One of today’s emerging software categories is the customer data platform (CDP). CDPs solve one of today’s biggest problems for marketers: getting a single customer view. As such, it’s helping to define the next stage of data-driven marketing.
Despite its emergence, however, there’s a fair bit of confusion as to what exactly a customer data platform is and where it fits in your technology stack. The confusion mostly stems from confusing a CDP for customer relationship management (CRM) software. A Gartner survey found that 47% of marketing leaders said they already use a CDP, with another 19% searching for one. However, 52% identified Salesforce Analytics Builder (a CRM module) as their CDP. It’s clear that since CDPs are relatively new, many marketers don’t know the difference between CDP and CRM. To help ease the confusion, let’s first define what a CDP is.
Put simply, CDPs collect customer data from multiple channels and match them across those channels. This identifies a customer as the same user whether they’re on your blog, on Twitter or on a landing page. Marketers can then use this customer database to create a single customer view and track the customer journey.
So what differentiates a CDP from a CRM system? There are three main differences:
Known and Anonymous Visitors
CRM solutions are great pieces of software because they track the interactions your customers make with your brand. You can use this information to find out a lot about your customers, and market to them accordingly. Where a CRM solution falls short, however, is that it can only do this for known customers. A CRM can’t identify a customer that isn’t already somewhere in your database. That’s where a CDP shows its biggest advantage. No matter whether you collect data from a repeat customer or an anonymous new visitor, a CDP can identify them. This capability is what creates the robust single customer view. No longer are there unidentified data points for anonymous visits; they’re all accounted for and identified.
No Need for IT
CDP management can be summed up in one word: simple. One of the requirements for a piece of software to be considered a CDP is that it’s manageable by marketers. Although IT needs to help with initial implementation, marketers should be able to handle it afterwards. David Raab of the CDP Institute explains what makes CDP management so simple: “Schema-less data stores and AI-driven data preparation reduce set-up effort. Prebuilt modules for complex processes such as identity management eliminate custom development and simplify tuning to make the data ready for use.” This is in contrast to a customer relationship management system, which requires IT for setup and management, as the databases are much more complicated.
Customer relationship management focuses mainly on customer transactions. As Buck Webb at RedPoint describes, a CRM gathers information about calls, emails, purchases, etc. These data points are sometimes identified separately, even if it’s the same customer. This can happen because a CRM isn’t built to handle multiple data types. When this happens, data quality dips because data gets replicated. With a CDP, on the other hand, data remains unified. They’re built to handle multiple data types from a large set of external sources, so customers are always identified, no matter the channel they’re using. In other words, data never gets duplicated.
Outside of the question of what a CDP is, we’ve heard one question more than any other: should I replace my CRM system with a CDP? We answer this with a resounding “no.” Although these software categories are related, the difference between CDP and CRM is a large one. And that’s what exactly makes them so dynamic when they’re used together. To create the best customer experience and reach the highest customer satisfaction, we suggest using a CDP and CRM side-by-side. There’s no better way to track and engage with your customers.