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No, your CRM isn't a CDP - and here's why

Author: Lindy Porter


CRM (Customer Relationship Management) and CDP (Customer Data Platform) are two of the most well-known management systems for customer data. While they share some overlap, including the promise to eliminate data silos, the two are very different in scope. The characteristics of these solutions also differ according to the size and complexity of the organization into which they're deployed.

CRM systems are used to store data.

The fundamental difference between CRM and CDP is data collection. CRM systems are primarily designed to support sales, marketing, and customer service and as a result only partially resolve customer data silos. They’re typically used to store customer and prospect contact information in one central place, along with sales opportunities. Much of the data contained in a CRM is collected and entered manually.

A CDP on the other hand captures and integrates customer data from multiple sources, including behavioral, transactional, structured, and unstructured data, into a single source of truth, enabling businesses to build a unified profile around an individual. This provides a 360-degree view of the customer which can be segmented for better targeting and personalization.

A CRM isn’t designed to collect interactions and behaviors.

CRM systems don’t capture first-party customer experience and behavior data from an organization’s digital channels (such as their website or mobile apps), whereas this data collection is one of the defining capabilities of a CDP. This means if a company tries to capture experience data without a CDP, for example by using a Tag Management System (TMS) to extract behavioral data, the data they capture will likely form a separate silo to their CRM database. And the behavior and experience data captured by a TMS isn’t necessarily in a format that’s compatible with the CRM system, so it can’t be easily ingested. On the other end, a CDP can connect in real-time to the systems organizations rely on for digital marketing, analytics, and decisioning.

CRMs are limited in terms of the types of data they typically ingest

CRM systems tend to be focused on sales and financial data, contact history, and demographics. They’re not designed to contain a definitive record that includes all the interactions and behaviors of customers across an organization’s digital touchpoints. While many CRM systems have developed extensible data models, they still struggle to combine customer interaction data with the personal, demographic, and transactional data they were designed to handle. CRM systems also can’t create profiles for anonymous or unidentified customers or update these profiles with personal identifiable information (PII) when the customer provides consent, either for data processing or to receive marketing communications.

CRM systems can’t offer the compliance capabilities that modern CDPs provide.

With GDPR and other data privacy laws in effect, organizations need a clear record of customer consent to the capture and processing of their personal information to prove they have a legal basis for the use of this data. While CRM systems can be used to record customer interactions with staff, including their consent choices, they’re unable to automatically capture this data from digital channels. For example, if a banking customer opts out of marketing communications in a branch, a member of staff can update the CRM system, but if they opt out on the bank’s website or mobile app, they’d have to find a way to capture and ingest this information into the CRM.

CRMs weren’t designed to have genuine real-time capabilities

CRM systems act as a relatively static record of customer information. Typically, a CRM system would be updated every 24 hours, creating an unsuitable backbone for real-time interactions. While the actual real-time capabilities of CDPs vary greatly from vendor to vendor, in general these systems are designed to have far less latency than CRM software. Depending on requirements, CDPs can deliver unified customer data within seconds, enabling it to be used in real-time. If your requirement is to deliver customer data for web or mobile content personalization, this demands data connectivity of less than 500 milliseconds. For this, you need a genuine real-time CDP such as Celebrus.

In leading global organizations, the CRM works alongside the CDP to enhance the results of both. For example, the CDP captures and enriches granular customer experience and behavior data and feeds it into the CRM. The CRM then augments the customer data housed within the internal systems to provide a highly accurate and complete record of customer experience and interactions. In many cases, the CDP is considered the single source of truth, capturing the data contained within the CRM (along with data from multiple other sources) to inform the customer profile.

Enterprise CRMs are a bit different, but not really…

Large enterprises operate on an infinitely greater scale than smaller companies, and therefore experience a greater level of challenges. Long-established global businesses, employing tens of thousands of people, often have hundreds of millions of customers.

When it comes to technology and infrastructure, the degree of complexity enterprise organizations experience is unrivaled. Their architectures include extensive arrays of technology, including legacy systems that are embedded in their operations, customized software developed in-house, and off-the-shelf hardware and software – all of which must integrate with each other.

In smaller organizations, a marketing suite from a major vendor is often used to enable customer data to be stored, edited, accessed, and used by other systems. Enterprises on the other hand will combine a range of front-end and back-end systems, linked to enterprise data warehouse platforms, to handle all the data associated with their millions of customers and prospects.

In addition, most large enterprises have developed a system which unifies customer data into a consolidated profile, or north star. In some industries, such as financial services, pressure from tightening regulations requires banks to eliminate inconsistencies in customer data. This centralized record is housed in the complex combination of systems that enterprises use to manage customer data, which is loosely referred to as their CRM.

Why your enterprise CRM still isn’t a CDP.

Although many enterprises have a more consistent centralized profile containing customer data than smaller organizations, this CRM data is still likely to be messy and incomplete. A CRM can’t capture all customer interaction data across domains, devices, sessions, and channels, so the customer profile it contains is missing valuable insight. The role of an enterprise CDP is to capture this data in the level of detail enterprise use cases demand - i.e., feeding best-of-breed analytics and decisioning solutions – which requires high quality data that can be fed into the customer profile contained in their CRM solution. In this situation, the enterprise CDP’s role is to integrate seamlessly with the complex CRM system and augment the customer profile to include digital interaction data.

Of course, an enterprise CDP also delivers other benefits, such as connecting to enterprise systems, operationalizing data to drive digital engagements and analytics, and providing the security and compliance capabilities enterprises demand.

CRM and CDP solutions are entirely different forms of technology which have been designed to achieve different outcomes. A CRM application falls short of being a CDP and similarly, a CDP wouldn’t be able to achieve the things a CRM system can do.

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