CDPs (customer data platforms) vs CRMs (customer relationship management platforms)

Understanding the similarities and differences between customer data platforms (CDPs) and customer relationship management (CRM) platforms is essential for any company looking to leverage its customer data more effectively and efficiently.

Despite some crossover, CRM and CDP solutions are two very different things, with specific purposes, functions, and objectives. So, how do you know which is the right choice for your business?

We explore customer data platform vs customer relationship management solutions below.

What is a CDP?

A customer data platform (CDP) is a software solution that collects customer data from multiple sources, unifies that data into a single customer view (or Customer 360), and sends the data to downstream business tools for activation.

Some modern composable CDPs take a slightly different approach. Rather than attempting to warehouse customer data within its own platform, they act as a form of middleware, connecting multiple data silos in a way that can be integrated as if they were a unified data source.

Key capabilities of a CDP

All CDPs offer a specific set of capabilities. These are aimed squarely at providing the business with a 360° view of the customer using data captured from multiple sources. These capabilities include:

• Data consolidation: Collection of customer data across multiple channels, such as social media, email, web, mobile apps, and existing sources of data including CRM platforms, to provide a holistic view.
• Data cleansing and unification: When merging data from multiple channels to create a unified customer profile, duplicate data will be merged and inconsistencies will be resolved to ensure accuracy.
• Customer classification and segmentation: Real-time analysis of customer data to classify customers into segments based on required demographics, such as purchase preference and history, behavior, pain points, location, age, genre, etc.
• Real-time updates: As new/updated customer data is acquired, it is processed in real-time to ensure all data-driven customer interactions are relevant and contextual.
• Actionable insights: Two-way integration of customer intelligence with other business-critical systems, such as marketing and advertising platforms, enables a highly focused, data-driven approach to customer acquisition, nurturing, and conversion.

The benefits of a CDP

To understand the difference between CRM and CDP solutions, we have outlined the unique benefits that a customer data platform provides.

• Complete personalization of the customer journey: With access to a unified, 360° view of the customer, you can personalize every touch point along the customer journey to create engaging, relevant interactions.
• Efficient customer interactions: Unified customer views also allow customer support teams to be consistent and timely with their responses.
• Decisions are driven by data: Having access to a constant stream of customer insights enables businesses to create marketing and sales strategies based on real world data.

CDP examples

• RudderStack: RudderStack offers a Warehouse-Native CDP that allows data teams to eliminate data silos, ease compliance burdens, and optimize the use of existing infrastructure while transforming their data into a competitive advantage.
• Segment: A CDP from Twilio, Segment offers a library of inbuilt connectors to activate data across various systems. Segment includes user-friendly dashboards, customisable data pipelines, real-time tracking.
• ActionIQ: A composable CDP, ActionIQ is built for use across all business teams, from data to marketing to advertising. Its acquisition tools are driven by first-party data and hybrid functionality puts control of data in users’ hands.
• Bloomreach Engagement: The Bloomreach CDP is described as a composable personalization cloud. Incorporating the recently purchased Exponea customer data platform supplies machine learning capabilities, online and offline data tracking, and advanced customer analytics to its users.

What is a CRM?

Traditionally, a customer relationship management (CRM) system stores static customer data that has been generated from multiple channels. These channels could include transcripts of phone conversations, web chat history, personal information, and manually entered records of previous interactions with the customer, emails, amongst others. In many ways, a CRM can be seen as a huge customer database that aims to keep a record of the relationship the business has developed with the customer.

Key capabilities of CRM

CRM systems have a number of defining capabilities. From the viewpoint of traditional CRM, these capabilities could include any or all of the following:

• Customer contact management: Centralizing all customer data in a single system increases useability and efficiency.
• Integration of the sales process: Connecting different sales cycle tools leads to greater productivity and higher sales volume.
• Personalized customer support: Enabling customer service teams to customize solutions by drawing on a single source of truth informed by past customer behaviors and preferences.
• Reporting and analytics: Consolidating data in a CRM solution enables KPIs to be monitored, revealing insights into the effectiveness of sales and marketing processes.

