Most sales teams know of or use a customer relationship management (CRM) system to nurture budding and existing customer relationships and track engagement across all company touchpoints. Its lesser-known cousin, the customer data platform (CDP), analyzes the data you collect about your customers across several sources to better understand their current behavior and predict future purchasing decisions.
Did you know: As businesses increase their marketing and advertising budgets, analyzing its impact on consumer behavior becomes more critical to make sure the return on investment justifies the extra spending. In fact, the CDP market is expected to grow 34% to $10.3 billion by 2025. The driving force behind the growth is the proliferation of stricter guidelines governing industries like banking, financial services, insurance, and healthcare.
Who CRMs Are Best For
Whether you’re a solo sales professional or a growing sales team, there are few instances where CRM software, like Salesforce Essentials, doesn’t make sense to use. At a minimum, they are perfect for organizing and tracking customer information. Powerful tools like pipeline management, workflow automation, and email integration help teams accomplish even more.
With CRM prices ranging from free to $100 or more per user, there are highly rated CRM software solutions to meet every small business need and budget.
Who CDPs Are Best For
CDPs have a lot of processing power under the hood and manipulate much more data than a CRM, and therefore come with a higher price tag. The software, which can be purchased as a standalone solution or as functionality that can be combined with an existing CRM platform like Salesforce’s Marketing Cloud Interaction Studio, costs anywhere from a few hundred dollars to many thousands of dollars per month, depending on the system’s capabilities.
As a result, CDPs are better suited to larger companies and enterprise-level organizations that can afford to equip sales teams with the platform.
How Both CRMs & CDPs Help Businesses
An easy rule of thumb for remembering their differences is that the sales department rely the most heavily on CRM, while the marketing department tends to be the primary user of the CDP. The easiest way to distinguish between these two systems is to think of CRM as a tool to help you stay on top of deals and clients’ stated interests, while CDP provides behavioral insights. However, both allow you to provide better service, which results in a better customer experience and increased sales revenue.
How Customer Relationship Management (CRM) Software Works
CRM software is a cloud-based ecosystem that serves as the core of a small business’ sales strategy. It organizes contacts, accounts, leads, and customer interactions. CRM guides the sales process from start to finish while accelerating the speed and productivity of deals.
While it’s the lifeblood of salespeople, it also allows collaboration between team members such as account management and customer success. Entering correct customer information into the CRM is critical, as it becomes a robust analytics solution. CRM allows companies to pull reports and learn about their business.
CRMs do this by:
- Continuously improving your sales strategy: CRM provides data you can use to identify weak areas such as stalled deals and inefficient processes. Using data to make business decisions ensures your team can focus on the activities that generate the most revenue.
- Accurately predicting your sales numbers: CRM gives you a picture of your win rate, allowing sales managers to create reliable forecasts. Sales leaders will always know how many sales their team will close to set realistic revenue goals.
- Providing better customer experiences: The more knowledgeable and efficient your team is, the better the customer experience will be. CRM equips your team with knowledge on past customer interactions and current deal stages so that customers feel that they’re getting personalized assistance.
Core CRM Features
In most instances, a CRM system is all a small business needs to make educated decisions about customer engagement and behavior. CRM features like email tracking, automatic activity capture, and call logs funnel customer data into reports sales teams can use for a 360-degree view into customer behavior. These actionable insights help sales teams make short- and long-term business decisions, develop marketing campaigns, and improve customer service.
Contacts within your CRM allow you to consolidate and organize customer contact information. You can then group them for email campaigns or other initiatives. You can learn more about how the best CRMs can help you stay on top of your contact records by visiting our guide on the best contact management software.
Tasks are a critical part of customer service, follow-ups, and collaboration. They are time-sensitive reminders or to-dos that can be assigned by another person or set for yourself, and include sales activities like following up with prospects.
Accounts are usually based on one company or organization and contain contacts. Accounts hold the record of interactions or other pertinent information to allow your company to go into every interaction prepared.
Opportunities refer to potential deals that will generate new or additional revenue. Several opportunities can exist within one account.
Quote & Order Management
This feature automatically generates and sends price quotes. Your CRM serves as a living record of all changes and everything sent to the customer in general.
How Customer Data Platforms (CDPs) Work
CDPs combine multiple data sources, allowing your company to leverage actionable insights to retain and grow existing accounts. These data sources could be first- or third-party data. CDPs use machine learning to inform their marketing automation software, creating laser-targeted campaigns that produce results with your customer base.
CDPs do this by:
- Developing customer personas: CDPs compile the identities (or profiles) of customers during real-time interactions using prebuilt data connectors.
- De-duplicating records: Combining collected data and removing duplicate information from the system creates a single, accurate description of each customer.
- Creating a unified customer view: CDPs combine customer data into a single, user-friendly interface. This unified view empowers marketers to analyze each customer, segment audiences, and execute the next best move, leading them down the buyer’s journey.
- Building targeted campaigns: These systems use the unified customer view and other data to deploy personalized campaigns across marketing, customer success, and commerce channels.
Core CDP Features
CDP systems also gather data on customers but analyze it at a more conceptual level. Besides providing insights on purchase history and other general customer behavior, CPDs also use analytics to create a deeper understanding of individual customers or as a collective. Similar to CRMs, these systems give companies a comprehensive view of their customers but also offer a trove of business and customer intelligence that picks up where CRMs leave off.
The core ways in which CDPs do this consist of the following:
CDPs build customer profiles based on a concept called identity. Marketers use this feature to resolve or identify customers across multiple channels and devices to obtain a holistic customer view by tracking their online and offline activities.
Data Cleansing, Transformation & Enrichment
Some CDPs can enrich customer data through integration with third-party data vendors. CDPs will pull information that other companies have gathered on your customers for a deeper understanding of them. Examples of these third-party data providers are Experian, Mosaic, Consumerview, and Oracle Datalogix.
Centralizing data is a huge selling point for CDPs. Using an API, CDPs unify all data (first-party or third-party), allowing marketers to personalize campaigns and conduct A/B testing. Centralization is critical during audience splitting so that the marketer can get a unified representation of a group despite distribution across multiple touchpoints.
Audience & Segmentation
Segmentation is your CDP’s way of sifting through massive amounts of company data. Filtering data allows companies to identify target audiences for laser-targeted marketing campaigns.
Data Integration & Analytics
Integrations allow your CDP to connect and pull information from multiple systems. For example, you can connect CDP to an advertising platform such as Facebook or a marketing automation program like Mailchimp. Similar to the Salesforce marketplace AppExchange, your CDP can have numerous integration options.
CRM and CDP are two technology platforms that enable businesses to serve customers better and increase revenue. A CRM is used to log customer interactions and set follow-up tasks to serve the customer diligently. CDPs allow users to create detailed customer identities and centralize data for more informed decisions, like improved marketing campaigns. The two platforms can work in tandem, but small businesses are typically better served by a CRM’s features—and lower price tag.