CDP Vs. CRM: What’s The Difference + How To Choose

Successful businesses are built on data. When you can easily access accurate info, you can build better marketing campaigns, sales strategies, and customer support procedures.

The question is, how do you collect data in the most effective, efficient way? Just as important, how do you store said data so you can access it when needed? As you might expect, there are solutions for that. The two most popular ones are CDP and CRM software.

The CDP vs. CRM debate has picked up steam in recent years. So, which one is better? Here's my position: Both are valuable tools and should be used together, if possible.

That said, CDPs and CRMs have important differences. The biggest difference is that CDPs will help you understand how all customers interact with your brand, as a whole. CRM software, on the other hand, will log specific interactions between your brand and individual customers. In other words, the scope of information each tool provides varies. But I'm jumping the gun …

In this article, I'll explain what CDP and CRM systems are, their essential differences, and how to choose the right tool for your specific business needs. Let's dive in.


CDP: An Overview

CDP, which stands for customer data platform, is a software that helps users ingest and manage first-party data (i.e., data collected from one's own sources, such as a CRM.)

This data can then be used to create a unified picture of your target audience, complete with customer behavior information, across multiple touchpoints in the typical customer journey.

A CDP helps your company eliminate data silos, understand its target market, and split it into various audience segments. Once these things happen, your company can craft more effective sales and marketing strategies that drive more revenue. Win!

Marketing teams are most likely to use CDP data, though other departments can use it, too. Here are a few specific use cases for CDP software:

  • Marketing can use CDP data to understand audience preferences, then craft blog posts and social media content that generates more likes, shares, and comments.
  • Product can use CDP data to learn how existing customers interact with their company's offerings, then make changes that lead to better customer experiences.
  • Sales can use CDP data to assess customer behavior, then use the information it uncovers to pinpoint upselling and cross-selling opportunities in real time.
  • Leadership personnel can use CDP data to evaluate their company's go-to-market strategies, then adjust them based on the historical data at their disposal.

I should mention, CDPs are not the same thing as data management platforms (DMPs.)

CDPs collect first-party data that can be linked to specific individuals through a process called identity resolution (see below). Doing so helps CDP users better understand their target audiences and craft effective marketing campaigns that produce sales.

Conversely, DMPs collect third-party data, which can't be used to identify specific people. The information inside DMP software is, therefore, used to better understand unidentified users and craft advertising campaigns that reach the largest possible audience.

What’s the Difference Between CDPs and CRMs - Close View

CRM: An Overview

CRM, which stands for customer relationship management, is a software that helps users manage contact information (like a prospect's email address and phone number), build in-depth customer profiles, and facilitate customer interactions that drive revenue.

Simply put, CRM software gives users a complete view of current and prospective customers, enabling them to streamline their sales processes and close more deals.

If you want to consistently connect with potential customers, shorten sales cycles, and increase your company's retention rate, you should definitely invest in a CRM.

CRM data is largely used by sales teams, though marketing and customer success teams often use it, too. Here are a few specific use cases for CRM software:

  • Sales reps can use CRM software to create omnichannel outreach campaigns, track individual customers through the buyer's journey, and store customer information.
  • Sales managers can use CRM software to monitor their reps' efforts, evaluate overarching sales strategies, and forecast future sales numbers.
  • Marketing professionals can use CRM software to better understand their company's customers, segment their audiences, and automate their email marketing efforts.
  • Customer Success Teams can use CRM software to fully understand the context of customer complaints and provide better service to those they engage with.

Pro tip: CRM providers like Salesforce and HubSpot are extremely popular. But they aren't the best tools for every company—especially startups, and small businesses. To learn more about this specific kind of solution, and to help you choose one for your organization, read this guide.

What’s the Difference Between CDPs and CRMs?

Now that we know what CDPs and CRMs are, we need to explore the key differences between them. Once you understand these differences, it will be much easier to choose the right tool for your company. Or, if you plan to invest in both, to deploy each solution effectively.

Purpose and Focus

CDPs and CRMs were designed with different purposes in mind. As such, they're generally used by different kinds of professionals to collect different kinds of data.

CDP's Purpose and Focus

Multiple departments can benefit from CDP software, but it's really designed for promotional purposes. The big-picture data these tools collect and display helps marketing and advertising teams understand the unique audience they serve. This information can then be used to craft effective marketing and/or advertising campaigns with high conversion rates.

It's also important to know that CDP software analyzes all customers and their interactions with your brand, which gives users a sense of the entire customer journey.

CRM's Purpose and Focus

CRM software was designed to help sales teams connect with prospects, sell products and services, and improve customer engagement. That doesn't mean marketing and customer support professionals can't use CRMs—they often do. But these departments will likely need additional martech and/or CS tools to accomplish their individual goals.