The benefits of CRM

The benefits of CRM are already well-known, as this is a mature business technology. However, we’ve included a brief outline of the benefits of CRM to help further highlight the difference between CDP and CRM.

• Improved customer satisfaction: By managing the customer relationship intelligently.
• Increased sales: Through efficient and meaningful lead nurturing, leading to more conversions.
• Decreased churn rate: From increased customer satisfaction and improved customer retention.
• Efficient customer interactions: By providing sales and support staff with access to detailed customer relationship histories.

CRM examples

• Salesforce: Salesforce is one of the best-known CRM solutions. It has an extensive, multi-cloud ecosystem that caters to all businesses, from start-ups to enterprises, with extensive customisation options and a training platform.
• Hubspot: A free CRM platform, Hubspot includes lead capture forms, dynamic chats, and tools to build a single customer view across all stages of the customer journey.
• Zoho: Zoho is a CRM solution designed for large enterprises and meets their unique challenges with an omnichannel approach to customer communication, extensive integrations, and automation for sales processes.
• Pipedrive: Marketed as CRM for salespeople by salespeople, Pipedrive offers automated workflows, a mobile-first interface, and customizable dashboards to increase efficiencies for small- and medium-sized businesses.

So, what’s the difference? CDP vs CRM explained

When considering a customer data platform vs a customer relationship management platform, the main differences are found in the way they manage customer data, their key capabilities, and their intended purpose.

The difference between CDPs and CRMs: Data handling

The table below gives a comparison of the data handling capabilities of both CDPs and CRMs

The difference between CRM and CDP: Purpose, functions, and objectives

The following table compares the main purpose, functionality, and overall objectives of both CDPs and CRMs.

CDP and CRM: The key differences

Customer data platforms (CDPs) vs customer relationship management (CRM) platforms: A summary

While both CDP and CRM systems have a role in managing customer data, there are significant differences in their purpose and functionality. These differences are mainly found in the way that data is sourced and actioned.

CRM aims to organize interactions between the business and its customers to help create better customer relationships. CDPs, on the other hand, focus on capturing, cleansing, and unifying customer data to create a complete view of the customer.

This view can then be used to uncover actionable customer insights and drive personalized interactions across every touch point.

Which should you use? CDP and CRM use cases

The choice between a CDP and CRM involves evaluating your business needs. The list below highlights common CDP and CRM use cases.

CDP use cases

• Creating a holistic, 360° customer view: Enabling the collection, cleaning, and unification of multiple sources of customer data into a unified whole.
• Unlocking greater levels of personalization: Creating personalized customer interactions based on a data-driven, deep understanding of customer preferences and behavior.
• Advancing classification and segmentation: Grouping customers into strategically aligned groups for targeted marketing and sales purposes.
• Processing data in real time: Integrating and analyzing data sources in real time ensures that customer insights are up-to-date, relevant, and contextual.
• Implementing omnichannel marketing: Ensuring that a consistent marketing message is maintained across all channels and touchpoints.
• Utilizing advanced analytics: Leveraging machine learning techniques to uncover customer insights based on behavior and preferences and predict future needs.
• Creating actionable data: Making customer data available to all applicable business units and systems, maintaining consistency in interactions, and enabling data-driven decision-making.

CRM use cases

• Managing the sales process: Tracking customer interactions from lead generation to conversion.
• Improving customer support: Providing a range of tools for more efficient and personalized customer support.
• Improving contact management: Keeping track of the history of customer relationships.
• Producing sales forecasts: Using historical customer data to predict future sales performance.
• Managing the sales pipeline: Analyzing historical and current customer data to create comprehensive sales pipeline views and make predictions.

Discover how you can drive growth with RudderStack’s warehouse-native, end-to-end customer data platform

This post offers a basic overview of the difference between CDPs and CRMs. However, every business has its own specific needs and may leverage either software solution in different ways.

As a warehouse-native CDP, RudderStack provides a flexible and secure platform for your data pipelines. Collect event data from and transform them in real time for flexibility, scalability, and control.