Customer Data Platform vs. CRM: What’s the Difference?

In the current digital environment where customers expect personalized experiences at every turn, data is king. However, you must go beyond simply collecting data to gain a true competitive advantage. You need a way to unify and deploy it, hence the CRM vs CDP debate.

In this post, we’ll compare Customer Data Platform vs CRM, exploring similarities and differences regarding benefits, features, and use cases.

That said, we are increasingly seeing a trend where these platforms converge. For instance, in Microsoft Dynamics 365, they work together to create end-to-end connected customer experiences.

See how our customer engagement services can help you implement Dynamics 365 to build connected experiences that fuel growth.

TL;DR – Customer Data Platform vs. CRM

How do Customer Data Platforms and CRMs compare? Here’s a quick overview of the pros, cons, and key use cases.

What Is a Customer Data Platform (CDP)?

For many years, organizations kept valuable customer data fragmented in departmental islands. Marketing, sales, and service departments each had their own data, stored in separate systems.

As customers increasingly demand personalized experiences, you must move away from this fragmented approach. It creates data silos that prevent your customer-facing teams from having a coherent, comprehensive view of the customer.

The right move, therefore, is to unlock data from these silos. This is where Customer Data Platforms come in. A CDP is a platform that ingests data from every source and unifies the data by matching identifiers to create a comprehensive profile of each customer.

With a CDP, you create a “single source of truth” for each of your customers. Further, you can integrate this data with other business tools, allowing your sales, marketing, customer service, and other relevant teams to easily use it.

What’s more, CDPs are becoming more intelligent. You can enrich the data by adding contextual information and using machine learning to segment audiences, predict customer behavior, or score leads to allocate sales and marketing resources to your hottest leads.

Customer Data Platform Benefits

Your business stands to gain in the following ways by using a CDP.

• • Data consistency: By centralizing data from several departments, you ensure that all teams use “one single source of truth”. You’ll reduce data sourcing and interpretation errors.
  • Improved personalization: A comprehensive, real-time view of every customer allows you to deliver targeted and personalized interactions across all touchpoints.
  • Improved campaign performance: Tailored marketing and sales campaigns perform better. You’ll get a higher return on every dollar spent on marketing or sales.
  • Agile strategic management: CDPs give you the data to monitor consumer behavior and evolving trends, allowing you to quickly make business adjustments based on high-quality internal data sources.

Customer Data Platform Features

CDPs typically have the following features:

• • Unified customer profiles to create a single and consistent view of every customer.
  • Integration capabilities so that other business tools can use the unified data.
  • Real-time data processing capabilities for immediate personalized actions.
  • Segmentation tools to create dynamic audiences based on behaviour/actions.
  • AI and machine learning for predictive analytics, churn detection, personalized recommendations, etc.

Customer Data Platform Examples

Popular customer data platforms include:

• • Microsoft Dynamics 365 Customer Insights
  • Salesforce Data Cloud
  • Twilio Segment
  • Oracle Unity

We recommend D365 Customer Insights because of Microsoft’s unified platform strategy. The deep, native integration allows the unified data to flow seamlessly between sales, marketing, and customer service tools and apps.

Also, you don’t have to buy all the tools at once. Microsoft offers its platforms modularly, so you can buy only what you need.

Customer Data Platform Use Cases

The power of CDP lies in its broader application. It can help you optimize your business processes in the following ways.

• • Omnichannel personalization: Unified data and seamless data flow can help you personalize customer experiences across all touchpoints.
  • Personalized advertising: Granular lead and customer data can help you create highly targeted ads, significantly improving conversions.
  • Personalized product recommendations: Because you have every customer’s browsing, purchasing, and behavioral data, you can tailor product recommendations to each customer.
  • Customer journey orchestration: Instead of relying on static customer segments or campaigns, you can use real-time data provided by CDP to dynamically create relevant, personalized customer journeys. You can anticipate a customer’s next move and seamlessly nudge them towards the next-best action.

What Is Customer Relationship Management (CRM)?

The success of your business depends on your ability to build strong customer relationships. Effective and empathetic communication is the backbone of every relationship.

Now, in a world with endless customer touchpoints and communication channels, how do you ensure every team member has the information they need to communicate effectively with every customer?

Customer Relationship Management is the answer. A CRM is a platform that captures, organizes, and manages all customer interactions and data in one place. The goal is to provide a reliable system of record to effectively track and manage direct interactions.

Imagine your support representative answering a customer query. Instead of browsing through several systems to find the customer’s past orders and tickets, they can access all that information in the CRM.

They can see all contact information, past purchases, conversations, and tickets. The added context results in highly relevant and personalized interactions.

Benefits of CRM

Using a CRM comes with the following benefits.

• • Better customer relationships: Since every customer-facing team member has a complete record of your company’s past interaction with each customer, subsequent communications are relevant and personalized. Customers feel like you know and understand them.
  • Enhanced collaboration: Collaboration becomes easier when you can centralize customer interaction data. Your sales, marketing, and customer service teams can act in alignment.
  • Improved sales performance: CRMs automate and streamline various sales processes, leading to better performance. Also, the enhanced visibility of your entire pipeline ensures every potential lead is given the required attention.

CRM Features

CRMs typically have the following features:

• • Reporting and analytics for Insights into your sales, marketing, or customer service performance.
  • Sales automation features for workflow automation, pipeline management, and sales forecasting.
  • Contact and lead management features to store and manage all contact information.
  • Integration capabilities for seamless data flow between various tools and apps.
  • Ticket management and communication tracking features to aid customer support.
  • Knowledge bases to facilitate customer self-service.

