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Companies are increasingly adding customer data platforms (CDPs) to their martech stacks. The CDP Institute estimates industry revenue will reach $1.55 billion in 2021, a 20% increase over 2020, with other reports expecting more double-digit growth in the future. 

CDPs emerged in 2015 to great fanfare and confusion. As is usually the case when a new technology emerges, some predicted the advent of the CDP would bring about the end of legacy technologies, including CRMs. And as is also usually the case, such prophecies fell flat. But how has the rise of the CDP affected the use and trajectory of CRM platforms?

CDP Better for Some Marketers

"The rise of the CDP presents a lot of inspiring opportunities for marketers,” said Kashif Naqshbandi, Tenth Revolution Group CMO. “But that doesn't mean that the age of the CRM is over. The primary differentiator between the two technologies is the relationship factor. We're a very people-centric business. Our sales teams use our CRM to help build their relationships with customers and ensure they're delivering the best service possible.”

A CDP is an unbeatable tool for marketers looking to create effortless experiences throughout a customer's digital journey, Naqshbandi said. But the business is all about people, whether they're job seekers, businesses, those looking to kick-start their tech careers. Creating tangible human connections and sharing knowledge and experience with customers is key.

"The benefits of the CRM hinge on the human interaction element,” Naqshbandi said. “It might not give as complete a picture as a CDP, but when the core of your organization is the customer and their interactions with you, then the CRM is still king."

Related Article: Customer Data Platforms Shine Where CRMs Fail

CRM Has Evolved

“As a business owner and digital marketer, using CRM software has been paving the way for my business to have a rock-solid customer relationship. And as my business grows, CRM grows as well,” said Israel Gaudette, founder of Link Tracker Pro.

“CRM’s evolution is indeed due to the rise in CDPs over the past years,” Gaudette said. “But whatever change there is in a CRM, it will always play a significant role in transforming every business’ efforts to better understand their customers. But to fully reach the ultimate goal where every customer is always wanting more, CRM must be placed at the center of every marketing strategy. With it, customers’ needs will be fully met and they’ll be approached the way they want to.”

CRMs aren’t just a bin of information anymore, Gaudetter explained. CRMs suffer from the perception that they're a dumping ground for customer information.  While that may have been true when the platforms were first introduced, it's no longer the case.

“In my business, I’ve made CRM the foundation of all my marketing efforts,” Gaudette said. “With it, I was able to forge a deep-rooted relationship with my customers. It spoon-fed me with data and actionable insights on how to approach them the right way. And when I integrated it into my email marketing campaign, I got a more comprehensive and tailored approach.”

Related Article: What's the Difference Between a CRM and a CDP?  

CDPs and CRMs Complement, Not Compete With Each Other

“CDPs have been a fixture in the marketing realm for some time now,” said Christian Wettre, general manager, Sugar Sell and Sugar Market, for SugarCRM. “We are seeing the technology becoming more mainstream — more affordable and approachable — to companies in the midmarket, thus expanding its adoption. As the events of the past year have massively accelerated digital transformation efforts, digital data is becoming a rich source of intent data that is in high demand across the enterprise and its needed to feed many functions — i.e. marketing, loyalty, store operations, ecommerce, etc.”

CRM systems can also benefit from access to the rich data being collected in CDPs, however there needs to be a new approach that can keep pace with the speed of business today, according to Wettre. “CRM systems have historically been integration-heavy. If we want customer data in CRM, we create integration jobs that bring it into the CRM system. It is not unusual to see a customer with 10 or more integration routines connecting different data sources. We see an opportunity to subscribe to this data from a consolidated source and on an as-needed / just-in-time basis from the CDP to provide a central and real-time view of the customer for CRM users.”

With customer data originating from many applications and departments, the CDP has an important function as a clearinghouse that can apply data governance rules to prepare data for enterprise consumption, Wettre added. Having this take place in the CDP versus CRM system, enables both platforms to “play to their strengths” — the CDP as a purpose-built scalable database organized for big data, and the CRM as a system that does the work of identifying important correlations, trends and surfacing vital information at the moments of truth and instances that matter to aid marketers, sales reps and customer service professionals.