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Jul 13, 2021
4 minutes read

CRM, CDP and DMP Platforms: How Are They Different?

Data management platforms (DMPs), customer relationship management (CRM) systems and customer data platforms (CDPs) can all play an important part in the customer lifecycle, but telling the difference between them can get tricky. Let’s have a look at what they do, how they differ, and what they can do for each business.

What is a Data Management Platform

Ever wonder why as soon as you search for a particular product on one platform, you see advertisements for similar products everywhere else? That’s partly because of DMPs, which gather and categorize data from various sources.

This information is usually gained from third-party web analytics, such as cookies and IP addresses, that track your page visits or even the contents of your shopping cart. Data from a DMP can then be fed into a demand-side platform (DSP) so that companies can serve customers adverts based on their online behavior.

As legislation regarding user privacy has become more stringent in recent years, such as with GDPR, this information should be completely anonymous and short-lived - expiring after a certain duration.

While DMPs are great for targeted ad campaigns, they don’t have the same breadth and depth of stand-alone analytical tools, and online adverts are notoriously easy to ignore. They also do not build a complete view of your customers, which is where CRM and CDP systems become necessary.

What is Customer Relationship Management

The goal of a CRM system is fairly simple: to improve business relationships by managing interactions with existing and potential customers. Most CRM software is used to create a simple interface for employees to record basic customer information as well as other important details, such as:

  • email,
  • contact numbers,
  • call conversations,
  • the customer’s buying prospects,
  • contract status,
  • or reasons for a won or lost deal.

Ultimately, CRM systems help businesses, big or small:

  • learn more about their customers,
  • organize their information,
  • and optimize the interactions with them.

A CRM is particularly useful for marketing, sales, and service operations, as they frequently use past customer data to contact new or returning customers. A CRM can serve as an analytical tool to create a sales pipeline for forecasting and improving customer satisfaction by keeping track of ongoing relationships. It also helps with creating personalized experiences based on past interactions.

However, a common drawback of a CRM system is that it often creates a limited view of the customer as it focuses on first-hand interactions and isn’t able to fully integrate data from different touchpoints. Because it also usually relies on manual entry, it can easily become overly complicated, labor-intensive, and difficult to manage effectively. That is where CDPs step in.

What is a Customer Data Platform

The main problem with customer data is that it is often siloed across different software systems and while businesses have access to ever-increasing amounts of user data, the core of their business remains digitally unintegrated.

A CDP brings together data from various channels and sources to create a single, unified profile of each customer. CDPs work with first-party data, such as a CRM database of existing customers, combining them with second-party data (which is data bought from other companies) and anonymous third-party data (such as those gained by DMPs). This greatly benefits personalization marketing strategies as it gives a more holistic understanding of known customers while incorporating second- and third-party insights to target prospective customers more effectively.

One should, however, be careful of platforms that have recently changed into CDPs but are, in reality, just CRMs, DMPs, or data warehouses. CDPs do not simply store information or route them between different systems, but they create a central database where information is organized, integrated, and made available to use when it is needed. Bringing all your customer data together is one thing, but you’ll need a trusted CDP if you want to use it well.

A leading CDP provider like CM.com allows you to segment customer data based on certain criteria, such as purchase history, birthdays, web behavior, and location. It gives you real-time insights into your customer's behavior, so advertising can be personalized and automated with workflows to reach customers via various channels exactly when they’re looking for it.

How They All Come Together

DMPs, CRMs, and CDPs all come together to create a bigger picture of the customer journey. After DMPs have created new customer leads, CRMs help keep track of the ongoing relationship, while CDPs bring all of this data together to help brands connect and engage with new and existing customers more effectively. Businesses don’t always need to choose one over the other two, as they all serve valuable roles in understanding your customer and aligning your marketing campaigns with holistic, data-driven insights.

After all, data, on its own, is quite inconsequential – a small moving part in a bigger operation. Only when it is made valuable and accessible can companies explore their true potential in improving decision-making and measuring positive business outcomes.

As more people take to online activities, the amount of user data being generated will only increase exponentially. If businesses want more effective customer engagement and satisfaction, they need to start using that data to its full potential.

Unlock Your Data With the Customer Data Platform

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