CRM vs CDP and why you need both

A couple of months ago, a client asked me about the difference between CRM and CDP and wanted my advice on which system he should invest in to support his omnichannel transformation journey. More recently, I was asked the same questions by another client. Also, after doing some research online, I noticed that there’s often confusion about the difference between CRM and CDP and what they bring to the table. This led me to write this article.

Elements of?context

Before jumping right into it, let me bring a little bit of context about those clients :

• They are retailers operating in a B2C multichannel business and trying to become omnichannel retailers
• They are looking to have a single customer view across all their touchpoints (e-commerce websites, POS, mobile apps, social media etc.) to drive personalization at scale and elevate the customer experience
• They are wondering whether they should build their omnichannel customer database on a CRM or on a CDP platform

Quick definition of CRM and?CDP

Before comparing them, let’s start by defining them:

CRM

A Customer Relationship Management is a sales, service & marketing system that automates and streamlines the sales, service & marketing processes of the company across the entire customer lifecycle to:

• Empower sales teams to better collaborate & close more deals
• Empower service teams to better service their customers
• Empower marketing teams to better target their customers

CRM systems are performant in managing B2B marketing use-cases, but they tend to be pretty limited for B2C marketing use-cases. This is due to their unability to store and process all the amount of digital data necessary to address advanced B2C marketing personalization use-cases.

CRM has been around since the 1980s and is very mature with an important footprint (Most companies in 2022 already have invested in a CRM system).

CDP

A Customer Data Platform is a marketing system that collects and unifies the company’s customer data across all channels (website, mobile app, call center, POS, social media etc.) to :

• Enable customer segmentation & modeling
• Optimize the targeting of messages and offers.

CDP systems are very performant in collecting, storing and managing massive amounts of customer data (including behavioral and browsing data) which makes them relevant for building customer 360 databases and managing B2C marketing use-cases in the digital age.

CDP is a fairly new technology (born in the digital age) and has a relatively small footprint but is growing very rapidly.

CRM vs?CDP

CRM and CDP serve different purposes and therefore are designed to address different use-cases and even though there could be a small overlap between them, they are mostly complementary.

Let's compare them using the following criteria applied to a B2C environment:

Main purpose

• CRM : Maximize the productivity of your sales and service teams to enable them to deliver a best-in-class customer experience.
• CDP : Collect and unify the customer data across all touchpoints to enable the marketing teams to segment, score, and personalize communications at scale.

Most relevant use-cases

• CRM : Customer Service and Clienteling.
• CDP : Customer 360 Database and Segmentation & Analytics.

Key capabilities

• CRM : Account and Contact data access & management, Case management, Workflows & Automations, Collaboration and Reporting.
• CDP : Data collection, Data quality, Data unification, Segmentation, Scoring and Data Analytics.

Scope of data

• CRM : Customer personal data & transactional data. CRM technologies tend to be limited in their capacity to deal with large amounts of data. For instance, they cannot manage behavioral data (web-browsing, clicks, mobile app browsing etc.). This incapacity to store and manage large amounts of data is what makes CRM limited for advanced personalized marketing use-cases.
• CDP : Customer personal data, transactional data & behavioral data (web-browsing, clicks, mobile app browsing etc.). CDP is designed to process massive amounts of data. This capacity to collect, store, unify, process, segment and analyze large amounts of data across all your touchpoints is what makes CDP pertinent for building customer 360 databases and managing advanced personalized marketing use-cases.

In a nutshell, where CRM only captures photos of the customer interactions, CDP captures the entire movie. This makes CDP more adapted to customer knowledge and personalization at scale use cases.

Users in your company

• CRM : Customer service and Retail sales teams
• CDP : Marketing teams

Example of providers

• CRM : Salesforce CRM, Microsoft Dynamics, Zendesk, Hubspot etc.
• CDP : Twilio Segment, Treasuredata, Sitecore CDP, Salesforce CDP, Adobe CDP, SAP CDP, Imagino, etc.

Summary table

Wrap-up?: CRM and CDP are complementary

As a conclusion, if you are the CIO of a retailer or of a business operating in a B2C context with large amounts of data, you need to invest in both a CRM and a CDP system?:

• Invest in a CRM for customer service & clienteling use cases to maximize the productivity of your teams and enable them to deliver a tailored and compelling customer experience.?
• ?Invest in a CDP for customer data collection & unification across all your touchpoints to build a 360 view of your customers. Use this knowledge to feed your Customer Engagement platform to drive personalization at scale.

CRMs and CDPs are complementary and made to live side by side where the CRM will act as a System of Records whereas the CDP will act as a System of Reference.