This byline originally appears on MarTech Advisor.
Not too long ago, salespeople organized their contacts in a Rolodex, a rotating spindle with index cards listing relevant information like addresses, phone numbers and maybe a personal detail or two.
In sales, the Rolodex gave way to the spreadsheet, and eventually to more complex and robust customer relations management (CRM) systems. Current CRM systems show not only every email interaction between a company and a contact, but also customer service records, marketing preferences, loyalty program details and specifics on historical sales, sometimes up to 10 years old.
But CRM has its limits. To establish a more comprehensive customer identity, marketers need to use a CRM solution in conjunction with a DMP. And where do customer data platforms (CDP) fit in?
The difference between CRM, DMP and CDP
The distinctions between anonymous, pseudonymous and personally identifiable identities have led to the rise of disparate solutions for the personally identifiable and pseudonymous worlds. In an ideal marketing world, there would be a single solution that handles all customer data, but regulatory and legal limitations, as well as the historical evolution of solutions for the personally identifiable information (PII) and pseudonymous worlds, have restricted capabilities around connecting this data in one solution.
Identity resolution links together different identifiers about customers that have been collected and stored in both online and offline channels, systems and data sources in order to create one master identifier. Within the master identifier are details on transactional and non-transactional behaviors, context such as location and profiles.
The basic differences in terms of data solutions for identity resolution have to do with distinctions between what can be done with PII, for which CRMs and CDPs solve, and what can be done with pseudonymous information, for which DMP solutions are used.
CRM systems, which originated to solve for traditional marketing and sales technology needs (i.e. direct mail and email), focus on the personally identifiable world. Many people confuse CRMs thinking that they are only solving for the offline world, but that is not true. CRMs house both online and offline sales AND online and offline marketing information—website sales, store sales, email contact history and response and direct mail. Others think CRMs only house first-party data. While CRMs do predominantly house first-party data, they often include second-party and third-party data.
The most important distinguishing factor is that CRMs and CDPs focus on PII data while DMPs live in the pseudonymous world and do not house PII Other key differences between CRMs and CDPs vs. DMPs are:
- CRMs and DMPs are able to house first-, second- and third-party data, although DMPs primarily house third-party data.
- CRM and CDP solutions generally have minimal limits on data persistence (the data can live there for years), while DMP data is limited to months.
- CRM and CDP data are broader and deeper than DMP data.
Though CRM and CDP both house PII data, they play different roles in marketing operations. CRM solutions are mature and have been around for decades, whereas CDPs are still in an infancy stage. This leads to common differences in terms of maturity. A congealed, agreed-upon definition of what a CRM is and isn’t vs. the definition of what a CDP is varies between CDP companies.
The promise of a CDP is the collection, unification and access to a personally identifiable view of an individual customer. Beyond that, both how the solution works and the additional features and benefits it offers vary widely, from onboarding and prediction capabilities, to marketing activation partnerships. Because of the immaturity of the CDP solution set, most are not yet advanced enough to handle complex use cases. Many, if not all, CDPs are still in the definition stage, with products and features that have not yet reached maturity.
The good news is that the data marketers are now able to compile using these solutions is truly game-changing for the industry. If CDPs continue to mature in terms of both features and applications, digital marketing will change dramatically with enhanced connection of martech and adtech worlds. Marketers will be able to create consistent experiences for every consumer that reflect customer engagement across all channels and touchpoints.