Understanding The Difference Between a CDP and CRM

Choosing between a Customer Data Platform (CDP) and a Customer Relationship Management (CRM) system is a critical decision for modern businesses. While both technologies help organizations harness customer data, they serve distinctly different purposes in your tech stack, so understanding which solution best fits your needs is essential.

In this comprehensive guide, we’ll compare the CDP vs CRM, examine their unique strengths, and help you determine which platform (or combination of both) will best serve your organization’s data needs.

What is a CDP?

A Customer Data Platform (CDP) is a technology that helps organizations to collect, manage, aggregate, and activate customer data from multiple sources. It centralizes customer data in a single location and provides a unified view of each customer profiles across all touch points.

The goal of a CDP is to provide a comprehensive understanding of each customer, their behavior, and preferences, and use this information to deliver personalized experiences.

For example, Zeta’s CDP collects first-party customer data from various sources such as websites, mobile apps, and other digital touch points and creates a single source of truth that is made available to marketing systems in real-time. The goal of a CDP is to provide a comprehensive understanding of each customer, their behavior, and preferences, and use this information to deliver personalized experiences in real time.

What is a CRM?

A Customer Relationship Management (CRM) system is a technology used by organizations to manage their interactions with customers, clients, and sales prospects. It serves as a centralized database that helps sales and customer service teams to personalize their approach, automate routine tasks, and make data-driven decisions.

The main goal is to help organizations improve customer relationships, increase customer loyalty, and drive revenue growth. For example, the Zeta Marketing Platform features an embedded CRM that enables businesses to manage customer relationships and interactions with prospects and consumers.

A CRM system tracks customer interactions and communication, analyzes customer behavior, and provides a centralized location for storing customer information. This information can be used by sales and customer service teams to personalize their approach, increase efficiency, and close more deals.

A CRM system can also help organizations manage customer interactions, automate repetitive tasks, and provide insights into customer behavior and preferences. The information stored in a CRM system can be used to deliver better customer experiences and improve the overall relationship with customers.

Six Differences Between a CDP and CRM

Understanding the distinctions between CDPs and CRMs is crucial for building an effective customer data strategy. While both platforms handle customer data, they serve fundamentally different purposes and complement each other in distinct ways.

CDPs and CRMs have different use cases and are designed to serve different purposes within an organization.

• CDPs are great for delivering personalized experiences to customers, segmenting customers based on behavior and other attributes, and providing a unified view across touch points.
• CRM systems are great for managing customer interactions, tracking communications, and providing insights into customer behavior and preferences.

Here are the key differences you need to know:

1. CDP Unifies Customer Data, CRM Manages Direct Relationships

A CDP’s primary function is creating a complete, unified view of customers by automatically collecting and integrating data from multiple sources, including third-party data. It builds comprehensive customer profiles that capture every interaction across channels.

CRMs, in contrast, focus on managing and tracking specific customer relationships, helping teams monitor sales pipelines, service interactions, and communications to drive revenue growth.

2. CDP Collects Data Automatically, CRM Relies on Manual Entry

CDPs excel at automatically gathering data from various touch points, including websites, apps, email interactions, and offline sources. They continuously collect both behavioral and transactional data in real-time, creating rich customer profiles.

CRMs rely primarily on manual data entry by sales and service teams, recording specific interactions, conversations, and deal progress. This fundamental difference impacts data accuracy, completeness, and how quickly information becomes available.

3. CDP Serves Marketing Teams, CRM Supports Marketing, Sales, and Service

Marketing teams primarily use CDPs to understand customer behavior, create segments, and orchestrate personalized campaigns across channels. The platform’s ability to process large amounts of data helps them make data-driven decisions about customer engagement and marketing strategy.

CRMs are built for marketing, sales, service, and support teams who need quick access to customer interaction history, deal status, and communication logs to manage direct relationships effectively.

4. CDP Processes Multiple Data Types, CRM Focuses on Direct Interactions

CDPs handle a wide variety of data types, including behavioral data (website visits, app usage), transactional data (purchases, returns), and demographic information. They can process both structured and unstructured data from multiple sources.

CRMs focus on structured data about direct customer interactions, such as contact information, sales opportunities, service tickets, and communication history. This structured approach helps maintain consistent customer relationship management but limits the breadth of customer insights.

