CRM vs. CDP: What’s Best for Your Restaurant?

May 19, 2021
min read
Written by
This article outlines:
Definitions of Customer Relationship Management (CRM) and Customer Data Platform (CDP)
The differences between CRM and CDP, as well as benefits of each
Which is best for restaurants: CRM vs. CDP?

here’s been a rapid adoption of new technology in the restaurant industry. To help you make sense of the ever-evolving tech ecosystem and how it all works together to benefit restaurants, we’re breaking down two of the most talked about newcomers to the restaurant tech stack: Customer Relationship Management (CRM) and Customer Data Platform (CDP).

At a high level, both of these tools are used to personalize the guest experience with cross-channel communications that are timely, relevant, and tailored to the behaviors of each individual. Though both can add tremendous value to businesses, they function very differently.

What is CRM?

CRM stands for Customer Relationship Management. A standard CRM system collects data on a company’s direct customer interactions—like contact details and previous conversations—from a variety of communication channels, including their website, email, social media, and more. In other industries, sales teams utilize CRM systems to track and manage customer and prospect contact information, accounts, leads, and sales opportunities in one location.

Given that restaurants see thousands of customers per day, it would be unreasonable to expect operators to collect and store every nuanced customer data point by hand. A restaurant CRM like Wisely eliminates that issue by connecting data from systems like your POS and online ordering solution as well as other custom-built (restaurant-specific) integrations—and making it actionable. 

The action aspect of a CRM can’t be emphasized enough because it’s so critical but also because it differentiates solution providers. Every CRM has a unique set of actions you can take within the platform leveraging collected customer data—at minimum offering a way to create segments, engage customers via email, and so on. A restaurant CRM is built to take actions unique to engaging a restaurant guest like automating feedback surveys following the pick-up of an online order, incorporating offers into triggered email & SMS campaigns, and more.

In a nutshell, a CRM enables businesses to collect their customer contacts from select sources and organize them. And CRMs often also enable brands to communicate with their customers through integrated channels (e.g. via email)—and track those conversations and a core set of metrics over time.

What is CDP?

CDP stands for Customer Data Platform. The Customer Data Platform Institute defines a CDP as: “packaged software that creates a persistent, unified customer database that is accessible to other systems.”

In general, a CDP connects all types and sources of customer data, including transactional, behavioral, profile, product, CRM, and offline, to create a single customer profile. Then, it can send that data to a myriad of destinations to make it usable.

A restaurant CDP like Wisely, the first of its kind, creates individual guest profiles by connecting data from restaurant-centric systems including: POS, loyalty programs, payment processors, reservations, guest feedback, mobile apps, online ordering, WiFi, waitlist, events, and ecommerce. It can then push that data to, again, restaurant-specific destinations like the host stand, menu engineering tools, real estate site selection vendors, a marketing automation solution, media channels, and the list goes on.

This gives every department — from marketing and finance to operations and culinary — a holistic view of the customer base, so they can sort, analyze, and act on those insights instantly.

The main differences between CRM and CDP

Both Customer Relationship Management (CRM) and Customer Data Platform (CDP) solutions collect customer data for businesses. However, there are a few important differences. 

  • CDPs are designed to ingest massive amounts of data from a large number of sources. CRM data integrations tend to be more limited or require significant customization.
  • CDPs are built to help dedupe customer records automatically—which makes for a clean, usable data set which is vital when the data is being piped in real-time to several external tools. CRMs are built to make use of customer records from directly within the system itself and often include report or audience building filters manually controlled by the CRM admin.
  • CRMs track known customers, whereas CDPs combine data from known contacts and reduce the number of anonymous profiles by connecting the dots between customer behaviors (e.g. a frequent in-restaurant diner could remain anonymous until their first online transaction—but their profile is zippered together with a unique credit card token)—to create a single source of truth.
  • CDPs are not designed to take action to the end customer. Outside of data consolidation and identity resolution, the only action that CDPs take is sending data to external tools. CRMs, on the other hand, regularly have action baked in.

So, which is best for restaurants: CRM vs. CDP?

Now that we’ve established what CRMs and CDPs are and how they’re different, we can evaluate their role in the restaurant industry specifically. 

There is no one-size-fits-all solution to optimizing a restaurant tech stack. There are numerous factors to consider including, but not limited to, overall business goals, budget, guest experience, operations, marketing, and beyond. 

