Why a CDP is not a CRM: How these systems can work together to support your business needs
Introduction
Customer data is the lifeblood of modern marketing. It enables marketers to understand their customers, segment them, personalize their experiences, and measure their impact. However, not all customer data is created equal, and not all customer data systems are designed for the same purposes. This topic delineates the differences and complementarities between customer data platforms, such as Redpoint CDP, and customer relationship management systems by explaining the following:
The differences between two types of customer data systems: customer data platforms (CDPs) and customer relationship management (CRM) systems
The functionality typically provided by CDPs and CRMs
The similarities and differences between CDPs and CRMs in terms of functionality, usage patterns, typical users, integrations, and user interfaces
Examples of how CDPs and CRMs are used in different industries and use cases
How CDPs and CRMs can work together as complementary components within an overall marketing technology solution
For more information about Redpoint CDP, refer to the Redpoint Global website and the Redpoint CDP user documentation.
What is a CDP?
A Customer Data Platform (CDP) is a software system that collects, unifies, and activates customer data from multiple sources. A CDP creates a single and persistent view of each customer, which can be used for various marketing purposes, such as personalization, segmentation, analytics, and campaign orchestration. A CDP typically provides the following functionality:
Data ingestion: Encompasses the collection of data from a multitude of sources, including websites, mobile applications, emails, social media, offline channels, and third-party platforms.
Capable of managing both structured and unstructured data, a CDP can process this information in real-time or batch modes. For instance, it can gather website data like page views, clicks, downloads, and form submissions, as well as mobile app data such as installations, launches, sessions, and in-app activities.
Can assimilate data from email campaigns, tracking opens, clicks, and conversions, and from social media platforms by monitoring likes, shares, comments, and mentions.
Can integrate data from offline sources like call centers, retail stores, and kiosks, along with third-party platforms including advertising networks, data brokers, and analytics services.
Can offer data-in-place capabilities where the data already resident in a database can be leveraged to support the CDP’s unification and activation activities.
Data unification: Integrates data from diverse sources and formats to construct a unified customer profile.
Employs various identification and matching techniques to consolidate customer information across devices and channels, utilizing cookies, device IDs, email addresses, phone numbers, physical addresses, and customer IDs.
Enhances these profiles with supplementary data, including demographic, behavioral, and psychographic details. For instance, a CDP can amalgamate data from a company's website and mobile app to form a comprehensive profile for each visitor and user. Similarly, it can integrate data from email campaigns and social media to build a complete profile for each subscriber and follower.
Enables merging data from offline interactions and third-party platforms to create a detailed profile for each caller and purchaser.
Enables further augmenting customer profiles with external data sources, such as census, location, and interest data.
Data activation: Serves multiple marketing functions, including personalization, segmentation, analytics, and campaign management.
Marketers can leverage a CDP to segment customers by attributes, behaviors, preferences, and lifecycle stages, enhancing the ability to tailor experiences across various channels like web, mobile, email, social media, and advertising.
Additionally, a CDP aids in evaluating and refining the effectiveness of marketing efforts by tracking metrics such as attribution, conversion rates, customer retention, and loyalty. For instance, marketers can use a CDP to segment customers by demographics (age, gender, location), behavior (browsing, purchasing, engagement histories), preferences (products, content, communication methods), and lifecycle stages (new, active, loyal, churned). This segmentation allows for the personalization of customer experiences, ensuring messages and offers are relevant and customized.
A CDP helps in assessing and enhancing the impact and efficiency of marketing campaigns by monitoring and improving critical metrics like attribution, conversion, retention, and loyalty.
What is a CRM?
A customer relationship management (CRM) system is a software system that manages the interactions and relationships between a company and its customers. A CRM system helps sales, service, and marketing teams to track and manage customer information, such as contact details, account history, opportunities, leads, and cases. A CRM system typically provides the following functionality:
Data management: A CRM system serves as a repository for customer information including contact details, account history, and interactions such as opportunities, leads, and support cases.
Manages data pertinent to the company's offerings and agreements, encompassing product specifications, service tiers, pricing structures, and contractual conditions. For instance, it compiles and arranges data from the sales department, including customer identities, contact information, and account statuses.
Organizes service team data, tracking customer inquiries, problems, solutions, and feedback. Marketing team data, like customer demographics, promotional efforts, and performance metrics, are also systematically managed. This comprehensive data organization supports a cohesive approach to customer relationship management.
Data access: A CRM system facilitates access to customer data across various internal teams such as sales, service, and marketing, as well as external partners like distributors, resellers, and suppliers. For instance:
Sales teams can leverage the CRM to oversee their sales pipeline, engage with prospects, finalize transactions, and promote additional sales.
Service teams can utilize the CRM to handle service inquiries, address problems, offer assistance, and achieve customer satisfaction.
External collaborators can use the CRM to align with the company's operations, obtain product and service details, and nurture their customer relations.
Data analysis: A CRM system is instrumental in analyzing customer data for a multitude of purposes, including forecasting, reporting, and creating dashboards. It offers valuable insights and recommendations to sales, service, and marketing teams on aspects such as lead scoring, opportunity management, and customer satisfaction. For instance:
Sales teams can utilize a CRM to predict sales revenue, assess their performance, and track sales activities.
Service teams can leverage it to evaluate service quality, oversee service metrics, and enhance service operations.
