CDP vs CRM: Know the Differences

3 minutes read

Successful marketing campaigns start with the use of the right data. This makes it crucial to collect information using effective techniques to ensure their usefulness and accuracy. That said, two of the most common systems used are customer data platform (CDP) and customer relationship management (CRM). In this article, you’ll learn the differences between the two and how businesses use them to implement the right marketing tactics.

Defining CDP and CRM

To begin with, let us have a quick look at the definition of the terms. A CDP platform creates databases of the organization’s customers, including behavioral and historical information. It includes mobile app sessions and website visits. On the other hand, CRM refers to a technology that manages the relationship and interactions of the business with its current and potential customers.

Identifying the Key Differences

One of the key differences between a CDP and CRM is with regards to their application. CRM is designed for sales. The system is used for capturing, tracking, and managing information during the sales transaction. CDP, on the other hand, is made for developing marketing strategies. It provides information about how customers are interacting with the business, providing insights that will be helpful in improving marketing.

The two are also different in terms of the sources of the data they use. In CRM, the information is derived from the communication or transaction customers had with the business in any way. Meanwhile, in the case of CDP, data comes from multiple sources and is consolidated in a single platform. The information sources include social media, points of sale, and mobile applications, among others.

Speaking of data sources, the two are also different in the sense that CRM is not capable of picking up offline data. This is in contrast to CDP that can use both online and offline data.

Also, with CRM, there is a potential for data duplication. Multiple records can be created about the same customer, which has a negative impact on the quality of data. On the other hand, CDP unifies customer data, which eliminates duplication. Even if the information is from multiple sources, it is recorded as a single entry.

To add, with CRM, it only allows the tracking of information from a known individual. This is one of its limitations, which can represent a lost opportunity for the business. This drawback is addressed with CDP. The latter tracks not only known customers but even those that are unknown.

In sum, CRM and CDP are both crucial in business operations. However, the two should not be confused, even if some people use the terms interchangeably. From their applications to their uses, they are different in more ways than one. Between the two, CDP is a more complex system that offers better solutions compared to CRM. Nonetheless, it is undeniable they are both instrumental in making the most out of customer data.

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