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CRM
CDP vs CRM: Which one do you need?
Liucija Adomaite
July 25, 2024
|
7 min. read
Liucija Adomaite
LAST UPDATED
July 25, 2024
READING TIME
7 min.
People often confuse CDP and CRM, two technologies that deal with customer data. But in reality, they are designed to perform really different functions.
Knowing the differences between CDP and CRM is crucial if you're a marketer or decision maker who’s selecting tools to gather customer data.
In this article, you learn everything you need to know about customer relationship management software and customer data platforms.
We will look at their functions, benefits, and use cases, to make sure you invest in the right customer data and relationship software.
CDP vs CRM: What are they?
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What is CDP?
A Customer Data Platform (CDP) is a technology that consolidates and integrates customer data from various sources into a single, comprehensive database.
This unified customer database is accessible by other systems and can be used to provide a consistent, personalized customer experience across all channels and touchpoints.
CDPs collect data from online and offline sources, including websites, mobile apps, email platforms, and customer service interactions, compiling this information into a single source of truth within a company.
It allows to create a detailed profile for each individual customer, as well as to segment audience based on various factors, from user traits, interests, location, to past behaviors.
CDP-created customer profiles can then be used for targeted marketing efforts, personalization, customer segmentation, and to drive customer engagement and loyalty by ensuring that every interaction is tailored to the customer's preferences and behaviors.
A Customer Relationship Management (CRM) software is a technology solution designed to help businesses manage and analyze customer interactions and data throughout the customer lifecycle.
The primary goal of CRM software is to improve business relationships with customers, assist in customer retention, and drive sales growth.
It achieves this by centralizing customer information, which can include contact details, purchase history, preferences, and previous interactions with customer service into a single database.
This consolidation makes the data accessible and usable for various business functions, enabling sales teams, marketing departments, and customer service representatives to have a comprehensive view of each customer.
CRM systems offer tools and features for tracking and managing customer interactions through multiple channels such as emails, phone calls, social media, and websites.
They also provide functionality for automating processes like sales tasks, marketing campaigns, and service inquiries.
Moreover, CRM software can analyze data to offer insights into sales trends, customer behavior, and campaign effectiveness, helping businesses make informed decisions and tailor their strategies to better meet their customers' needs.
Generally, a CRM system supports sales, while a CDP creates a more complete view of customer relationships beyond the sales cycle.
CDP also provides integrations and an environment to support you in the various stages of a full customer experience cycle.
Meanwhile, CRM systems primarily focus on managing customer relationships, processes, and business interactions.
How does CDP manage your data?
CDPs collect data from various sources, integrating and consolidating it to create unified customer profiles and then analyzing this data for actionable insights.
The management of data in a CDP system can be explained with several key stages:
1. Data Collection:
Multi-Source Integration: CDPs collect data from a wide range of sources, both online and offline. This includes website traffic, social media interactions, email engagements, purchase transactions, customer service interactions, and mobile app usage.
Structured and Unstructured Data: They are capable of handling various types of data, including structured data (e.g., name, email, purchase history) and unstructured data (e.g., text from customer service interactions, social media comments).
2. Data Integration:
Identity Resolution: CDPs perform identity resolution by linking and matching data points from different sources to individual customer profiles. This process often uses unique identifiers, such as email addresses or customer IDs, to connect disparate data elements.
Data Consolidation: After identifying linked data points, the CDP consolidates this information, creating a unified view of each customer. This unified view encompasses all interactions and behaviors of the customer across different channels and touchpoints.
3. Data Storage:
Centralized Database: The unified customer data is stored in a centralized database, making it easily accessible for future processes and analysis. This database is designed to handle large volumes of data and ensure data integrity and security.
4. Data Processing and Management:
Data Cleaning and Enrichment: CDPs clean the data by removing duplicates and correcting inconsistencies. They can also enrich the data by adding information from external sources to enhance the customer profiles.
Real-time Processing: Many CDPs are capable of processing data in real-time, allowing businesses to act on current data for timely and relevant customer engagement.
5. Data Analysis and Insights:
Segmentation: CDPs use the consolidated data to create detailed customer segments based on behaviors, preferences, and other criteria. This segmentation allows for targeted marketing campaigns and personalized customer experiences.
Predictive Analytics: Advanced CDPs offer predictive analytics features, using machine learning algorithms to forecast future customer behaviors, preferences, and potential value.
6. Data Activation:
Personalization and Targeting: With a comprehensive understanding of each customer, businesses can personalize marketing efforts and target customers more effectively across various channels, such as email, social media, and websites.
Multi-Channel Campaign Management: CDPs enable the orchestration of coordinated campaigns across multiple channels, ensuring a consistent and personalized customer experience.
