CDP vs CRM Comparison: What’s the Bottom Line?

My friends in the marketing agency business know the differences between marketing automation platforms and CRMs. Generally, they break down along functional lines. Marketing uses automation tech to capture and nurture leads, and assist Sales in qualifying and closing them. The sales team uses CRM to manage their leads, deals and accounts. There is some overlap, for sure, and some platforms, like Salesforce and HubSpot, integrate both functions using a single contact/customer database. So, what the heck is a CDP, and why should agencies and marketing professionals care?

What’s the Difference Between a CDP and CRM?

Customer Data Platforms (CDPs) are well defined at this stage of the game. To be qualified as a CDP, software platforms must have the following capabilities, according to the CDP Institute:

1. They must ingest data from any source. For sales and marketing, that means website, social media, landing pages, email, paid ads, third party contact and company data, and a wide variety of apps.
2. They must capture the full detail of ingested data. Not just a limited set of contact or company information - everything. And to make room for the details, the platform must be flexible and easily adaptable to all kinds of data.
3. They must store ingested data indefinitely (subject to privacy constraints). So a CDP is designed to be the persistent, centralized source of data for all sales and marketing uses. 
4. Create unified profiles of identified individuals. This is a key difference with CRMs. Take all of the data that comes in from diverse sources, identify and combine it in a single customer profile that is consistent across all uses.
5. Share data with any system that needs it. This means creating automatic two-way pathways with all of your business applications, not importing and exporting data on an ad-hoc basis.

Bear in mind, these criteria are the minimum for classifying a platform as a CDP. There are many CDPs in the market, and they vary in many ways on top of these foundations. For now, let’s illuminate the big differences between CDPs, CRMs and marketing automation systems.

CDPs are for Marketers

If you think about it, marketers care about collecting and analyzing the right data to identify and prioritize high potential prospects. Yes, they do other things, but nowadays, marketers are data centric. Yes, marketing automation helps them do that, but marketing automation tools focus on automation, not data. CDPs enable the entire process, including collection, data management, processing, segmentation, utilization across every type of marketing, analytics and reporting.

Where are marketing automation systems missing the mark? Most are designed to collect first party (or zero party) data, i.e. collected at the points of engagement with your brand - website, social pages, emails, and, in some cases, digital ads where a cookie or UTM campaign can be tracked. What about everything else? What about third party intent data, trade show connections, live events, direct mail, programmatic ads, syndicated content, and video/podcast engagements? How can you synchronize all of that data with your contacts and companies without spending months building complex APIs and workflows?

A CDP does all of that and more.

CRMs are for Sales People

CRM’s, on the other hand, are built for sales teams. Your view is contacts, accounts and deals. That’s pretty much all sales reps care about. Your job is to filter and prioritize, connect, engage and close. Period. Sales teams neither want nor need tools to do what CDPs or marketing automation systems do. They just want great leads delivered to their inbox, and they’ll take it from there. Yes, they’ll use an app or two to streamline the process, but managing data? Forget about it. 

Granted, sales leaders want reps to document everything in the CRM so that they can assess their sales processes and individual performance, but by and large, CRMs track sales activities. There are exceptions of course, for example both Salesforce and HubSpot, that enable teams to plug in all kinds of sales enablement apps and content tools, but where does all of that data get stored, managed and analyzed? CRMs aren’t built for that task, and more to the point, sales teams don’t want to mess with it.

If you have ever dealt with a CRM that was never thoughtfully implemented or has been subjected to multiple infusions of imported or merged data sets, you know how ugly the situation can be. Among the more common problems with no easy solution:

• Duplicate contacts, companies or accounts
• Expired or erroneous owners, categories, stages and histories
• Inconsistent or duplicate fields with redundant and inconsistent data
• Nightmarish problems synchronizing with marketing automation and other apps
• Reports that are fraught with errors and missing data, and so are rendered useless

To be fair, CRMs were never designed to do the work of a proper customer database, complete with tools for data professionals and data professionals assigned to manage them. So, it’s not simply a software issue. There’s usually no one with the experience or responsibility to manage that incredibly valuable resource, your customer data.

Again, a CDP does all of that and more, but you do need knowledgeable people to manage it.

The Benefits of a CDP Beyond Data Management and Team Efficiency

Purchasing and implementing a CDP can be a big cost saver if you consider the amount of time your sales and marketers spend collecting, collating and manipulating data to support their activities, instead of doing what they’re paid to do. Eliminating do-overs and avoiding missed opportunities due to errors and inconsistencies can also contribute to your bottom line. Perhaps the biggest benefit is what you can do with the data once it’s properly cleansed, stored and unified. Let’s take a look at a few of the many possibilities:

1. Automating inputs and outputs to sales, marketing, and business intelligence systems - for example e-commerce data, customer service data, event data, shipping and logistics.
2. Creating more accurate customer segments with both visual analysis tools and AI-assisted predictive analytics.
3. Building and testing customer journeys with graphical tools to quickly launch and assess omnichannel marketing campaigns.
4. Personalizing web pages, emails, digital ads and remarketing campaigns with diverse first party and third party intent data and integration with content marketing tools.
5. Rapidly creating interactive reports across your entire sales/marketing/service organization from a single, unified data resources
6. Accurate and complete attribution reporting across omnichannel marketing campaigns, website and social platforms, content syndication sites, ABM resources, and more.

Can your CRM or marketing automation platform handle that sort of data orchestration?

UPDATE: HubSpot announced this morning that it has acquired PieSync, an application that synchronizes contact data across multiple platforms. This is definitely a step in the right direction for HubSpot and its CRM customers, but if you look at all of the functions a CDP performs, it's still not a CDP. HubSpot is apparently moving in that direction, though, so stay tuned!

What About the Bottom Line?

It seems the CDP ship has already sailed among many mid-size and enterprise companies. Yes, it’s a significant investment above and beyond your annual MarTech costs for sales and marketing, but a majority of companies are making the case and finding the budget to implement and leverage a CDP in addition to CRM, marketing automation, and the expertise to drive them all. If your agency or company isn’t there yet, at least you know that a CDP is worth looking into for your clients and for your future.

Photo by Samuel Sianipar on Unsplash