Struggling to align your business with customer demands and failing to generate sufficient profits?
While having a big business has advantages, you must keep upgrading the advertising campaigns, sales strategies, customer policies, etc., to stay relevant. But one of the biggest challenges is getting everyone in the company to work in tandem and creating a synergy between different departments.
That’s why many companies use CRM or ERP systems to stand out. However, there is often confusion regarding the best software, which is the purpose of today’s guide. If you are wondering — what is ERP vs CRM — this article will highlight how ERP increases efficiency through data collaboration among departments, while CRM helps retain customers and converts prospective clients.
What Is ERP Software?
To handle their daily operations, organisations utilise software known as enterprise resource planning (ERP), covering aspects such as:
- Project management
- Supply chain operations
- Risk management and compliance
With an ERP system, businesses can know about enterprise performance management to predict, plan, budget and report on the financial output. Thanks to ERP systems, several business processes are bound together for a smooth data flow between them.
If you can access an organisation’s transaction history, you can use an ERP system to prevent data duplication. Hence, ERP systems have become indispensable for all types of businesses, and some of the most common benefits include:
- Real-time data offers better insight into the business
- Greater collaboration from users
- Low-cost financial and operational systems
- Lower risk
- Higher efficiency
- Reduced inventory management costs
- Consistency among various infrastructure
Since ERP systems use sales force automation to cut down on manual labour, saving time and cost, it gives employees more freedom to focus on other tasks. Even in cases where ERP can’t automate tasks, the fact that it provides detailed information at your fingertips ensures you can make the right decision faster.
Here are some applications of an ERP system:
- Inventory management
- Multiplier effect resulting from IT optimisation and automated reporting
- Sales and marketing
- Financial data management
- Works in tandem with CRM systems
- Human resources management
- Supply chain management
- Compliance monitoring
- Project management
- Asset management
- Business intelligence
What Is CRM Software?
To nurture customer relationships and ensure their satisfaction, it’s essential to communicate effectively, a process facilitated by software called Customer Relationship Management (CRM). With a CRM system, a business can manage communications better to create long-lasting bonds with clients and leads.
A CRM system simplifies tasks by eliminating the need for multiple apps, spreadsheets, and databases, instead centralising the task of managing customer data. This leads to increased organisational efficiency, improved time management, and positive feedback for customer service departments.
Customer relationship management systems consolidate all data, including calls, texts, documents, emails, quotes, and purchases, thereby providing a comprehensive view of high value customers. Hence, multiple departments can access the necessary customer data at the right time to deliver unmatched services or complete a sale.
The benefits of employing a CRM system extend from managing outstanding customer service tickets to:
- Increased sales
- Improved customer interactions
- Higher customer retentions
- Greater efficiency and productivity
- Detailed analysis of core business processes
- Manage potential customers
- A central database of information
- Sales force automation
- Better customer segmentation
- Streamlining business processes
- Accurate sales projections
When executed correctly, CRM solutions not only boost profit margins but also ensure sustainable revenue growth, showcasing some of the significant CRM benefits. Since you can integrate various strategies for tracking sales and analysing customer data, here are the most common uses for CRM systems.
- Omnichannel customer experience
- Automating mundane tasks
- Prioritising leads
- Personalising customer experience
- Sales outreach
- Creating sales prospects
- Sales performance management
- Converting leads
- Monitoring rival businesses
- Tracking churn rate
- Helping agents help customers
- Data security
Key Differences Between ERP And CRM?
While some businesses simultaneously utilise CRM and ERP systems, distinguishing between these two types of software is crucial.
A. ERP System
ERP solutions are related to the daily functioning of the entire organisation, be it business management or logistical analysis.
The objective is to ensure smooth functioning of a business through ERP integration, enabling business leaders to maintain a steady data flow among various departments such as accounting, order management, and human resources. Businesses utilise ERP systems to streamline operations and facilitate efficient information flow.
Some of the key features of an ERP system include:
- Integrating essential services to run the company
- Web-based applications for easy access through various interfaces
- Helps monitor the growth of the organisation
- Allows businesses to manage their resources
When To Use An ERP System?
Check out the following points to better understand when you should use ERP systems rather than a CRM solution.
1. Finance Department Management
ERP software solutions often focus on core processes like accounting and financial management tools. With financial tools, you can stick to the predetermined business budget, forecast future finances, and calculate taxes.
2. Customer Relationship Management
CRM and ERP software are sometimes used together but are less effective than standalone CRM systems. But combining the two is ideal for businesses with basic CRM needs while focusing on other parts of the sales process.
3. Human Capital Management
ERP software also helps you manage people, thanks to HCM tools that schedule work hours, approve sick leave requests, handle PTO, or distribute wages. You can also use HCM tools for project management and check projects staff members are currently handling.
4. Supply Chain Management
As part of an ERP solution, SCM tools will help you with:
- Product Distribution
- Managing purchase orders
- Regulatory compliance
- Quality monitoring
5. Inventory Management
You can create automated ordering points and notifications through IM when stock levels are running low. Moreover, it’s possible to create comprehensive solutions by combining IM with warehouse, distribution, and manufacturing.
