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PHOTO: George Kedenburg III

In a crowded, 6,000 vendor martech landscape, understanding who’s who can sometimes seem like an impossible task. New vendors pop up, some shift their focus, and others plain disappear. Just a few weeks ago, Salesforce acquired Datorama — a customer data platform (CDP) used by some 3,000 marketers worldwide — for a reported $800 million. And while this might seem like just another acquisition, it’s worth understanding better. Not for the names of the companies or even the value that changed hands, but for the kind of technology that was acquired.

The term “Customer Data Platform” might be a new one for you, but these platforms have been around for a few years now, emerging as a solution to the fractured martech landscape problem. In fact, Gartner has named CDPs one of six technologies to look out for in 2018. Gartner analyst Chris Pemberton noted in the Gartner blog that CDPs can help marketers take advantage of customer-centric trends, including higher expectations for personalized experiences, and C-suite demands to prove ROI.

“CDPs have the potential to transform how you deliver consistent, targeted and contextually relevant experiences across channels,” he wrote.

The customer relationship management (CRM) system was once considered the almighty marketing and sales tool for companies, but because they lack a common data model, they’re no longer enough. Marketers have begun to realize that data silos are preventing them from acquiring new buyers, growing revenue and improving the customer experience.

They’re looking to solve that problem by installing a platform that merges multiple streams of data into one unified interface and can rapidly surface insights. And even though a customer data platform and a CRM appear to be similar, their primary purpose and function have many differences. Let's take a closer look.

System of Record vs. System of Intelligence

Having a single source of truth for all your marketing, sales and customer data means you can analyze a set of data in a way that gives the full context behind that data. Where the CRM creates a record, such as a new customer, it’s the customer data platform that provides a true 360-degree view of the customer, from anonymous to advocate.

Think of your CRM as a system of record, and your CDP as a system of intelligence. CRM solutions typically can’t match customer interactions over different channels. Most CRMs don’t have the machine intelligence to pick up on customer behavior and track their purchase journey outside of the system itself, which could be vital information to target that audience.

A CDP on the other hand, is designed specifically as a central location for all customer data, including personal identifiers, website visits, email responses, chat transcripts, audio recordings of customer service interactions and social media comments. A CDP pulls data from multiple sources, cleans and combines to create a single, unified customer database that’s accessible to other systems.

Related Article: What Can You Do With a Customer Data Platform?

CRM Is Only as Good as Its Underlying Customer Data

Data issues are often overlooked, but data is the foundation of your CRM system. It can have the most direct impact on your bottom line. In fact, a recent Gartner study found that poor-quality data costs organizations an average of $14.2 million annually. Your typical CRM can only take structured data (forget about those customer chat logs), and is pretty limited in its ability to cleanse, merge and dedupe contact records.

A CDP maintains unified data. So, even if data is being captured from multiple channels, it will be tagged to a single customer. Here’s an example: Let’s say I sign up for your newsletter with my special Gmail spam account, and then later on end up buying your software with my business email. A CDP will assign both of these transactions to the same person using machine-based fuzzy matching, thus avoiding data duplication and gaps in the customer journey.

A CDP Can Help You Prove Revenue Impact

In the last few years digital marketing has grown more complex, spanning multiple channels, campaigns and sources. There are many layers or dimensions that a marketer might want to track, such as channel and subchannel (for example Paid > Social > LinkedIn), landing page, form URL, specific ad served, and the associated ad campaign. Marketers might also want to track user information such as city, region, country, device and platform. Each dimension helps create a more vivid picture of the buyer journey and helps marketers better understand their prospects and prove revenue impact.

With so many different variables, your CRM is going to need a little help. To build a tailor-made attribution model that’s a perfect fit for their brand, customers and priorities, marketers need a CDP. This platform serves as the attribution source to gain a holistic view of how customers are progressing through their journey. Models such as last-click fall short as they fail to accurately attribute value to marketing channels. For instance, if all the credit is placed on either the first or last click, there’s no understanding of how other journey touch points have contributed to brand awareness or conversions.

Related Article: What's the Difference Between Customer Data Platforms and Data Management Platforms?

CDP + CRM = Better Account-Based-Marketing

Whether you’re going full-steam ahead with account-based marketing, or are looking for a more efficient way to manage customer and prospect data, incorporating a CDP into your tech stack can help you make the most of your CRM data.

For example, records in your CRM have many standard and custom fields that are critical to revenue operations. However the process of matching incoming leads to existing accounts is largely manual. A CDP can automatically match incoming leads to existing accounts and bring over all the valuable information already stored in account records. In addition, if account information is ported over to leads, fields such as account status, territory, or any custom account field can be used to more effectively score leads for sales.

Nothing screams marketing and sales alignment louder than marketing using sales-determined fields in your CRM to score incoming leads. In addition to more effective lead scoring in your marketing automation, marketing teams working with a CDP can use account insights to better segment audiences, personalize campaigns, and do more in-depth reporting to measure the success of different marketing campaigns.

Related Article: Customer Data Platforms: A Contrarian's View

Kiss IT Goodbye

CRM databases are highly complex and require that marketing work with their IT team, or at least a certified administrator for both setup and management.

While a CDP still needs IT for setup, following setup, a CDP is designed to be a simple and easy-to-use database. It has one-click system connectors and a visual drag-and-drop workflow editor to handle complex marketing automation. Marketers have access to self-serve analytics and can take immediate action on insights.

Below is a quick summary of CRM vs. CDP.

 

CRM

CDP

System

System of Record

System of Intelligence

Built For

Sales

Marketing

Applications

Customer transactions

Personalization, Attribution, ABM, Data Integrity

Data Sources

Stores data on leads and customers, including firmographics, people and org chart data.

Supplements CRM data by collecting website visits, email responses, chat transcripts, audio recordings of customer service interactions, social media comments, purchase orders and more.

Data Capture

Doesn’t see offline data unless manually entered, focuses only on known customers and prospects

 

Captures both online and offline data. Uses unique personal identifiers such as phone number, email and mailing address, and gives a 360-degree view of the customer.

Data Duplication

Can’t handle duplication

A CDP maintains unified data. So, even if data is being captured from multiple channels, it will be tagged to a single customer.

Attribution

Last touch (100 percent credit goes to sales)

Supports first-, last- and multi-touch attribution for custom business rules.

Account-Based-Marketing

Data schema makes it difficult to match leads to account and map account-level data.

Can identify target accounts, match leads to account and attribute marketing activity at the account level.

Customer Journey

Can’t match customer interactions over different channels.

Provides a complete end-to-end customer journey, from anonymous to advocate.

IT Dependency

Requires a CRM admin, IT and developers.

Marketer-managed after initial setup.