“When human judgment and big data intersect there are some funny things that happen.”
–Nate Silver, Founder of FiveThirtyEight
Data is the foundation of modern marketing. The challenge is leveraging customer data to enable smarter, more efficient, personalized marketing campaigns while connecting the dots of the myriad of ways customers interact with your brand. Customer Data Platforms (CDP) and Customer Relationship Management (CRM) systems are two technologies that enable the collection and management of customer data and can assist in making these connections. While similarities exist between these technologies, there are some distinct differences in their primary purpose and role they play in enabling action from customer data.
According to Wikipedia, a CDP is a type of software which creates a persistent, unified customer database that is accessible to other systems. Data is pulled from multiple sources, cleaned and combined to create a single customer view. This structured data is then made available to other marketing systems. When used effectively, the CDP will house a complete 360 view of the customer and enable the creation of personalized experiences at scale.
Salesforce, a leader in the CRM industry, defines customer relationship management systems as a technology for managing all your company’s relationships and interactions with customers and potential customers with the goal of improving business relationships. When referring to a CRM system, people are usually referring to a tool that supports contact management, sales management, productivity and more.
The global customer data platform market size is expected to grow from $903 million in 2018 to $3.3 billion by 2023, at a Compound Annual Growth Rate (CAGR) of 29.3% during 2018-2023 according to a study by MarketsandMarkets. The need for software that is managed by the marketing team (rather than IT) to capture and target against multi-channel actionable insights is a contributing factor driving this growth.
The CRM market potential is projected to be at $82 billion by 2025 and growing at 12% annually according to SeekingAlpha. Increases in Sales Force Automation and Customer Engagement capabilities are trends pushing the industry forward.
Who is the Primary User?
The marketing organization generally owns and utilizes the CDP. Leveraging AI, backend big data systems and automation, CDPs offer a simplified approach to exposing customer behaviors and engagements across channels enabling marketers to quickly connect the dots and send those learnings to connected systems for activation.
The sales organization generally owns the CRM. The sales organization uses the CRM to collect and track information about customers and prospects. Transactional information is imported from financial systems and customer service information from customer support tools.
What is the Best Choice?
Spoiler alert! It’s not necessarily about choosing between a CDP or CRM. Rather, marketers should understand the differences between them, know their strengths/weaknesses, and understand how to apply the technology against their marketing goals — ultimately you may determine that you need both. One caveat to this… the capabilities and functionality of CDP and CRM platforms are constantly evolving and the lines between the two systems are increasingly blurring, further complicating the decision-making process.
CDPs are user behavioral data ingestion and activation platforms that can be used to design and execute marketing strategies and personalized campaigns by stitching user data from multiple data sources such as the website, mobile app, POS, external data sources and e-commerce transactions to create a single customer view. These enriched customer profiles are then activated in connected systems informing your display, social, programmatic and email campaigns. The key here is the CDP’s ability to make this data immediately actionable.
For instance, a user visiting a website, then downloading the app, adding items to a shopping cart and later abandoning that cart are all interactions that can be collected and stitched together by a CDP into a single customer view. The CDP then sends this data to a connected marketing automation system that sends an email containing a coupon to the user inviting them to complete the checkout process.
CRMs, on the other hand, are great for capturing, tracking and managing customer and prospect details during the sales, nurturing and support process. They’re great for managing customer lifecycle, understanding your business relationship with the customer and continuing to provide support and services throughout the relationship.
For example, leveraging a webform on the site, the CRM can collect prospects information, which the sale team then uses to communicate with and track the disposition of the prospect. Once the prospect is converted to a customer, the CRM then tracks the lifetime value of the customer by associating all future purchases (or donations) to that customer ‘contact’ info in the CRM.
In summary, both platforms play a significant role in your marketing technology stack and leveraging the right tool for the right task and obtaining assistance from the right partner will allow you to make the most of the investment. The CRM is essential for the sales process and collecting customer data and CDPs are great tools for activating customer data and executing personalized campaigns at scale across multiple systems.
The marketing technology landscape is becoming increasingly complex. Our goal is to help you develop a digital transformation roadmap that helps your organization navigate the vast array of tools with confidence. This approach supports the thoughtful, methodical and efficient selection of the right tools, in the right order, based on the sophistication and maturity of your marketing infrastructure, to support both short and longer-term objectives.