While CDP software tracks all customer interactions, CRM software only catalogs interactions between a brand and specific accounts. This makes the data inside CRM software more specific than the data inside CDP software, but less useful when planning general strategies.

Customer Data Management

As stated above, CDPs and CRMs were created to solve different problems. It's probably not a surprise, then, to learn that these two solutions collect the data they store in different ways, too.

CDP's Approach to Customer Data Management

CDPs collect data automatically, using APIs and integrations to assemble a wide range of information from a variety of devices and customer touchpoints.

Most of this data is considered first-party data, which means it comes directly from customers via website forms, cookies, and any digital marketing tools your company might use.

Because CDP data comes from so many sources, it's completely unusable—at least, at first. CDP software uses identity resolution techniques to clean and combine the data points collected into useful information. It then stores said information for future analysis.

CRM's Approach to Customer Data Management

Top-level CRMs are equipped with marketing automation tools, which can be used to automatically capture basic customer details. Sales reps, for example, don't have to manually log when they contact prospects, or the result of each call, email, and text they send.

Some of the more important data points that well-maintained CRMs contain, however, such as personal notes on the cold calls a sales rep makes, must be added manually.

Because of this, CRMs are great for storing personalized information that sellers can use to boost their close rates, while CDPs are great for storing general, standardized information that marketers can use to develop and implement effective promotional campaigns.

Analytics and Reporting

Finally, CDP and CRM software report on the data points they contain in different ways. Here's what you can expect from each respective platform's analytics dashboards.

What’s the Difference Between CDPs and CRMs - Analytics and reporting

CDP's Analytics and Reporting Features

CDPs offer a holistic view of the buyer's journey, helping users to understand the way their prospects generally progress from complete stranger to paying customer. Once you have this information, you'll be able to determine how conversions happen, which marketing campaigns are most effective, and which customer behaviors result in higher retention metrics. CDPs use data collected from websites, apps, and other digital products to generate these insights.

CRM's Analytics and Reporting Features

CRMs collect data from one-on-one interactions that companies have with their target audiences—like when a sales rep speaks directly to a prospect. So, the reports that CRMs generate are more specific. Want to learn about individual sales rep performance, the health of your sales pipeline, or the likelihood of future sales? A CRM can deliver these insights.

Purpose + FocusData ManagementAnalytics + ReportingCDPTo better understand customer behaviorAutomatically captures customer data across all touchpointsProvides a holistic view of the buyer's journeyCRMTo provide better customer interactionsManually captures account-specific data to personalize contactProvides a personalized view of each account's actions

How to Choose Between CDP and CRM

Whew, we've covered a lot so far! Now it's time to ask the million-dollar question: Should your company invest in a CDP solution or a CRM system? I'll help you make the right choice.

Factors to Consider in Choosing CDP:

Customer Data Management Needs

What kind of information do you need access to? If you're looking to automatically collect a wide range of data, then use it to better understand customer behavior, go with a CDP. Especially if you're a professional marketer and/or advertiser, rather than a salesperson.

Analytics and Reporting Needs

What kind of reports do you want to generate? If the answer is "high-level reports that give me a holistic view of the entire buyer's journey," you'll need a CDP solution. CDPs help users determine why prospects convert, which campaigns convert best, and how to boost retention.

Factors to Consider in Choosing CRM:

Customer-Facing Operations

CRMs are best for sales and other customer-facing teams. Once you add this kind of solution to your company's tech stack, you'll be able to deliver personalized customer experiences that drive consistent revenue for your organization—both now and in the future.

Looking for ways to enhance your sales results? Learn about the transformative "CRM benefits" detailed here.

Team-Collaboration Needs

CRMs also allow for greater team collaboration. Most, if not all, of the information you input into your CRM of choice can be accessed and viewed by the rest of your team. They can then use the insights you've gleaned to improve their own workflows and processes.

Harness Data, Streamline Operations, and Drive Growth

It doesn't matter if you run the hottest up-and-coming e-commerce company on the internet, or an old-school B2B brand doing its best to forget the internet exists. Both CDP and CRM solutions will help your organization adopt a data-driven approach that generates more sales.

That's why I suggest using CDPs and CRMs in tandem. Doing so will give you access to all of the information your marketing, sales, product, and customer departments need to succeed.

Now, if you can only afford one tool at this time, and you work with a customer-facing team like sales, you should probably go with a CRM, as outlined above.

Guess what: Close is the best CRM for startups and small businesses because it's both user-friendly and super powerful. Sign up for a 14-day free trial of Close to see for yourself. I'm confident you'll love the top-level sales features.


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