February 18, 2022
Should you choose a CDP or a CRM?
Should you choose a CDP or a CRM? Both tools can benefit your business substantially, but knowing which is the best fit can help maximize your returns.
In the fast-paced ecommerce market, businesses should strive to take a customer-centric approach. And CDPs and CRMs are two tools that can help you develop a deeper understanding and relationship with your customers.
MarketsandMarkets predict that the CDP market will grow exponentially and reach $10.3 billion by 2025. At the same time, Grand View Research found that the CRM market will grow to a whopping $114.4 billion by 2027. Based on these figures, it’s clear that the two digital tools are indispensable for brands now, and will be even more so in the future.
However, most marketers tend to get confused when choosing which tool to use. In this post, we'll resolve the confusion marketers face by showing the key differences and how a CDP can help you develop a deeper understanding of your customers’ behavior.
What is a CRM?
CRM stands for Customer Relationship Management. These solutions utilize data to help identify and improve customer relationships. CRMs offer functionality for various segments in a business, such as sales, marketing, customer service, and digital commerce.
Nowadays, marketers have direct interactions with their customers before closing deals. Customers reach their preferred companies through a variety of channels such as call centers, social media, live chat, websites, and email.
With a CRM, a business can store and analyze the data coming from their customers and use it to address and potentially resolve their issues. As a result, businesses can develop a deeper relationship with their customers. CRMs will store your customers’ personal details and any recent interactions with your team. The sales team and customer service personnel will then use this data to offer customized interactions with your customers in the future.
What is a CDP?
CDPs or Customer Data Platforms are another popular and reliable tool businesses use to manage customer relationships. A CDP is packaged software that enables you to create a persistent, unified customer database that other marketing systems can access.
The primary feature for CDP involves compiling and aggregating customer data that comes from different sources. Such unified data will offer a single customer view to help marketers properly understand each customer, their purchasing behaviors, and the products or services that engage them.
Based on this data, marketers can craft a contextually-relevant and customized message to customers. Responding to customers on their preferred channels improves engagement to offer excellent service.
Customer Data Platform vs. CRM: How They Differ
While CDPs and CRMs both help you develop a deeper understanding and relationship of your customers, they differ in several key ways:
1. Data collection
Once you know who your most valuable customers are, you want to shape your promotions, marketing, and services to meet their needs and adapt to their behaviors. Behaviors change, so you should continue to work to understand your customers as their needs shift, whether that be through additional data analyses or feedback surveys.
With a better understanding of your customers, you can create the experiences, marketing, and products that captivate your customers and ensure their returning business. And having the right customer insight tools can help paint a better picture of who your customers are and how to serve them.
2. Data ingestion
Companies that use a CDP can ingest large volumes of data from both online or offline sources. CDPs can carry out the process from multiple sources in real-time. Users can also automatically classify and organize any unstructured data into a more streamlined data structure.
On the other hand, CRMs aren’t designed to ingest data coming from multiple sources. CRMs can’t handle real-time data ingestion or structure data automatically. Alternatively, you will need to enter offline data and structure it manually.
3. Single customer view
One major perk of CDPs is their ability to create a single customer view, enabling a 360-degree view of every individual customer. Within the single customer view, you’ll be able to access a variety of data points such as customer interaction, websites, channel behavior, and purchase reports. The advantage of that view is that the data is clean, with minimal chances for data duplication.
CRMs don’t store extensive information about a lead or a particular customer. The data is always available for analyzing the sales pipeline, guaranteeing the right forecasting decisions. However, such information is not always clean, and there are high chances that it may store duplicated data.
4. Multiple systems integration
CDPs easily integrate with multiple systems such as SMS, menial, website channels, social media, CRM, mobile chatbots, and more. The data transfer occurs in real-time from the channels to the CDP. As a result, your sales and marketing teams can target leads and customers with customized messages across various channels.
CRMs, on the other hand, cannot correctly integrate with multiple channels and customer touchpoints in real-time. Due to this difficulty, sales teams cannot deliver authentic omnichannel experiences to their customers without the use of additional tools.
Choosing CDP over CRM
For businesses to operate seamlessly in this digital market they have to remain relevant and create highly personalized experiences across all their touchpoints contextually. Such a high level of relevance and personalization makes CDP a popular option due to its capabilities to develop deeper customer understanding and more engaging experiences.
CDPs are becoming a major asset for businesses, particularly when their data is generated in unprecedented volumes, variety, and velocity. It is common for businesses to face an uphill battle in ingesting data concepts and accessing the cornucopia of data to achieve meaningful outcomes for their customers.
For a successful digital transformation, it is paramount that operational data comes with speed, accuracy, and depth that promotes engagement.
At a time when businesses are generating more data than they can hold, CDPs can provide a bigger benefit than CRMs. This is mainly because CDP platforms can solve issues of all disconnected customer data to deliver the proper engagement, at the right time, to the right people. CDPs ability to offer a unified view for each customer and a personalized customer touchpoint makes it a proper solution for any business.
Choose Lexer’s CDP to deepen your customer relationships
If you’re looking for a CDP to integrate into your business processes, choose Lexer. Lexer is a CDP built for retailers that have helped leading brands such as Sur La Table, Rip Curl, Quicksilver, Supergoop, and more. Let us help you improve your customer engagement and drive revenue generation.