Which Solution Is Right For Small Businesses?

Chris Cho, President of LocaliQ, Digital Marketing Solutions, Gannett.

It can be overwhelming to navigate the various data platforms and tools available to small businesses. As the president of a digital marketing solutions company that provides a lightweight customer relationship management tool, I am often asked about CRM systems versus customer data platforms. As a small business owner, how do you know which to invest in? Which will help set up small businesses for success and enhance growth?

CRMs and CDPs are software systems that both bring different benefits to businesses. CRMs focus on transactional and interaction data, while CDPs aggregate data from all touchpoints to provide a holistic view of the customer. I’ve found that CRMs are often used by sales and customer service teams, whereas CDPs are typically used by marketing teams for data-driven decision making. CRMs manage customer relationships and sales pipelines, while CDPs focus on data integration, unification and activation for personalized marketing. But let’s break it down a bit more.

Understanding CRMs

There are many benefits of CRMs for small businesses. In my experience, they can help in three major ways:

1. Enabling new sales: CRMs track sales activities, manage pipelines and forecast revenue. These systems can help identify high-value opportunities and spot bottlenecks, which can allow you to optimize actions and processes to maximize new client acquisition.

2. Improving customer experience: CRMs centralize customer information, which can make it easier for a business to access and manage customer interactions. By tracking interactions and preferences, the business can offer personalized service and timely follow-ups, which can enhance customer satisfaction and retention. Detailed customer data can also help the business segment its audience to create more relevant marketing campaigns.

3. Driving business efficiency: CRMs can support collaboration among team members by providing a centralized platform for sharing information and managing business processes. This helps ensure everyone works in a coordinated manner. A CRM can help facilitate the smooth handoff of tasks from one employee to another, as well as automate scheduling, data entry and other routine tasks so the team can focus on more strategic activities.

Understanding CDPs

On the other hand, as a small business becomes more sophisticated and its needs become more complex, CDPs could enhance its capabilities. CDPs are built to help you gather, manage, streamline and leverage customer data from various sources to create targeted marketing campaigns and tailored experiences, as well as improve overall customer engagement. In an increasingly competitive landscape, CDPs can help small businesses identify ways to differentiate themselves from competitors.

CDPs can support small businesses by:

1. Enhancing customer understanding and personalization: A CDP gathers data from various touchpoints, such as e-commerce platforms, social media, email marketing and customer service interactions. This integration creates a single customer profile that provides insights into behaviors and preferences and enables tailored marketing efforts that resonate with specific customer needs. This can lead to a more personalized experience. A unified view can also help small businesses identify trends and patterns that inform product development, marketing strategies and customer service enhancements.

2. Data-driven decision making and efficiency: With detailed customer segments provided by CDPs, small businesses can run campaigns that address the interests and needs of different groups. This targeted approach could lead to higher engagement rates and lower costs per acquisition. By focusing on the right audience with the right message, businesses can reduce marketing waste and better ensure their limited budgets are spent effectively. CDPs also provide access to real-time analytics, which small businesses can use to evaluate the effectiveness of their marketing campaigns and make adjustments based on data rather than intuition.

3. Scalability and growth optimization: As a small business expands, a CDP can accommodate an increasing volume of data without requiring significant changes to infrastructure. By measuring the performance of campaigns across different channels, businesses can identify areas for improvement and optimize their strategies for better results. This adaptability supports continued growth and marketing efforts. By investing in a scalable solution, small businesses can prepare for future needs and avoid the costs and complications of switching systems later.

Choosing What’s Right For Your Business

In many instances, CDPs are more effective when used alongside a CRM, but CRMs don’t require the use of a CDP. For most small businesses, I’ve found a CRM is often the more immediate need to help manage sales and customer relationships.

As businesses grow and marketing needs become more complex, incorporating a CDP can enhance a business’ capabilities. Starting with a CRM and gradually integrating a CDP can be a strategic approach that enables a business to continue to grow efficiently and effectively while building trust and customer satisfaction across its customer base. The bottom line is that both options can offer various benefits for small businesses.

But when exploring these solutions, you’ll want to ask solution providers a few important questions, including: What is the typical amount of implementation time required? What kind of assistance do they offer for implementation? What kind of client success resources are available for support? How long does it typically take to transfer data from old sources to a new tool? Is this programmatic? What is the process for data transfer? What is the typical adoption rate for customers they’ve worked with in the past?

Moreover, keep in mind that any new technology will require a change management plan. Most new tools will require training to ensure users achieve the most benefit from the new product. As part of a change management plan, training and piloting the new tool internally with a few key influencers can help identify areas that need additional clarification and help cultivate internal “evangelists” and “power-users” who can attest to the benefit of the tool. This can help combat the tendency toward inertia that is often felt when new tools are implemented in an organization.

By keeping these best practices in mind, you can ensure you choose the technology that’s right for your small business—whether it’s a CRM, CDP or both.

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