Restaurants can use the Customer Data Maturity Pyramid (Fig. 1) as a guide to determine which technology will best suit their business needs. Most brands start at the base of the pyramid to build the foundation of customer data architecture. At this stage, a brand may simply need data that is accessible and usable, in other words, a CRM. 

As brands mature, they start to move up the pyramid. A CDP can help these brands with things like unifying and enriching guest profiles, gathering additional insights, piping data to other business intelligence tools, marrying data to financials, and leveraging customer lifetime value (CLV) throughout the organization.

It’s important to note that a CRM and CDP are not incompatible—more often than not, they’re interconnected. In fact, the best CRM solution for restaurants is one that can act as both a source and a destination for actionable data coming in through a CDP. For example, having your CRM and CDP connected would give you the ability to enrich guest data back into the CRM.

Fig. 1

How restaurants can benefit from a Customer Relationship Management Solution

Good restaurant GMs store personal details about regulars—favorite dishes, hobbies, family, etc.—in their head. The problem is: It’s not scalable. That GM cannot easily share that information with other teams, like marketing, culinary, or real estate. And to make matters worse, with staff turnover, those crucial guest details can be lost altogether.

A restaurant CRM eliminates those issues by collecting all of that vital guest intel, along with contact information, communication history, and engagement channels, in one location so that it’s never lost and can be accessed by others. 

Keep in mind that not all restaurant CRMs are created equal. Some are integrated with other tools—like waitlist, reservations, POS, and more—while others are more limited in functionality. Additionally, only some CRMs offer analytical capabilities that enable operators to segment customers or export data. And when it comes to actually acting on that data, some CRMs feature SMS or email marketing automation, while others do not.

Given that no two CRMs are built exactly the same, it’s important to thoroughly vet any solution before adding it to your restaurant tech stack in order to get the best bang for your buck.

How restaurants can benefit from a Customer Data Platform

When restaurant brands are ready to do more with their guest data than a CRM can offer, they graduate to a CDP. A restaurant CDP can fuel the next phase of growth by making data more accessible to everyone, integrated with a wider reaching set of sources, and actionable across an essentially unlimited number of destinations.

Restaurants often struggle to access their customer data due to archaic systems or limitations set by consumer-facing discovery and third-party delivery networks. With a CDP, restaurants gain access to usable data from countless sources—online and offline—merged into a single customer record. Here are just a few of those sources:

  • Waitlist & Reservations
  • POS
  • Online Ordering
  • Pay at Table
  • Payment Processors
  • Loyalty
  • Guest App
  • Email/SMS
  • WiFi
  • Brand Website
  • Social Media
  • Surveys

Even those brands that have access to their guest data typically do not have the team or the technology to stitch it all together. And systems that strictly unify data add another layer of costs. Some of the primary benefits of a restaurant CDP are that it eliminates data deserts, manual workflows, tech-stack dependency, and vendor lock-in.

With a CDP, restaurants can push a singular, enriched guest record to the destination vendor best suited to meet the brand’s business goals, including marketing, business insights tools, or data warehouses. For example, brands can use lifetime guest data to tailor email and SMS marketing efforts, as well as search and social advertising, with conditional messaging that drives guests through the funnel based on their engagement.

With unlimited access to integrated, usable data, restaurants can test and pilot new strategies—from menu engineering to online and offline marketing. This increased visibility into ROI enables them to make strategic business decisions based on the behaviors and preferences of high-value customers.

With a CDP, restaurant brands can unify and enrich guest profiles, as well as gather additional insights such as exactly where and why guests spend money. By piping data to business intelligence tools and using the customer lifetime value (CLV) metric, brands can quantify results of marketing dollars spent, staff training, menu optimization, real estate selection, and more.

Still on the fence?

If you’re still unsure of which solution is right for your restaurant brand, you’re not alone. For some, the data accessibility that a CRM provides is enough to satisfy their business needs. For others, the extra layer of data integration and flexibility that a CDP offers will be key to growth.

The truth is, a CRM and CDP are not mutually exclusive. Each works with the other to provide a holistic view of the customer. While CDPs are nothing new, never before has there been a CDP built specifically for restaurants. 

Now that brands have access to a restaurant CDP that was specifically designed to integrate with (often antiquated) POS systems, they finally have the option to move up the Customer Data Maturity Pyramid and maximize customer lifetime value with enriched, actionable guest data.

In the end, restaurant brands that invest in technology built to harness customer data—and act on it—will provide the best guest experience, edge out the competition, and build a profitable future.

Photo by Los Muertos Crew from Pexels

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