CRM vs. CDP – Understanding the Key Differences

CRM vs. CDP - Understanding the Key Differences

There are key differences between CRMs and CDPs. CRMs focus on sales and service interactions, while CDPs excel at unifying customer data from various sources for a holistic customer view. Many CRM vendors now offer separate CDP products, highlighting the crucial distinction between these systems.

There’s a significant difference between a CRM and a CDP, and you do your readers a huge disservice by conflating them. Yes, both store customer data—as do data lakes, data warehouses, marketing automation, email engines, personalization tools, web content managers, and other systems. Each is designed for a specific purpose and stores customer data in a way that fits that purpose.

CRM also has its purpose—to support sales and service agents when speaking with customers—and is optimized for it. CRMs are notoriously bad at dealing with data imported from elsewhere and unstructured and semi-structured data types. They’re generally poor at sharing their data with other systems.

CDP is designed to combine all customer data into sharable profiles. It has connections to hundreds of sources, uses a data store that handles all data types, employs advanced identity-matching methods, and gives other systems easy access to its data.

Many CDPs do more with analytical, campaign, and delivery functions, but those are not what make them CDPs. Very few CDP vendors also extend to CRM functionality precisely because the technical requirements are so very different.

This confusion is not a new problem.

Several years ago, CDPI Institute launched its RealCDP certification program, which sets seven criteria to be considered a true CDP: accept data from all sources, retain all details of the original input, store data as long as the user wants, construct unified profiles, share profiles with other systems, react to events in real-time, and share individual profiles in real-time.  We chose those because we feel they are capabilities needed to support the use cases that people expect a CDP to support, such as giving CRM users a view of interactions in other channels, updating retargeting lists in real-time based on ecommerce transactions, and combining in-store and on-line transactions with building campaign lists.

The common thread is combining data from different systems and sharing results across all systems. CDPs are uniquely skilled at this. The fact that every major CRM vendor has developed a separate CDP product—despite considerable initial resistance to the concept—is the most compelling evidence that they are truly different systems.