The difference between CDPs and CRMs

Anja Bojic | 01. 04. 2024.

In today’s overly connected digital landscape, businesses often deal with an unprecedented influx of data from various sources.  

Using this data effectively has become essential for driving growth, improving customer experiences, and staying ahead of the competition. However, sometimes things can be confusing and make it hard for businesses to find the right tools to access accurate and up-to-date customer data.  

In this blog post, we’ll define Customer Data Platforms (CPDs) and Customer Relationship Management Platforms (CRMs) and explain how they differ.  

Make sure to read until the end to find out why you need both!   

Defining CDPs 

Customer Data Platforms (CDPs) are specialized software systems designed to centralize, manage, and unify customer data from diverse sources.  

Unlike traditional databases or CRM systems, CDPs are specifically built to handle large volumes of customer data, often in real-time. Moreover, they provide you with a comprehensive view of individual customers. 

The data CDPs work with include: 

• CRM data 
• Sales data,  
• Analytics, and  
• Customer journey data. 

CDPs collect and merge this data across various touchpoints — mobile apps, websites, social media, email interactions, and other offline sources to provide you with a 360-degree view of your customers.   

Thanks to such a comprehensive view, you can segment their audience more effectively, target specific customer segments with tailored marketing campaigns, and optimize engagement strategies to drive customer loyalty and satisfaction. 

Defining CRMs 

In contrast to a CDP, a Customer Relationship Management Platform (CRM) is a software solution whose purpose is to streamline and improve interactions between you and your customers. It’s like a centralized hub that allows you to manage and analyze: 

• Historical customer data,  
• Different communication channels, and  
• Sales processes. 

CRMs provide you with tools for different business operations, such as marketing automation, customer support, sales tracking, and lead management.  

By using customer and potential customer data, CRMs help you build better one-on-one relationships, make customers happier, and work more efficiently overall.  

Other than that, CRM software is also important for keeping your customers loyal in the long run and boosting revenue through personalized and focused communication. 

Understanding the differences between CDPs and CRMs 

At first, CDPs and CRMs might seem alike.  

However, once you dive deeper, you realize that they perform different tasks. Let’s see how CDPs and CRMs differ.  

Data focus  

A CDP’s main purpose is to collect, improve, and merge data from various sources to create a unified customer profile. However, a CRM can’t unify or improve data quality because it works only when you feed data into it. That’s why a CRM prioritizes managing customer interactions and nurturing relationships.  

Use cases 

CDPs are great in scenarios that require businesses to analyze great amounts of data from different sources to better understand their customers’ behavior.  

That’s why they are so useful for:  

• Creating personalized marketing campaigns,  
• Refining product recommendations, and  
• Improving cross-channel customer experiences. 

On the other hand, CRMs perform better in scenarios requiring businesses to streamline customer interactions and manage sales processes efficiently.  

They’re an ideal solution for: 

• Tracking leads,  
• Managing customer accounts,  
• Automating sales tasks, and  
• Providing outstanding customer support. 

Integration 

CDPs and CRMs can complement each other within a company’s tech stack by leveraging their unique strengths: 

For example, CDPs can feed better customer data into CRMs, improving the depth and quality of customer profiles within the CRM system. The good thing is that you can use this enriched data to personalize your interactions and improve your marketing strategies. 

Additionally, CRMs can provide valuable feedback on customer interactions and sales activities, which can inform data collection and analysis strategies within the CDP. This collaboration ensures that both platforms work together to improve customer understanding and drive business growth. 

Why do you need both?  

Integrating both CDPs and CRMs into a business’s tech stack can offer a comprehensive approach to managing your customer data and relationships. Having both is beneficial for many reasons, including:  

Complete customer understanding:  

CDPs collect and unify data from different sources to give you a full picture of each customer. On the other hand, CRMs are great for managing how you talk to customers and build relationships. They give you insights into sales progress, customer conversations, and support tasks. When you use both, you get a better handle on your customers because you can see both their past data and what’s happening with them now. 

Personalized customer experiences 

With CDPs, you can sift through tons of data to identify patterns and trends. This is gold for creating super personalized marketing campaigns, suggesting products, and creating top-notch customer experiences. CRMs use this rich data to generate sales pitches and customer support that hit the mark, making them more meaningful and successful. 

Efficient operations  

While CDPs are all about gathering and analyzing data, CRMs make things smoother on the customer front. They can help you with handling leads, predicting sales, and organizing customer support requests. But when you bring these two together, you can automate these tasks and run things more smoothly across the entire company.  

Optimized marketing and sales strategies

CDPs allow you to understand what your customers like and how they behave. This helps you group them, target specific groups, and tweak your marketing for better results. CRMs use this information and make sure your sales team goes after the best chances and seals the deals. 

Long-term customer loyalty:  

When you bring CDPs and CRMs together, you get a great recipe for building strong customer loyalty. Personalized interactions, quick follow-ups, and outstanding service all come together to make your customers happier. And when customers are satisfied, they stick around longer and contribute to the overall success of your business.  

Wrapping up  

Things are clear — managing customer data effectively has become paramount for any business.  

CDPs and CRMs can play an invaluable role in supporting business growth. While CRMs handle customer communications, CDPs provide you with advanced functionalities, especially when you’re working with fragmented and diverse data. 

In an ideal scenario, CDPs and CRMs complement each other and help you understand your customers and prospects better. If you’re eager to find out more about how you can use CDPs and CRMs for your business, feel free to contact us at ai@thingsolver.com