Marketing teams can use a CRM to measure marketing results, monitor marketing metrics, and refine marketing tactics.
Additionally, CRM systems aid in providing strategic insights and advice to sales, service, and marketing teams, enabling them to effectively score leads, manage opportunities, and sustain high levels of customer satisfaction.
How are CDPs and CRMs different?
CDPs and CRMs are different in many ways, as they are designed for different purposes and users. The following table summarizes some of the key differences between CDPs and CRMs:
Aspect | CDP | CRM |
|---|---|---|
Data sources | Multiple and diverse sources, such as websites, mobile apps, email, social media, offline channels, and third-party platforms. | Limited and specific sources, such as sales, service, and marketing interactions and transactions. |
Data types | Both structured and unstructured data, such as customer attributes, behaviors, preferences, and events. | Mostly structured data, such as customer contact details, account history, opportunities, leads, and cases. |
Data processing | Real-time or batch processing, depending on the data source and use case. | Mostly batch processing, with some real-time updates for certain data fields. |
Data unification | Creates a single and persistent view of each customer by identifying and matching customers across devices and channels. | Creates a single and static view of each customer by storing and organizing customer data in predefined fields and records. |
Data activation | Activates customer data for various marketing purposes, such as personalization, segmentation, analytics, and campaign orchestration. | Activates customer data for specific sales, service, and marketing purposes, such as forecasting, reporting, and dashboarding. |
Data access | Provides access to customer data for marketers and other business users, who can use the CDP's user interface or integrate with other tools and platforms. | Provides access to customer data for sales, service, and marketing teams, who can use the CRM's user interface or integrate with other tools and platforms. |
Data ownership | The company owns the customer data, and can control how it is collected, stored, and used. | The company and the customer share the ownership of the customer data, and have to comply with various regulations and agreements. |
How can CDPs and CRMs work together?
CDPs and CRMs are not mutually exclusive, but rather complementary components within an overall marketing technology solution. CDPs and CRMs can work together in the following ways:
CDPs can enrich CRMs with additional customer data, such as behavioral, psychographic, and third-party data. This can help sales, service, and marketing teams to better understand their customers, and tailor their interactions and offerings accordingly.
CRMs can enrich CDPs with transactional and operational customer data, such as purchase history, contract details, and case status. This can help marketers to better segment their customers, and personalize their experiences and campaigns accordingly.
CDPs can leverage CRMs as data sources and destinations, by ingesting data from CRMs and sending data to CRMs. This can help to create a seamless and consistent customer data flow across the company's systems and channels.
CRMs can leverage CDPs as data sources and destinations, by receiving data from CDPs and sending data to CDPs. This can help to create a unified and persistent customer data view across the company's systems and channels.
How are CDPs and CRMs used in different industries and use cases?
CDPs and CRMs are used in different industries and use cases, depending on the nature and needs of the business. The following are some examples of how CDPs and CRMs are used in different scenarios:
Retail:
A Customer Data Platform (CDP) is utilized to gather and integrate customer data across diverse channels, including web, mobile, email, social media, in-store, and loyalty programs. Moreover, a CDP enables the activation of this data for marketing initiatives, allowing for personalized product suggestions, the creation of dynamic customer segments, and the management of omnichannel campaigns.
A Customer Relationship Management (CRM) system is employed to compile and manage customer information from sales and service interactions, encompassing purchases, returns, and customer feedback. Additionally, a CRM provides the functionality to retrieve and scrutinize customer data for sales and service objectives, such as inventory management, demand forecasting, and customer support.
Banking:
A Customer Data Platform (CDP) can be utilized to gather and integrate client information from diverse channels, including online and offline mediums like websites, mobile apps, emails, social media, branches, and ATMs. Furthermore, a CDP can be employed to leverage this data for marketing initiatives, enabling personalized offers, risk profile creation, and the management of cross-selling and upselling strategies.
A Customer Relationship Management (CRM) system is instrumental in storing and structuring data from sales and service interactions, encompassing account details, transaction records, and customer inquiries. Additionally, a CRM facilitates the examination and application of this data for sales and service objectives, which includes portfolio management, revenue prediction, and customer support.
Travel:
A Customer Data Platform (CDP) to gather and integrate customer data across multiple channels, including web, mobile, email, social media, bookings, and check-ins. Additionally, a CDP can be employed to leverage this data for marketing strategies, such as tailoring destination suggestions, developing loyalty segments, and managing campaigns before and after trips.
A Customer Relationship Management (CRM) system is instrumental for storing and structuring customer data from interactions related to sales and services, like reservations, cancellations, and customer feedback. A CRM also facilitates the examination and application of customer data for operational needs, including managing room or seat availability, predicting demand, and delivering customer support.
Conclusion
CDPs and CRMs are two types of customer data systems that serve different purposes and users.
CDPs collect, unify, and activate customer data from multiple sources, and enable marketers to create and manage personalized customer experiences and campaigns.
CRMs store and organize customer data from specific sources, and enable sales, service, and marketing teams to track and manage customer interactions and relationships.
CDPs and CRMs are different in terms of data sources, data types, data processing, data unification, data activation, data access, and data ownership. However, CDPs and CRMs can also work together as complementary components within an overall marketing technology solution by enriching, leveraging, and integrating each other's data. By combining the strengths of CDPs and CRMs, companies can achieve a holistic and comprehensive customer data strategy and deliver superior customer value and satisfaction.