7. Compliance and Privacy:
Regulatory Compliance: CDPs help businesses comply with data protection regulations (such as GDPR in Europe or CCPA in California) by managing customer consent and ensuring personal data is handled securely and lawfully.
Data Governance: They provide tools for managing data access, retention policies, and data governance, ensuring that customer data is used responsibly and ethically.
How does CRM handle your data?
Meanwhile, CRM software streamlines and automates the management of customer data. Then, it transforms it into actionable insights that drive sales, improve customer engagement, and enhance the efficiency of marketing and service teams.
The process of managing data in a CRM system can be broken down into several critical steps:
1. Data Collection:
Centralized Data Entry: CRM systems collect data from various customer touchpoints, including sales interactions, customer service engagements, marketing activities, and social media interactions. This data typically includes contact information, demographic details, purchase history, preferences, and communication records.
Integration with Other Systems: Many CRMs integrate with email platforms, social media, ERP systems, and other business tools to automatically capture interactions and transactions, reducing the need for manual data entry.
2. Data Organization:
Customer Profiles: The CRM software organizes data into individual customer profiles, creating a comprehensive view of each customer. This organization includes categorizing information based on its type, such as contact details, sales opportunities, service requests, and interaction history.
Custom Fields and Tags: CRM systems often allow the creation of custom fields and tags to further categorize and organize data based on specific business needs, making it easier to manage and access relevant information.
3. Data Accessibility:
Centralized Database: By keeping all customer information in a centralized database, CRMs ensure that authorized personnel can easily access up-to-date customer information from anywhere, fostering collaboration across sales, marketing, and customer service teams.
User Permissions: CRM platforms typically include user permission settings that control access to data, protecting sensitive information and complying with privacy regulations.
4. Data Management and Tracking:
Activity Tracking: CRMs track every interaction with customers, including emails sent, calls made, meetings held, and responses received. This chronological activity log helps businesses understand the entire customer journey.
Automation: Many CRM solutions automate routine tasks, such as follow-up reminders, data entry for lead capture, and updating contact information, allowing teams to focus more on strategy and less on administrative tasks.
5. Data Analysis and Reporting:
Insights and Dashboards: CRM software includes analytical tools and customizable dashboards that provide insights into sales trends, customer behavior, campaign performance, and overall business health. These tools help businesses make informed decisions based on real-time data.
Segmentation and Personalization: CRMs enable the segmentation of customers based on various criteria, facilitating targeted marketing campaigns and personalized communication strategies to improve engagement and conversion rates.
6. Customer Service and Support:
Service Requests and Ticketing: CRM systems manage customer service requests and support tickets, tracking their resolution status and ensuring timely follow-up. This improves customer satisfaction by ensuring issues are addressed efficiently.
Knowledge Base Integration: Advanced CRMs integrate with knowledge bases and customer portals, allowing customers to find information and resolve issues independently, reducing the load on customer service teams.
7. Compliance and Data Security:
Regulatory Compliance: CRM platforms are designed to help businesses comply with relevant data protection regulations, such as GDPR or HIPAA, by managing customer consent and data retention policies and ensuring secure data handling practices.
Data Protection: Security features such as encryption, data access controls, and regular backups protect sensitive customer information from unauthorized access and data breaches.
CRM and CDP: Which one do you need?
CDPs are great for engaging with leads and prospects, while CRMs are made for managing the relationship with your customers. But they can work best when used together.
While CRM systems are very effective for teams directly interacting with customers (sales, customer service) and managing customer relationships, CDPs are particularly valuable for marketing departments and anyone involved in creating a unified customer view to tailor marketing efforts.
Moreover, larger companies with complex customer data environments will benefit from employing both CRM and CDP systems. But that may come as a hefty investment.
Frequently Asked Questions
What is the difference between CDP, CRM, and DMP?
The main differences are: a CDP integrates and unifies customer data, creating the most accurate user profile. A CRM system is typically managed by a sales team, with limited data integration. A DMP uses third-party data, stored temporarily, creating an audience-based persona.
CDPs need to bring in a lot of data from a lot of technology systems, which requires a lot of integrations and APIs. Make sure the CDP’s data model fits with your data systems.
Is Salesforce a Customer Data Platform?
Salesforce has a Customer Data Platform solution called Genie. It helps businesses to save time and spend with intelligent targeting, fast segmentation, and real-time automation.
What is the best customer data platform?
Some of the best CDPs include Segment, Emarsys, Optimove, Lytics, BlueConic, Bloomreach Engagement.
These are the 9 best CRMs that offer customer management features without any cost. Track, organize, and optimize all your customer and sales interactions in a centralized platform free of charge.
CRM methods are practices businesses use to manage and analyze customer interactions and data throughout the lifecycle. This is what you need to know about the most effective ones.
Liucija Adomaite
July 25, 2024
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