Understanding CDPs vs. CRMs
Customer experience is a competitive strategy in almost any industry. Consumers and buyers expect innovative services and personalized experiences, and companies can deliver on those expectations using customer data.
According to a survey by Harvard Business Review, however, only 15% of executives indicated that they have a unified view of customer data, making it difficult to craft effective digital experiences. A common problem is data silos that keep information between sales, marketing, customer service, and product teams disparate.
Here's the good news — solutions like customer relationship management (CRM) software and customer data platforms (CDPs) compile and integrate customer data in one place, making it accessible to different teams across the organization. The question for most decision-makers, then, becomes whether to invest in a CRM or CDP.
But that might not be the right question to ask. CRMs and CDPs each collect and manage customer data differently — but when used together, they also enable companies to provide a uniquely competitive user experience.
Whether you're just getting started or brushing up on your customer data management knowledge, you’ll learn everything you need to know about CDPs and CRMs in this article, including:
- What a CDP is
- What a CRM is
- The difference between a CDP and a CRM
- How CDPs manage data
- How CRMs manage data
- How to choose what’s right for your company
What is a CDP?
A customer data platform (CDP) is software that collates data from multiple sources (including CRMs) to create a centralized customer database. The CDP takes raw data and creates a single, comprehensive view of your audience across different touchpoints. That clean, structured version is then accessible to every department that needs it.
Leadership, marketing, and product teams will find the most use for CDP data. Marketing teams can create personas for targeted marketing campaigns, and leadership teams can develop high-level strategies based on big-picture trends and behavioral patterns. Product design teams can determine which parts of the website are the most popular so they can decide which areas to highlight or where to place the next call-to-action.
What is a CRM?
Customer relationship management (CRM) software is technology used to manage your company’s interactions with individual existing and potential customers to build and nurture relationships. It centralizes contact information and interactions, so teams can easily access all of a customer’s data from one place.
While all business teams will benefit from a CRM, sales, marketing, and customer service will use the software most. CRMs help sales teams track and nurture leads, marketers create targeted marketing campaigns, and customer support teams provide personalized customer service.
CDP vs. CRM — what’s the difference?
The main difference between CDPs and CRMs is that CDPs provide a big picture of how all customers and platforms interact with your brand, while CRMs note interactions between a specific account and your brand.
CDPs track overall customer behavior to show how audiences and audience segments interact with your brand and give you an idea of the entire customer journey. They automatically collect, clean, and consolidate user behavior data using integrations and code snippets embedded in different touchpoints — such as desktop, mobile devices, and even CRMs.
On the other hand, CRMs manage individual customer interactions by manually collecting information during one-on-one transactions between customers and the brand. CRM data is highly specific because it references details unique to your customers — like their names, contact information, and past interactions with the company.
Compared to CDP data, CRM data is limited because it only accounts for your one-on-one interactions. Unlike CDP data, which you can use to determine general strategies, you can only retrieve CRM data when you need to record or examine a specific scenario.
How CDPs manage data
CDPs automatically collect data from different devices and touchpoints using APIs and code, which means they gather a large variety of customer data.
Most of the data is classified as first-party data. This data comes directly from the customer through form fills, cookies, and other digital engagements, so you have sole control over it. But some of the data in a CDP is third-party data (information collected by external providers). This means your company does not have a direct connection to the consumer. It’s worth mentioning because third-party information can be bought, stolen, or collected without consent — and that’s not the kind of data collection you want to be involved with.
During collection, CDP data is unusable because it comes from multiple sources. After gathering the data, the CDP performs a process called customer data integration (or identity resolution) to clean and combine the data. The “clean” data is then stored in a central database to be transformed into a single, unified view that you can use to analyze the behavior of your brand’s target audiences.
A CDP’s automated data collection function allows you to store information in the database for long periods of time. This lets you build in-depth customer profiles and develop more and more strategic campaigns over time.
How CRMs manage data
CRMs are a central record repository containing details on all company and customer interactions. Customer-facing departments such as sales, marketing, and customer service often access and maintain CRMs. They manually enter information every time an exchange occurs, and because each interaction varies, it’s difficult to standardize the data. Thus, the CRM controls and keeps the data.
Employees use CRMs to access all the information they need on the customer and add a personal touch when closing deals or providing customer support.
CDP vs. CRM — which one is right for you?
If you’re addressing a very specific need for your team, it’s easy to see whether a CDP or CRM is the solution that you’re looking for. But if you’re exploring how to create a better UX for your audiences in general and how to better compete in your industry, consider investing in both.
Most teams start with a CRM to manage customer information, provide personalized service, and strengthen the customer-brand relationship. In the long run, many teams will realize that a CRM alone isn’t enough because it can only provide limited insights. If you want a holistic view of your target audience and audience segments, you’ll need a CDP.
CDPs automatically collate data from different sources, giving you a wider understanding of how your customers behave and engage with your business. Use a CDP when you need broader insights or are ready for big-picture data trends.
Getting started with a CDP
If you want to improve your customer experience with data, start by establishing your customer relationship goals and then determine the metrics you need to measure success.
When you’re ready to implement a CDP, check your current tech stack to see if it has the features you need to help you operate more efficiently. Whether designing products or creating marketing campaigns, Adobe Real-Time Customer Data Platform supports multiple project functions and coordinates work across your organization, giving you real-time insights into programs, projects, and resources.
Watch Adobe Real-Time CDP in actionand see what else it can do.