5. CDP Updates in Real-Time, CRM Records Information Periodically

CDPs provide real-time or near-real-time data processing and activation, allowing immediate response to customer behavior and preferences. This enables dynamic personalization and timely marketing interventions based on current customer actions.

CRMs typically update information periodically based on manual entry or scheduled syncs, making them better suited for managing longer-term relationship developments rather than immediate customer behavior changes.

6. CDP Tracks the Full Customer Journey, CRM Focuses on Direct Touch Points

CDPs track the entire customer journey across all touch points, including anonymous interactions before a customer identifies themselves. This comprehensive view helps understand the complete path to purchase and overall customer behavior patterns.

CRMs focus specifically on direct, identified interactions like calls, emails, and meetings, providing detailed records of customer communications but missing broader journey context.

Industry Outlook

When evaluating the market outlook for CDP vs. CRM, it’s essential to consider their respective growth trajectories across different industries. While CRMs have traditionally dominated the market, CDPs are rapidly gaining traction, particularly in sectors requiring sophisticated data-driven marketing strategies, such as retail, financial services, CPG, and travel.

CRM vs CDP in Retail

CDPs for retailers offer personalized experiences while also collecting real-time customer insights and powering omnichannel integration. Retailers can track customer interactions across multiple touch points, including websites, mobile apps, brick-and-mortar stores, and social media platforms while also reacting quickly to changing trends and customer behavior, to recommend products tailored to the individual shopper.

With a CRM system, retailers can leverage predictive analytics to forecast buying behaviors and identify high-value customers, creating customer loyalty programs to foster long-term relationships and integrating with e-commerce platforms to streamline order processing, track shipments, and provide personalized post-purchase support, enhancing the overall online shopping experience.

CDP vs CRM for Financial Services

For organizations in financial services, CPDs enable the delivery of personalized financial advice and product recommendations based on individual customer profiles, financial goals, and risk tolerance, fostering trust and loyalty. CDPs can prioritize compliance with regulatory requirements such as GDPR and CCPA, ensuring the responsible handling of sensitive financial data and protecting customer privacy, while also incorporating advanced analytics to detect and prevent fraud and enhance security.

CRM systems can provide similar benefits by providing financial advisors with a comprehensive view of client portfolios, communication history, and financial goals, enabling them to deliver personalized advice and superior service. CRM systems can also help in maintaining regulatory compliance by tracking client communications, documenting advisory recommendations, and generating audit trails to prove adherence to regulatory requirements.

CRM vs CDP for Travel

CDPs enable travel companies to deliver personalized experiences by analyzing traveler preferences, booking history, and destination interests to recommend custom itineraries, accommodations, and activities. CDPs facilitate cross-selling and upselling opportunities by identifying upgrades and add-ons based on traveler profiles and previous purchase behavior, while supporting dynamic pricing strategies by reviewing market trends, competitor pricing, and demand fluctuations to optimize pricing decisions in real time, maximizing revenue and profitability for travel companies.

CRM systems will streamline loyalty program management by tracking member activity, rewarding loyalty, and offering exclusive benefits such as room upgrades, free nights, and personalized offers to drive repeat bookings and brand advocacy. CRM systems can also support destination marketing efforts by segmenting traveler profiles, tailoring marketing messages, and collaborating with local tourism authorities to promote specific destinations, attractions, and experiences to targeted audiences.

The Right Fit for Your Organization: Customer Data Platform vs. CRM

CDPs and CRMs are not either/or tools. In some cases, you might choose to implement both a CDP and a CRM, as they complement each other and provide a complete view of the customer. For example, a CDP can provide a comprehensive understanding of each customer, while a CRM can provide a more personal touch and help organizations manage customer interactions.

At Zeta, we consider the connection between the CDP and CRM to be of utmost importance. This is why our ZMP has a built-in CDP at its center, making sure that precise and enhanced customer data is readily accessible for activation through the ZMP’s customer relationship management functions—which include carefully planned, customized campaigns and promotions across various channels.

If you’re looking for a CRM or CDP solution, Zeta Global offers a CDP+ solution that includes a single view, centralized data, enrichment, analytics, and segmentation plus additional benefits such as persisting ID management, and AI-generated insights. But don’t just take it from us: We were recognized as a Strong Performer in Forrester’s first-ever B2C CDP Wave.

Learn more about our CDP+ solution for enterprise brands.