The journey to understanding the difference between CRM and CDP begins with knowing what is CRM. CRM is basically a sophisticated system that enables organizations to streamline their interaction with leads and customers. On the other hand, CDP is a customer data platform that is designed specifically for marketing. It assembles first-party customer data from varying sources to offer a comprehensive view of each customer. So, what is the difference between CRM and CDP? Well, the difference lies in their purpose and functionalities. Let us explore this further in the following section-
CRM vs CDP
Both CRM and CDP are known for collecting and compiling data from diverse sources at one place. They also make the data accessible across the board, improving data accessibility and collaboration. However, if you have to invest in any of these platforms you should know which one you should go for. Thus, understanding key differences between CRM and CDP is very crucial. Read the following points to learn the basics of CRM vs CDP-
Usefulness- The primary difference is that CDPs provide a much bigger picture than CRMs. CRMs are generally limited to the sales cycle and mainly record interactions with individual customers. This may include all the email contacts, phone calls, in-person discussions, virtual meetings, etc. On the other hand, CDPs go beyond sales and provide a 360-degree view on all customer segments.They track customer behavior and help businesses understand how customers interact with them, ensuring complete visibility on customer journey.
Scope- A CRM system mainly focuses on streamlining and strategically aligning contacts so that businesses can personalize communication and close sales. On the other hand, CDP encompasses historical, sociographic, and customer behavior data. CDPs let businesses know what customers will buy, what are the preconditions that influence their decision, and the incentives that they will desire. The scope of CDP is vast and includes both transactional and behavior data.
Data Sources- In CRMs, the data is collected from the clients that have already established contact with the organization. Now, this may include all the suppliers, service providers, partners, investors, etc. The knowledge base of CDP is much broader as it collects data from a variety of sources. Apart from considering website or application analysis, CDP also collects data from store visits, orders, interactions, newsletter subscriptions, online forms, etc.
Application Area- The primary application area of CRM is B2C. On the other hand, CDP is widely used in B2B business and mainly in the industries of direct sales, ecommerce, and retail.
How Data is Collected?- CRMs are basically a centralized repository where all communication details with the customers are stored. Customer-facing departments like sales use this software to manually enter details after the exchange. They then use this data to add a unique personal touch which drives higher response rates and engagement. On the other hand, CDPs leverage APIs and code snippets integrated in various touch points. For CDPs, the data is automatically collected, organized, and stored in the repository.
What is the Right Choice?- Startups or new businesses with smaller teams mainly rely on customer relationship management to manage their prospects and customer-base. However, as the team size grows steadily over time, businesses realize that they need much broader insights on customers. They need CDPs to detect trends that give them a much bigger view of the market or get broader insights for customer communication.
Conclusion
The blog explores what is CDP, what is CRM, and basic differences between them succinctly. To know which one would work for you is a tricky question. You must first define your target audience, customer relationship goals, metric for success, and budget. If you want to understand your audience in more depth, you can go for CDP software. On the other hand, if you are starting out and you need to strengthen your connection with the customers, you can go for CRM. Furthermore, for transcending UX for customers and gaining a distinctive competitive advantage, sometimes both of these tools are recommendable.
For more details, get in touch with CRM experts or visit our website. Check out our other blogs to learn CRM capabilities and more!
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