access, activation, control, and speed. Their sole focus is helping marketers deliver more relevant, responsive customer experiences by activating customer data in real-time while cutting out the time-consuming, manual work typically required. CDPs aren’t intended to replace existing data systems, but rather to unlock value from marketers’ siloed data and use it to drive marketing effectiveness and ROI. With CDPs, marketers can finally scale data-driven marketing and use their data to deliver the rich, real-time customer experiences they’ve been aspiring to for years.

Who needs one: CDP vs. CRM

CRM: Customer Relationship Management systems are best utilized by sales and customer service teams — because those teams are what the software was built for. While technologically, yes, CRMs have been tweaked and added on to in order to work for marketing use cases, it’s just not the same as being purpose-built for marketing teams.

That being said, it’s common for marketing teams to have a CRM, especially as a holdover from a purchase made a few years back before platforms like the CDP were an option. It’s often the case that marketing teams go looking for a CDP to unify data from their CRM with other data, or to phase that data from a CRM into a CDP permanently. For marketers just starting out then, who work with a very small customer base with limited data types, CRMs are a totally viable (and cost-effective) option, but beware — it might not have the longevity and scalability you expected.

CDP: Simply put, marketers (or even anyone who wants to use AI) need CDPs. Customer expectations have increased and it’s no longer acceptable for marketers to send the same message to all customers or even to send the same message across all channels. Your customers expect targeted, relevant messages in order to drive their engagement and they communicate that expectation with their wallet.

A study by McKinsey found that the “likelihood of generating above-average profits and marketing earnings is around twice as high for those that apply customer analytics broadly and intensively.” Leveraging customer data can have a material impact on the bottom line and marketers need the ability to do that with real-time, complete data and without requiring IT or engineering to get involved every time they need up-to-date data.

To make this a reality, marketers need a platform that collects data, makes it accessible to them, provides insights, and allows them to use their data for their campaigns for timely and relevant messages. A CDP is built for data to be ingested, analyzed, and activated at the same time and allows marketers to drive more revenue for their companies than the competition.

Limitations to marketers: CDP vs. CRM

CRM: Customer Relationship Management systems were designed to store customer engagement information, but not to activate it. They can’t make data available in real-time because they can’t rapidly ingest large volumes of data, process that data, or unify different data types, especially when that data has different identifiers.

They also offer minimal system access and control to marketers. Furthermore, CRM systems only work with known users, typically those that have an email address and customer ID. In today’s cross-channel landscape, marketers need cross-device identity resolution that includes anonymous identifiers. By not capturing cross-channel identities and related channel data, CRM systems miss customers on key channels and can’t engage anonymous customers who are further up the funnel.

CDP: Fluff and gimmicks are the biggest limitations to marketers searching for a CDP. Many organizations have flung together a solution that is a “kinda” CDP, some CDPs might not meet all of your marketing needs, and others require tons of expensive add ons and require significant engineering resources. The explosion of the CDP market has led to tons of these CDP imposters popping up, but have no fear! We’ve created our CDP RFP Template to help you identify your needs and run a successful CDP search (for free, available to download now).

Marketers don’t need yet another system to simply store customer data. They need a system that makes their data actionable and connected across channels, platforms, and devices to make their marketing smarter and more effective. Legacy data platforms (like CRMs) haven’t provided marketers with the control, flexibility, speed, insight, and connectivity they require to be successful. Within a future-proofed tech stack, CRMs can exist, but they’re not an end-to-end solution. Most businesses today find to leverage CRMs successfully, they have to route that data into a CDP. (And in many cases, the CDP ends up replacing the CRM). But even within the CDP space, there are solutions that will not meet all of marketers’ needs. The future of marketing (and the end game of CDPs) is the SmartHub CDP.

The SmartHub CDP connects applications around a deep customer understanding and uses it to direct interactions in real-time, enabling brands to deliver relevant, connected experiences throughout the omnichannel journey. If you’re interested in learning more about what makes our Smarthub CDP different, connect with one of our CDP experts, today.