Although both technologies help provide a more efficient customer experience, they are not the same; their scopes are often confused.

A common confusion among sales and marketing teams needing to manage and handle customer data involves two technologies: Customer Relationship Management (CRM) systems and Customer Data Platforms (CDP).

With analytics overtaking intuition in decision-making (21% of Spanish executives claim to promote data analysis and understanding throughout the company), both technologies are often used together to provide a consistent and personalized customer experience based on data. However, they serve different purposes: CRMs help manage customer relationships, while CDPs help manage customer data.

While both collect data and CDPs integrate most of CRM’s features (the most advanced CDPs include 100% of CRM functionalities), the main difference is that CRMs organize and manage customer-facing interactions, while CDPs collect data on customer behavior with the product or service.

For example: CRM data provides the name of a customer, interaction history with the sales team, among other things. In contrast, CDP data shows every specific step a customer has taken since interacting with the company, from the channel where the relationship started to how they behave regarding the product, etc.

CRMs are primarily designed for sales and service roles. By providing data related to their interaction with the company, CRMs facilitate, accelerate, and simplify the relationship with these audiences. The ultimate goal of a CRM is to help sales teams secure new business and retain existing ones by easing management.

CDPs are for roles oriented towards customer management strategy, such as marketing, operations, and leadership. The goal of a CDP is to manage and understand all customer data to make higher-level business decisions. CDPs collect data from every touchpoint, from ads to website traffic, transaction points, and user behavior. This data is then used to create a “single view” of the customer, an essential feature for omnichannel strategies. Marketing can use this view to understand which tactics are effective, Operations can gauge how users interact with the product and prioritize new features, and leaders can understand the overall acquisition cost and lifetime value of each customer.

Finally, while CRM data is generally collected manually, CDP data is collected automatically through integrations from mobile devices, computers, the web, and other touchpoints.

In summary, using a CRM is useful if you want to manage customer relationships more efficiently and personally; however, it cannot provide a unified view of everything known about each customer. CDPs are more useful if you seek to better understand who your customers are and how they interact with the business. This provides a broader view that can be applied in various ways, from marketing to product development and larger business decisions.

Also, before deciding on acquiring a CRM or a CDP, one must ask: How am I managing my company’s data?

By Julio Cesar Blanco – August 16, 2022