CRM Software Examples

Popular CRMs include:

• • Microsoft’s CRM applications include D365 Sales, D365 Customer Insights – Journeys, D365 Customer Service, and D365 Field Service
  • HubSpot
  • Zoho CRM
  • Pipedrive

We recommend Microsoft’s CRM applications because the company provides a holistic environment that combines CRM with other services, including CDP and ERP. Moreover, you don’t have to buy all the apps at once – you can buy only what you need.

Also, you get Copilot and other AI capabilities embedded, making using D365 apps intuitive for a wide range of predictive and personalization tasks.

How to Use a CRM System

A CRM is a powerful tool for sales, marketing, customer service, and field service teams. You can use a CRM to empower your teams as follows.

• • Sales management: Empower your sales team to track leads, manage sales pipelines, and forecast sales. With a CRM, your sales team has the data to understand each lead’s unique needs, leading to a higher close rate.
  • Marketing campaign management: Empower your marketing team with up-to-date data to nurture sales-ready leads with personalized journeys.
  • Customer service: Empower your customer support team with the capacity to build a comprehensive support history and manage service tickets in one place. The quality of engagement and service then improves with every interaction.
  • Field service management: With a CRM with field service capabilities, you can automate or schedule field dispatches, track technician locations, set appointment reminders, manage quotes and contracts, and deliver personalized in-person experiences at scale.

Detailed Comparison Between CDP & CRM

A CDP helps you understand your customers’ behaviour across all touchpoints, while a CRM helps you manage direct relationships with those customers. Here’s a detailed comparison of the use cases.

Similarities and Differences Between CDP and CRM

Both CDP and CRM are incredibly valuable at managing customer data. However, they are designed for different business functions. Let’s now explore their key similarities and differences.

Key Similarities

CDPs and CRMs are similar in the following ways.

• • Customer data hubs: Both focus on collecting and centralizing customer data.
  • Creation of unified profiles: Both create a unified profile for each customer.
  • Both enhance engagement: CRMs and CDPs provide contextual customer data that aid personalized customer engagements.

Key Differences

Here’s how CDPs and CRMs differ.

• • Data source and scope: CRMs get data from direct interactions. CDPs automatically collect data from broader sources, including demographic, behavioral, and transactional data. The result is a more comprehensive customer profile.
  • Use and focus: A CRM’s primary role is to manage one-to-one customer interactions. A CDP, however, collects and unifies data to create a “single source of truth” for each customer. The unified data has broader usage, including real-time segmentation, personalization, and predictive analytics.
  • Data activation: CRM data is generally limited to the CRM itself. Data unified by CDP is often distributed to other systems for activation, e.g., an ad network for personalized advertising.

Which Is the Right Tool for You: CDP, CRM, or Both?

Now that you know the key features and benefits of CDPs and CRMs, the next step is implementing these technologies in your business. Neither is inherently better than the other, the decision to go with either depends mostly on your needs.

A CRM will be ideal when:

• • Your sales team needs a way to track leads and manage sales pipelines.
  • Your customer service team needs a way to log customer service requests and manage tickets.
  • Your primary interaction with customers is one-one-one and personal relationships are important.
  • You are transitioning from manual data entries, e.g., spreadsheets, and want to centralize customer data digitally.

A CDP would be ideal when:

• • You want to unify data from several sources (website, mobile app, e-commerce apps, etc).
  • You want to use the unified data to orchestrate personalized customer journeys in real time.
  • You want to create end-to-end connected experiences when there are multiple touchpoints.

Therefore, you’ll use a CDP to understand your customers and a CRM to build and manage the relationship. You can use both if your business needs and budget justify it.

The Bottom Line – CDP vs. CRM

CDPs and CRMs are incredibly powerful tools. Nonetheless, they are only as good as the effectiveness of the implementation and the quality of data coming in. As the saying goes, garbage in, garbage out.

At Coffee+Dunn, we help organizations take a holistic approach to the implementation of customer engagement technology, including Microsoft Dynamics 365, which has both CDP and CRM applications.

Learn why Coffee+Dunn is the best partner when you want to effectively implement customer engagement technology in your business.

Frequently Asked Questions (FAQs)

Let’s now answer some of the common questions we get about CDPs and CRMs.

Can a Customer Data Platform and CRM Be Used Together?

Yes, you can use a CDP and CRM together. The CDP will give you the data to understand your customers, while the CRM will facilitate relationship building and management.

Do I Need a Customer Data Platform If I Already Have a CRM?

Depending on your business needs and the features of the CRM, you may or may not need a CDP. The two are complementary – they are not competing services.

Get a CDP if you want to unify data from several sources to get a 360-degree view of each customer. A CRM, for instance, won’t collect behavioral and demographic customer data nor personalize interactions in real-time.

Is It Better to Invest in a Customer Data Platform or a CRM First?

For a business with existing customers, investing in a CRM first makes sense as building and managing relationships with existing customers is probably your most immediate need. You should consider having both, though.

Next Steps

Both CDPs and CRMs are essential tools in the current digital environment where customers expect personalized experiences. Therefore, the debate shouldn’t be about Customer Data Platform vs CRM but how to use them together to create end-to-end connected experiences.

Microsoft Dynamics 365 looks to achieve exactly this with its integrated applications. The core sales, customer service, and field service modules have robust CRM features, while Customer Insights functions as a powerful CDP.

We are a Silver Microsoft Partner and a 2X Microsoft Partner of the Year Finalist. Schedule a free consultation with our team to see how we can help you implement Dynamics 365 to optimize your customer engagement strategy.