CRMs and CDPs are two major software systems that collect, store and use customer data.
CRM solutions were developed to break down silos in sales and marketing departments by collecting customer data for a 360° view of the individual customers companies are reaching out to. So how exactly does this vary from a CDP?
A CDP is an advanced, robust and persistent database that collates data from various sources and other martech systems, including CRMs.
Let’s dig deeper.
What Is a CRM?
A CRM is a Customer Relationship Management system that allows businesses to collect, store and act on the personal data of their customers. When done correctly, personalization is a simple and effective way to provide additional value to your customers’ experience with your brand.
CRM platforms are the best way for you to take advantage of one customer data platform to be used by different departments. Sales and marketing departments no longer have to exist in silos, working on their own data sets for different ends but rather have a 360° of a customer relationship from lead generation, acquisition and retention.
With predictive tools that can show expected LTV, sales and marketing departments can conclude how much they’re willing to spend to acquire a customer’s business. You can also use them to help solve issues with customer attrition; personalizing customer relationship management is a great way to retain a current customer, which improves overall LTV.
Some CRMs are for different industries and niches, but they can almost all be tailored to your needs and easily scaled as your business grows. If you’re interested in CRMs for ecommerce sites, we cover that more in our blog, Choosing a CRM for Ecommerce.
What Is a CDP?
A Customer Data Platform (CDP) is software that collects, stores, organizes and presents customer data. Think of it as a warehouse where everyone in your organization can access the same information, and you control the keys.
Using a CDP is a way to ensure all stakeholders have access to the same data so that they can draw the same conclusions.
A CDP is a great way to collect all of a customer’s experience with your brand and properties to truly understand their interactions. It can be used to optimize their digital experience or customer journey and can be used to help make an impact during the consumer decision-making process.
Marketers build more sophisticated campaigns, analysts build better dashboards, IT keeps up with data security and compliance obligations, and executives get better insight.
CDPs also help reduce attrition by providing customer relations departments with insight into an individual customer’s experience with a company over their entire life-cycle. This allows them to tend to the individual needs and complaints of a customer and offer specific and enticing rewards for keeping a customer.
When Should an Ecommerce Business Start Using a CDP?
CRMs are a great tool to have when you’re focused on sales, marketing and servicing your customers’ needs. CDPs are a way for companies to manage vast amounts of unstructured data in a sophisticated way.
Companies might have several CRM systems for different execution purposes, depending on the integrations and functions of the platforms, but you should only have one CDP that is canon and complete.
If your ecommerce business is national or international and has vast amounts of data from a variety of sources, you should be using a CDP. It keeps your departments efficient because they have access to the same data, but it will also help your enterprise to bolster security efforts and maintain compliance with data regulations.
A CRM is a simpler system that marketing, sales and retention teams can use to manage customer data and personalize their materials to customers.
CDPs are the only way to unify data from a vast multitude of sources. And so, for enterprise-level companies that need holistic and persistent access to accurate and complete data sets, it’s necessary to invest in a CDP. CDPs benefit from big data analytics and forecasting, and customer data is just one component of that.
CRMs are an important part of any business’s martech stack, but it’s worth considering augmenting your CRMs with a CDP, especially if you have large, unstructured data sets that need compiling.
CDPs, Governance and Data Protection
CDPs are also a way of providing a platform whereby you can understand all the data you own, protect it solidly and ensure you’re governing it correctly.
In the fast-changing regulatory environment where governments and regulators are trying to rein in technological oversight and protect consumers and citizens, enterprise-level companies are at the greatest risk.
Whether it comes in the form of data leaks, ransomware or punishment for failure to meet data security standards, data protection is an extremely important issue. It will only continue to become more advanced and leave ecommerce businesses in need of more security.
Do I Need a CDP and a CRM?
A CDP is a way to warehouse and report on all the data you have. If you have a lot of data, you likely need a CDP.
A CRM is a way to collect and act on more data. Ask yourself: Am I currently collecting enough data to make consistent, quality and personalized follow-ups with my customers? Am I using a system that can automate most of those communications? If not, you likely need a CRM.
What Types of Ecommerce Businesses Benefit from a CRM?
All ecommerce businesses can benefit from implementing a CRM, but there are two steps to reaping the benefits of one:
Collect the Data
When first setting up a CRM, integrate other owned data sources, including audience platforms, marketing channels, email channels and analytics. This means you can collate all the information you have available, but it also allows you to commit to step two.
Act on the Data
To optimize your custom audiences and automate your retargeting efforts, you need some upfront effort to define the parameters and systems for your CRM to act on.
It can be as simple as a customer added something to their cart four hours ago but did not complete the purchase; set up your CRM to automatically email the customer reminding them they forgot something in their cart.
Or it can be more complicated like the customer didn’t respond to the email reminder; set up your CRM to wait four hours before automatically sending them an SMS message with a discount code for 10% off their cart.
Test different email flows and their triggers, iterate your solutions and when you find something that works, push what is possible.
Does My Ecommerce Site Need a CRM?
Yes. CRMs are well worth the investment; they reduce customer acquisition costs, improve conversion rates, improve customer experience and reduce customer churn.
Research your options and the benefits of different CRM platforms. Many of them come with free trials and free tiers, and their pricing plans will be scalable. When you start investing in a CRM, spend a lot of time upfront setting it up; optimize the inputs and outputs.
A customer relationship management tool is a tool. It has the ability to be a powerful tool and exactly what you need it to be. In the right hands, a CRM can be used to efficiently and effectively grow your business.