There are a million acronyms in Martech — with more popping up every day.
Many of these terms are confusing and some even overlap. But there are two that everyone keeps talking about: CDP and CRM.
What are they exactly? The Customer Data Platform (CDP) and Customer Relationship Management (CRM) promise similar capabilities, but deliver very different functionality for ecommerce and B2C marketers today.
So what’s the difference between the two? When you pit CDP vs. CRM, which comes out on top? We’ll dig into the technical capabilities of each, the benefits and drawbacks, and offer a recommendation for marketers like you looking for the best platform for a growing brand and looking to make the most of the customer journey.
What is a CDP?
A Customer Data Platform is defined as a marketer-managed system that unifies known customer data and is accessible to other systems. A CDP is a database that can connect to your other marketing systems, including your ESP, ecommerce platform, and more, creating an actionable customer view.
CDPs offer marketers a single view of the customer by capturing data across channels and devices. In addition, the data in the CDP can not only go in, but also out — so other systems can use this customer database to activate marketing campaigns.
What is a CRM?
A CRM is defined as a single platform that tracks all of your interactions with customers and potential customers. When you think of a typical CRM, you probably think of Salesforce, the CRM that first defined the category.
Much like a CDP, a CRM unifies customer data in one location, creating a single customer view. But unlike a CDP, that data is often input manually by an inside sales team and is more often used to power B2B businesses with lengthier and more complex sales cycles.
How do the two stack up?
While a CDP and CRM seem incredibly similar in functionality, in reality, the two perform very differently.
Depending on your business, one type of marketing technology may serve you better than the other. To help clear up some of the confusion, here are the main differences between a CRM and CDP.
Built for Marketing vs. Sales
CDPs are built specifically with B2C marketers in mind. By automatically centralizing data from your website, email system, point of sale, and more, you get a full picture of your buyer behavior from the first interaction to their latest purchase. Even better, you can then use that behavioral data to analyze top-performing marketing campaigns and directly power new campaigns.
In contrast, CRMs are built for a sales team within a B2B business, not the marketing team at a consumer-focused brand. Sales reps have to input the customer data or pull it in from other sources, which means you’re likely missing a large amount of data about your customer.
Key difference: A CDP helps marketers keep track of where their contacts are in the customer journey, based on granular behavioral data—something CRMs can’t effectively do.
People-Driven vs. Account-Driven
CDPs are all about individual customers. There’s no need to focus on large accounts when an actual person is the one buying products directly from your business. What matters most to B2C marketers is how you market to and nurture your individual customers to encourage a first purchase, second purchase, and long-term customer loyalty.
But because CRMs were built to serve sales teams, CRMs are set up to manage a list of individual contacts within a larger business. This detached structure doesn’t align well with the high-volume, people-driven nature of B2C.
Key difference: CDPs are built to measure individual buyers, not accounts.
Unpredictable vs. Predictable Sales Cycles
It doesn’t get much more unpredictable than a B2C sales cycle: It can be as short as a minute or as long as a few years. For instance, one buyer might see an ad for a new pair of shoes and make an impulse purchase, while a different B2C customer may have a long consideration period before finally deciding to buy months later.
In contrast, B2B sales tend to be more manual, involve buy-in from more stakeholders, and require a longer process of vetting and technical integration. Because of this consistent process, most B2B businesses understand their usual sales cycle length and expect the process to take a certain amount of time.
Key difference: The varied, uncertain nature of purchase cycles in B2C makes it tough for a CRM to serve the needs of a B2C business.
Millions vs. Thousands of Transactions
When it comes to B2B vs. B2C, the sheer number of contacts and accounts that are dealt with on a daily basis is hugely different. In B2C, a large retail brand could be selling to millions of individual customers per day. Because of that, a CDP must be able to ingest massive amounts of data and accurately assign that data to specific customers in order to effectively measure results over time.
But in B2B, your business is generally dealing with a list of thousands of companies in your target market. In the end, the amount of volume isn’t really comparable.
Key difference: A traditional CRM may not be equipped to handle the extremely high volume of transactions common in B2C.
A Complete Customer View vs. Incomplete Data
A CDP can unify data from a variety of sources, including your ecommerce platform, ESP, website, ad platforms, and more. You can integrate almost any type of data into a CDP, giving you a complete view of your customer within a unique ID as they move across platforms and devices.
In contrast, CRMs can pull in a variety of customer interactions and other behavioral data, but it’s often an incomplete picture. Most CRMs use the customer email as the identifier, missing out on anonymous browsing data and other information not connected to the customer email.
Key difference: CDPs are able to provide a complete view of your customer, even when they have many distinct identities across your marketing systems.
CRMs are really a stepping stone on the path to a CDP. While a CRM may solve your immediate data problem, it doesn’t truly help you as a marketer. If you need a complete picture of your customer across channels and devices, a CRM is not for you.
With a CDP, marketers are empowered to build data-driven campaigns, analyze and optimize them, and automate them to perfectly tailor the message to buyers.
Hopefully, this cleared up some of the confusion around CDPs and CRMs and you now know exactly which is right for your business.
This post was originally published on Jan. 11 2019 and was recently updated.