CRM vs. CDP: What’s the Difference?

CRM vs. CDP: What’s the Difference?

The Gist:

  • All About Data. Data is the lifeblood of the modern business. Companies use this collection of information to better understand their customers and outperform the competition. 
  • CRM vs. CDP. A customer relationship management platform and customer data platform have overlap in terms of functionality. But marketers show a clear preference toward CDPs. 

Editor’s Note: This article has been updated on April 11, 2023, to include new data and information.

Customer relationship management (CRM) and customer data platforms (CDPs) are two of the major software systems that manage customer data.

Taking control over customer data isn’t a hard-lined choice of CRM vs. CDP. However, it’s worth exploring the differences if you’re a marketer or someone charged with selecting tools to gather customer data and craft digital customer experiences. This is especially true when you consider the promises of each technology are similar, according to Lizzy Foo Kune, vp analyst at Gartner.

“CRM solutions were often proposed to tackle customer data management problems,” Foo Kune said. “The idea was that you could get ‘all of your data in one place’ to use for sales, marketing and customer service. The promise was they’d break down silos in enterprises and design a view of the customer that wasn’t specific to sales or marketing or customer service. That sounds familiar to the promise of CDPs, doesn’t it?”

CRM vs. CDP: What’s the Difference?

A CRM and CDP both deal with customer data. But they have some significant differences as well.

What Is a CDP?

A CDP, or customer data platform, is a data management system that has a unified and persistent database, which can be accessed by other marketing technology (martech) systems, according to CMSWire’s 2023 Customer Data Platforms Market Guide

CDPs ingest and integrate behavioral, transactional, structured and unstructured data from multiple sources into a single repository that allows a business to build a unified profile around an individual customer.

Once customer data has been combined into a CDP, the ability to unify user profiles into a single record gives marketers the ability to form a 360-degree view of their customers. These customer profiles can then be segmented into groups to allow for better targeting of valuable audience segments.

In 2022, the CDP industry reached $2 billion in revenue worldwide, according to Statista, up from $1.6 billion in 2021.

CDP Customer Data Platform market revenue worldwide

What Is a CRM?

A customer relationship management (CRM) platform is a software solution that enables you to focus on your organization’s relationships with individual people and drive personalization.

Within a CRM platform, you can store customer and prospect data, such as contact information, customer behavior data, leads, sales opportunities and more, all in one location and, ideally, in the cloud.

“The ultimate goal of CRM systems, technologies and software,” Allen Bernard wrote for CMSWire, “is to personalize individual customer experiences at every point along their journey from prospect to repeat buyer.”

When successful, he added, the CRM increases customer loyalty and the company’s bottom line.

In 2020, the CRM industry reached $45.7 billion in revenue worldwide, according to Statista, and is expected to grow to $49.6 billion by 2025. It’s also an interesting market in that it’s dominated by one company, Salesforce. In 2021, held nearly 24% of the market, with runner-up SAP capturing only 5.4%.

CRM Customer Relationship Management software market revenue worldwide

What’s the Difference Between a CRM and CDP?

A CRM and CDP have some overlap in terms of functionality, as they’re both data management platforms. But generally, a CRM system is primarily to support sales, while a CDP delivers a more complete view of customer relationships beyond the sales cycle.

CRMs are also more limited in scope than CDPs, as they do not necessarily provide the development environment or integration flexibility to support the full customer experience cycle. CRM systems are more focused on managing customer behavior, business transactions and process management.

Related Download: Customer Data Platforms Buyer’s Guide

Who CRMs and CDPs Are For

Sales and marketing teams both need solutions for managing customer data. But one solution may not work for everyone.

CRMs Help Sales and Frontline Teams

A CRM system is generally focused on sales and service and is not intended to support real-time marketing, according to Foo Kune. This system allows sales teams to capture, track, manage and store data across the entire customer journey.

Homepage view of Salesforce customer relationship management (CRM) software

Think of it as a centralized location for new and historical data. And within it, you can organize that data, develop customer profiles, forecast sales and more. CRM software ultimately allows sales teams to optimize the lead generation and sales process and improve business outcomes.

CRMs Still Assist Marketers

Many marketers think of a CRM as a database with customer and sales contact information. But Gartner defines customer relationship management as both a business strategy and technology, according to Foo Kune. 

CRM application functionality can cut across a bunch of disciplines: sales, marketing, customer service, field service and digital commerce, she added. “And this is also why most organizations report that they have multiple CRM instances and no real unified customer database,” Foo Kune said.

Still, it’s not like marketers never touch a CRM.

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