CRM vs CDP: Are They the Ultimate Customer Experience Dream Team?


Marketing Insights for ProfessionalsThe latest thought leadership for Marketing pros

Monday, April 17, 2023

As businesses seek to improve the customer experience, they must leverage technology to better understand and serve their customers. Two of the most popular tools for doing so are customer relationship management (CRM) and customer data platforms (CDPs).

Article 7 Minutes
CRM vs CDP: Are They the Ultimate Customer Experience Dream Team?

While CRM and CDP similarities, they have several different uses and play different roles within the business. In this article, we’ll explore the differences between CRM and CDP and how they can work together to create the ultimate customer experience dream team.

Understanding customer data platforms

Customer data platforms (CDPs) are connected databases that collect and store customer data from various sources. These sources might include online and offline interactions, such as website visits, social media activity, email engagement and purchase history. By doing this, CDPs allow businesses to create unified profiles for each customer, which can provide insights into customer behavior and preferences.

CDPs are also designed to handle large amounts of data and provide real-time updates for customer profiles. They allow businesses to collect first-party data, which can provide valuable insights into the customer journey. This is also very important due to the impending end of third-party cookies. In fact, 92% of senior marketing executives agree that being able to collect first-party data in this way is more valuable than ever before.

Learn more: Where Does Analytics Fit Into a Marketing Strategy? | With Dara Fitzgerald

With this in mind, CDPs can be particularly useful for businesses with large customer bases, as they provide a central location for storing and analyzing customer data. And it’s clear that businesses are seeing these benefits, as the CDP market is forecast to surpass $5.7 billion by 2026.

Understanding customer relationship management

On the other hand, customer relationship management (CRM) is a software tool designed to manage interactions with customers. It typically includes features such as contact management, sales automation and customer service. CRMs are used to help businesses build and maintain customer relationships by providing insights into customer behavior, preferences and needs.

What’s more, CRMs typically integrate with multiple channels, including email, phone and social media, to provide a complete view of customer interactions. They can also be used to manage marketing campaigns, track sales activities and provide customer service.

Listen to the episode via your preferred pocast platform:

These tools are useful for businesses of all sizes, but they’re particularly valuable for those with a sales team, as they can also help manage and track sales activities.

The use of CRMs has grown drastically over the last 15 to 20 years. In fact, in 2008, only 12% of businesses used CRMs, but by 2022 that figure had increased to a whopping 87%. With so many businesses now seeing the benefits, the CRM sector is expected to become an $80 billion industry by the end of 2025.

Differences between CRM and CDP

As weve said, CRM and CDP do share some similarities, but they serve different purposes within a business.

Though both tools are designed to help with the customer experience and can provide valuable insights, the key differences are as follows:

  • CDPs are designed to collect and store customer data from various different sources, while CRMs are designed to manage interactions with customers
  • CDPs
  • While CRMs are useful for businesses of all sizes, CDPs tend to be better suited to businesses with large customer bases
  • The type of data they collect is also different. CDPs collect first-party data from different sources, while CRMs typically collect data based on their interactions with customers
  • CRMs provide insights into customer relationships, while CDPs provide insights into anonymous customer behavior

Benefits of CDPs and CRMs

Both of these tools provide several benefits to businesses seeking to improve the customer experience and stand out from the competition.

Firstly, CDPs help businesses understand the customer journey and create personalized experiences. This is something that the majority (81%) of consumers enjoy, saying they like getting personalized recommendations and favor the use of AI to do this.

Secondly, 74% of businesses say that CRM software has improved their access to important customer data, providing them with detailed insights into customer relationships. This helps with building and maintaining customer loyalty, something which is crucial in today’s competitive market.

Finally, these two tools can both add value to your business on an individual basis, but using both CDPs and CRMs together can have even more impressive results.

How CDPs and CRMs can work together for a unified customer database

To create a unified customer database, businesses can integrate their CDP and CRM systems. This integration allows businesses to collect and store more customer data from a number of different sources, providing a complete view of the customer journey. This can help to improve customer interactions and offer the best possible experience.

Learn more: How to Achieve Customer-Centricity (and Fuel Better Personalization)

What’s more, integrating CDP and CRM systems also allows businesses to create a detailed and connected profile for each customer. These profiles can be used to provide further insights into both customer behavior and relationships.

We’ve already begun looking at how these can benefit a business individually, but we’ll now look in more detail at the different ways in which these combined insights can be used to drive the business forward.

1. Improving customer interactions

By working together to provide detailed insights into customer behavior and preferences, CDPs and CRMs can help to improve customer interactions.

As weve mentioned above, they allow businesses to create more personalized experiences that meet and even exceed customer expectations. By combining these insights, businesses can understand what most customers are looking for and how they prefer to be contacted. This can help them to provide stronger and more timely customer service.

2. Helping with marketing campaigns

By gathering data on how customers behave, as well as how they prefer to receive content and advertising, businesses can create more targeted marketing campaigns.

But more than this, they can use these insights to create captivating campaigns that truly resonate with their customers. This, in turn, can lead to higher engagement and conversion rates, as well as improved customer loyalty.

3. Supporting the sales team

CRMs are particularly useful for businesses with sales teams as they help to manage and track sales activities. But the two tools combined is where your business can really excel, as you can build a strong database and holistic approach to selling.

After all, its well-recognized that the best way to boost sales is to understand exactly what the customer needs and any pain points they may have and to sell to them based on this information.

Plus, by providing valuable insights and a complete view of the customer journey, these tools can help the sales team to identify opportunities for cross-selling and upselling, as well as improve the sales process as a whole.

Learn more: How to Align Your Sales and Marketing Efforts | With Greg Gifford

4. Boosting customer service

CDPs can provide insights into anonymous customer behavior, while CRMs can provide insights into customer relationships. Putting this information together helps to improve customer service by allowing businesses to tailor and personalize experiences based on individual customer needs and preferences.

5. Reaching business goals

Finally, offering personalized experiences and marketing campaigns, as well as going above and beyond to meet customer needs and expectations, can lead to higher engagement and conversion rates and improved customer loyalty.

Ultimately, by combining the efforts of CDPs and CRMs, businesses can achieve more of their goals related to the customer experience. These goals may include improving customer satisfaction, increasing customer loyalty and driving revenue growth.

Final thoughts

While CRM and CDP have different strengths and use cases, the two tools can work together to create the ultimate customer experience dream team. By integrating CDP and CRM systems, businesses can create a unified customer database that provides truly valuable insights into both customer behavior and relationships.

This can help to create more personalized experiences, improve marketing campaigns, and provide better customer service. So, by leveraging the strengths of both CDP and CRM, businesses can better understand and serve their customers, driving revenue growth and customer loyalty.

Marketing Insights for Professionals

The latest thought leadership for Marketing pros

Insights for Professionals provide free access to the latest thought leadership from global brands. We deliver subscriber value by creating and gathering specialist content for senior professionals



Join the conversation...