Customer Data Platform vs CRM | What's the Difference

By Nicholas Day |

  | Mar 29, 2022  /  Solutions |

When it comes to customer relationships, two terms that come to mind are customer data platform (CDP) and customer relationship management (CRM) software. However, despite their similar names, both technologies serve a unique purpose with different tangible effects on your customer experience.

The major difference between CDP and CRM is that CRMs are meant for customer relationship management, while a CDP system helps manage customer data. 

Customer Data Platform vs CRM

CDP vs CRM: Definition

CRM is an integrated, data-driven software solution that helps improve customer interaction and relations.

In the B2B environment, a CRM enables businesses to track potential deals and forecast revenue. The resulting actionable data about client interaction makes the sales process more transparent.

In the B2C context, customer-oriented departments like call centers need to view customers’ history in one place. CRM helps achieve this for future 1-to-1 interactions.

On the other hand, CDP is a packaged software solution that creates a unified customer database accessible to other systems.

Using this platform, marketers can gather huge amounts of data from endless sources. Then, they match, merge and deduplicate this data into a single customer view without IT specialists.

These records are then segmented, analyzed, and used for delivering a personalized customer journey.

CDP vs CRM: Functions and Uses

Companies use CDPs in ways like:
  • Data management - integration, validation, cleaning
  • Identifying and categorizing customer behavior
  • Defining unified customer profiles for future use
  • Analyzing customer purchase journey for retargeting 
  • Exporting segmented customer lists for deriving business intelligence or executing campaigns
  • Predictive customer behavior
Companies use CRMs in the following ways:
  • Analyzing sales pipeline and forecasting
  • Sales related to front-office
  • Mining for new customers 
  • Post-sales customer service 
  • Marketing automation
  • Quote-to-cash processes

All in all, CDPs gather, analyze, organize and present customer data that is fed to marketing campaigns and personalization engines. In addition, you can integrate CDPs with CRMs and other customer-facing solutions to gather useful metrics like customer demographics, page views, page clicks, etc. This information helps further segmentation and data modeling.

CDP vs CRM: Date Collection

CDP data is automatically gathered using code snippets and integrations. Data can be sourced from mobile devices, software or apps, laptops, websites, etc. Raw data is filtered, cleaned, and matched to formulate useful insights to be used by different teams. So, you have full control over the data.

CRM data is gathered manually. Salespersons take notes that can be difficult to standardize. Most of this data is solely focused on finalizing the deal. So, CRM data is challenging to use or export elsewhere. Moreover, data can be used and controlled within the CRM only.

CDP vs CRM: Which one is right for you?
CRM is for customer relationships management, while CDP helps understand your customers, ultimately strengthening your customer relations. So, for most companies, it's not an ‘either’ decision.

But it’s worth mentioning that businesses need CDP as their core technology if they want to understand their customers better. This provides a broader, unified view of your customers, which can help improve decision-making at different stages – from product making to marketing.

If you want to get started with a CDP, contact our team today. We’ll help launch a customer data platform customized to your unique business needs.