B. CRM Software Systems
Compared to ERP systems, CRM, also known as customer relationship management, offers a broader range of features to manage customer service interactions effectively. The scope of CRM integration is more to do with customers by getting in touch with prospective clients.
This software automates customer service to enhance user experience and automatically carries out and synchronises sales. A CRM system aims to nurture the leads to improve overall performance, especially sales.
Key features of a CRM system include:
- CRM tracks and manages an organisation’s functions
- The main focus is on the customer
- Integrates customer services in one place
- Increases sales
When To Use CRM Systems
With enhanced CRM functionality, effective customer service management can be achieved, leading to conversion of customers into recurring clients. Here are some ways you can do so:
1. Managing Customer Service Interactions
You can track clients based on their purchase history, buying behaviour and interests. This also allows the sales team to segregate customers into different groups.
2. Contact Management Systems
With contact management systems, users can handle data entry, editing, and tracking of customer information. Collecting invoices, contracts, and documents and assigning specific contacts to sales representatives becomes easier.
3. Marketing Campaigns
For your marketing campaigns to be successful, you must target the correct audience through advertising. You can use a CRM system to shortlist prospective campaign targets and determine their effectiveness.
4. Database Management
Through database management tools, individuals across the organisation can easily access the required information about critical business procedures from the same location. You can even clear irrelevant or dirty data for proper analysis to reduce duplicity.
5. Lead Management
Be it from email marketing, referrals or landing pages, CRM features lead generation from several sources. You can develop lead routing and track how clients progress through the sales pipeline with territory management and hierarchy relationship tools.
How To Choose Between ERP And CRM Software?
To choose between ERP and CRM systems, it’s important to consider the requirements of the business. The main difference between the two is the data used to generate business insights.
While ERP uses internal data to streamline a business and the flow of information between various departments, CRM requires external input from prospective clients. Some signs you may need a CRM system include the following:
- Unable to retain customers
- High customer acquisition costs
- Disorganised sales process
- Departments must be updated with info on goods and services
- Low sales baseline
- No effective strategy regarding promising accounts or regions
- Want to enter a period of growth
- Looking to hypercharge your revenue
But if these issues are not your concern, you might need an ERP system. So, here are some signs of when to use ERP systems:
- Higher expenditure on business operations
- The organisation is struggling to adhere to industry-specific regulations
- Want to grow your business in new regions and industries
- Fail to react quickly
- Lack of accuracy about customer demands and market trends
- Looking to save money and time
- Want to create efficient workflows
These points will make choosing between a CRM or ERP system easy.
Integration Of ERP And CRM Software
Businesses can select CRM and ERP integration, merging two software solutions into one power-packed tool. That said, don’t expect this to solve all business issues, even though ERP and CRM systems have several benefits.
For instance, you can customise ERP implementations to integrate different departments and their varied roles into one functional body. This will provide more clarity in terms of actionable items.
Moreover, integrating CRM and ERP apps is easier with remote software deployment and cloud computing. But before you use both platforms, answer the following questions.
- Does the creation of products and services depend on responding to sales forecasting?
- Is the organisation big enough for integration between accounting and sales?
- Are you currently using multiple systems for business management?
- Is your tech stack bloating?
Some of the benefits sales reps and other employees will enjoy after integrating CRM and ERP include the following:
- Greater collaboration among employees
- Insight into customer views
- Faster sales approvals
- Preventing data duplication
- Better handling of financial and operational data
- Service customers efficiently
Streamlining Your Business: Unraveling the Difference Between ERP and CRM
As the debate between ERP vs CRM rages and businesses are left scratching their heads about which software to use, hopefully, this guide has offered some clarity.
The basic difference between the two lies in how they use the information available to improve business processes. While ERP helps in the smooth passage of information among various departments, CRM is related to customer data and converting prospective clients.
You can even use both software together to increase sales and track how people respond to marketing campaigns. And keep updating your preferred system every 3-5 years to stay relevant in the market.
1. How can an ERP system fail?
An ERP system can fail due to a number of reasons, such as:
- Inaccurate expectations
- Internal dissent
- Not enough supporting tools
- Stakeholders not showing enough trust
- Digital adoption initiatives
- Hazily-worded training
2. How frequently should you update ERP?
There is no standard time frame for updating ERP but such systems usually last 5-10 years. However, feel free to upgrade the system if you feel your business needs to catch up and certain things can be improved.
3. How will you know if an ERP is successful?
There are three simple ways to determine whether an ERP is successful:
- Significant increase in productivity
- Positive return-on-investment
- Client satisfaction
4. What are the essential components of a CRM system?
The essential components of CRM systems include:
- Customer retention
- Profit making
5. What are the three main types of CRM?
The three main types of CRM include:
- Analytical CRM
- Collaborative CRM
- Operational CRM
If your business comprises several departments, finding it tough to work together, you can use collaborative CRM, while operational CRMs make the most of customer information. On the other hand, when a company has a lot of customer data but needs to learn how to use it, analytical CRMs will prove ideal.