To do their jobs, Marketing, Sales, and Product teams need information about their customers. And to collect and manage this information, two types of technologies have developed that are easily mistaken for each other: customer relationship management systems (CRMs) and customer data platforms (CDPs).
Despite their similar names, CDPs and CRMs serve distinct purposes, and are often used in tandem to provide a consistent, personalized customer experience. But for clarity’s sake, the main difference between these two platforms comes down to this: CRMs mainly help manage customer relationships, while CDPs help manage the collection, cleanliness, and activation of customer data.
Of course, there’s a lot more nuance to it than that. Let’s get into it.
First things first: what’s a CDP?
A customer data platform (CDP) refers to software that collects, cleans, and consolidates customer data at scale. A CDP helps integrate a company’s tech stack with pre-built or custom integrations, and orchestrate the flow of data between them. It establishes a single source of truth within a company (e.g., a central repository, like a data warehouse) along with helping to create unified customer profiles and audiences based on specific user traits or behaviors.
On top of that, a CDP can help companies comply with data privacy regulations (like the GDPR and CCPA) with features like data masking and role-based access controls.
In general, a CDP’s capabilities will span data collection, cleaning, compliance, unification, and activation.
OK, then: what is a CRM?
A Customer Relationship Management (CRM) tool, as its name suggests, is used to help manage and improve customer interactions. As a result, it’s often geared toward customer-facing roles like Sales or Customer Support teams.
CRMs provide historical data on the relationship between your business and individual customers, to better inform (and personalize) future interactions. For example, in a CRM you would likely find data like:
The date, time, and method of communication a customer used to reach out to a company or Sales representative.
Notes from a Sales rep or Customer Service agent on an interaction (e.g., if an introductory call or demo, what questions the prospect asked).
A log of that prospect/customer’s previous interactions with the brand for added context.
CRM vs. CDP: what’s the difference?
Ultimately the difference between a CDP and CRM comes down to who primarily uses these tools and how each collects data.
In short, CRMs organize and manage customer-facing interactions with your team while CDPs collect data from across your tech stack to understand customer behavior and traits more broadly.
CRM data will give you a client’s name, their history of interactions with the sales team, and support tickets they’ve filed (among many other things).
The goal of a CDP is to manage and understand all customer data to make high-level business decisions. CDPs do this by gathering data from every customer touchpoint – everything from ads to website traffic, to points of transaction, to in-product user behavior – in one place.
This data is then used to produce a single view of the customer through a process called identity resolution.
Who CDPs and CRMs are for
CDPs help non-customer facing roles like Marketing, Product, and leadership, not just Sales. With the data they clean and collect, CDPs help organizations make better, more data-informed decisions. Marketing knows which ads work, product knows what actions led to an upgrade, Engineering knows if a feature breaks, and executives understand customer acquisition costs and lifetime value.
CRMs are mainly designed for customer-facing roles, like salespeople and customer success representatives, to help them secure new business and retain existing clients. Sales teams love CRMs because they help them to study and improve their outreach efforts.
Here’s a view of a customer communication log in HubSpot, which is a CRM:
A salesperson can reference this record as they work to develop a relationship with a prospect. Here, we see that Marc from the company IMPACT recently had a baby boy, which the salesperson can then log. Next time they interact with Marc, the salesperson sees this and can reference it without having to remember it on their own.
How CRMs and CDPs gather and manage data
CRMs and CDPs serve different roles because each solves a different problem businesses face when collecting and using their first-party customer data (i.e., data they own).
CRM data is often gathered manually
CRMs are a response to the need for a centralized record of interactions between the customer and the people who represent the business. This central record is something anyone can reference, but it’s mainly used when a customer-facing employee needs to be briefed on the customer they’re going to communicate with.
The data CRMs collect is usually manually gathered, highly specific in its purpose, and hard to automate—for instance, sales notes from your latest demo.
Each salesperson has their own way of taking notes, which is difficult to standardize. Also, the data collected on this demo is solely focused on sealing the deal. These two facts together make CRM data hard to export or use elsewhere.
This data is meant to be used within the CRM only, which means the data you put into a CRM is controlled by the CRM. To get that data out, you’ll have to jump through some hoops.
CDP data is gathered automatically
On the other hand, CDPs are the solution for fragmented tech stack, automatically collecting data via pre-built or custom integrations and code snippets. CDPs help teams gather customer data from mobile devices, laptops, the web, and their own software or app, standardize and centralize this data, and send it to where it needs to go.
To produce these profiles, CDPs collect customer data from many sources, including CRMs. They filter, clean, and match all that data in order to make it usable in many different tools for many different teams. In other words, the data you collect with a CDP is fully controlled by you.
CRM vs. CDP: Which one is right for you?
For most companies, it’s not an either/or decision between CDPs and CRMs.
Use a CRM if you need to manage customer relationships in a more efficient and personalized way. They’re great for teams of all sizes and can prove invaluable in a pinch. Often businesses will start with a CRM and realize that, while it’s an effective tool, it’s simply not enough.
Unlike CDPs, CRMs can’t provide a single, unified view of everything you know about each customer. The data is designed to serve the specific purpose of aiding future interactions with customers.
Use a CDP if you need to better understand who your customers are and how they engage with your business. This provides a broader view of your customers, which you can apply in many different ways—from marketing to product to larger business decisions.
The other technology CDPs are commonly compared to are DMPs. Read our breakdown on how DMPs and CDPs differ here.
CDP + CRM: A unified customer data ecosystem
Even though CDPs and CRMs are unique tools, they work well together to create a unified customer data ecosystem. This synergy between CDPs and CRMs can bridge the gap between transactional data and holistic customer profiles. The result is a single source of truth, high-quality data at scale, privacy compliance, and better customer engagement.
Let’s break this down further:
CRMs focus on contact information, sales history, support interactions, and more. CDPs can enrich this CRM data by providing insight into online and offline interactions, and provide insight into user intent, preferences, interests (and even make predictions about their behavior).
Data discrepancies can pop up with CRMs due to manual entries, not having automated data governance in place, and a lack of real-time updates. CDPs can help ensure data consistency by enforcing a universal tracking plan, data standardization, and by processing data in real time.
Data privacy regulations like GDPR and CCPA require organizations to maintain accurate and compliant records of customer data. This can be challenging when data is scattered across systems. CDPs can help ensure compliance by centralizing data and providing tools for data governance, access controls, and consent management.
The combined use of CRM and CDP data enables organizations to engage with customers consistently across multiple channels, as they have a holistic view of the customer's journey.
With Twilio Segment, businesses can connect to any CRM (via either pre-built or custom integrations) to use these tools in perfect tandem. A customer data platform like Twilio Segment can easily integrate an entire tech stack, clean and consolidate data at scale, while also ensuring data security (e.g., encrypting data at rest and in transit) and privacy (e.g., role-based permissions, automatic data masking).
CDPs have become instrumental in breaking down data silos and creating unified customer profiles, empowering businesses with accurate, complete, and real-time insights.
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