What is the Difference Between a CRM and ERP (and Which to Get?)
Organizations need intelligent systems that can improve efficiency, productivity, and sales. ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) are such systems. CRM and ERP are both similar in several ways but quite different in core functions. CRM is much more concentrated on front-office processes, while ERP focuses on back-office activities within organizations. In this article, we’ll dive deep into the differences between CRM and ERP, explaining their functions, purpose, and benefits.
What is a CRM?
CRM refers to software that manages consumer interactions, improves customer relationships, and streamlines marketing, including sales processes. A CRM system can help your company increase sales from new and existing customers by managing all aspects of the customer experience.
For example, someone from the marketing department in another region can use information about a particular customer to send a personalized sales email. They can also edit or add new information to the account. All they have to do is use the CRM’s search function to pull up the record.
CRM systems are typically easier to use, which reduces the cost of onboarding. For instance, Monday.com features customizable templates you can use to expedite the integration of your sales and marketing processes. Some CRM systems can also handle things like earnings projections, invoicing, and include AI-driven decision-making features.
Here are some core functions to expect if you choose a CRM, though not a limited list.
- Monitor consumer behavior, such as purchase patterns, to provide insights you can use to increase sales.
- Lead qualification and customer acquisition support features, such as sales funnel management.
- Automatically identify lead and sales origin to help focus your marketing efforts.
- Automate reoccurring sales and marketing tasks, including managing campaigns.
- Enable greater efficiency of customer support with intelligent features.
- Automate sales outreach and follow up.
- Confirm and fulfill orders, including drafting or terminating contracts.
- Manage contacts or accounts.
- Automatically receive alerts concerning consumer interaction, such as prospect follow-ups, lead acquisitions, newsletter subscriptions, lead revisits, and others.
- Integrate with other key platforms necessary for business operations.
What is an ERP?
ERP describes complex software that organizations use to manage daily business activities. ERP helps manage the logistics and processes of things like manufacturing, procurement, accounting, employees, projects, compliance, risk, etc. ERP packages typically include EPM (Enterprise Performance Management) applications that help strategize, forecast, budget, and report on a company’s finances.
Like CRM, ERP systems enable information access and sharing in an organization through centralization. Here are some functions of ERP, though not a limited list.
- Manage and adjust business processes in real-time.
- Manage employee benefits, information, and payroll.
- Track supply chains and manage product manufacturing.
- Support very large businesses with unique enterprise-wide integration features.
- Initiate company-wide strategies and correct issues in real-time.
- Handle multiple types of order processes, including returns or refunds.
- Automatically receive alerts concerning problems in certain areas of the business that needs to be addressed.
- Integrate with other key business platforms.
CRM vs ERP: What’s the Difference?
CRM and ERP overlap because both systems share similar functions. For example, some ERP offer light-weight CRM features that help enterprises manage customer experience. However, both CRM and ERP are laser-focused on doing a few things well.
The core differentiating factors of the two systems are as follows.
- While ERP can potentially handle all aspects of your business, it excels at cutting costs by improving the efficiency of logistics and processes.
- ERP tends to be more expensive than CRM to implement.
- CRM excels at boosting sales, improving customer service, and support.
- CRM is usually cheaper than ERP to implement.
Small businesses typically use CRM, while large enterprises prefer ERP. Smaller companies have a greater need to focus on sales and marketing, plus the cost of CRM is affordable for most. In contrast, large companies usually have significantly more processes and departments, therefore, often struggle to decrease operations cost, which is where ERP excels.
Do You Need ERP or CRM?
The differences between the two systems are becoming increasingly blurred. Today modern ERP systems offer solutions you’d normally find in CRM and vice versa. That is why deciding on which solution is best for an organization is challenging. The good news is that CRM and ERP can work together. They can connect and share information; providing compatibility is not an issue.
Some companies need both CRM and ERP, while others do not, depending on the company size. And growing organizations eventually come to a point where they need to use CRM and ERP. So, the real question becomes which one to implement first?
If you need to manage customer experience efficiently to scale, we’d recommend getting CRM first. CRM systems typically support various integrations that allow other crucial platforms to connect and share information. For instance, Keap integrates with Outlook, WordPress, Gmail, BigCommerce, and much more. A business can manage without ERP for a very long time and maybe forever.
Consider adding ERP once your company reaches a growth stage, where there are considerably many departments, functions, distribution centers, employees, etc. to manage and track. The issue isn’t a CRM vs ERP thing, but rather what is best for your company at this point in its growth.
Considerations for CRM
Before choosing a CRM software, consider the following questions, though not a limited list.
- Will the CRM integrate with the platforms you currently use? For example, you may already be using another software for sales, and integration can help avoid bottlenecks.
- Does it have good sales and marketing features? Many of your customers will encounter your business online before meeting someone face-to-face. That is the reality of business in the digital age. A good CRM system should feature robust capabilities to support your sales funnel and marketing plans.
- What kind of reporting and business intelligence features are available? The CRM should have comprehensive reporting and offer analytics for tracking customer interactions.
- Does it have good customer support tools? Your team should be able to send emails, start live chat, or initiate phone calls directly from the software. For example, Pipedrive lets you make calls without leaving the platform with its ‘Caller’ feature.
- How secure is the platform? Make sure the platform offers end-to-end encryption to prevent hackers from taking a peek at your company’s data.
- Is the CRM system scalable? Ideally, you want to avoid a CRM system that imposes limitations on crucial things like data storage and the number of contacts. So, ensure the CRM offers unlimited or upgradable features.
- Does the vendor offer support and training? While CRM systems aren’t typically complicated to use, they can be challenging at first. The vendor should provide support and training.
Considerations for ERP
It’s important to ask your chosen ERP vendor good questions, such as the following, but not limited.
- Will it integrate seamlessly with your CRM software? You want something that can connect and share data with your CRM without problems, so operations aren’t interrupted.
- Does the ERP vendor offer training? ERP platforms are usually more complicated to use compared to CRM. As a result, you often need training to utilize ERP.
- Does the ERP system meet your business needs? The system needs to support the requirements of your operations. For example, you may have to meet some government regulations. Your ERP software should meet and regularly update those standards.
- Is the ERP platform customizable? Sometimes, you may need to make a few adjustments to an ERP’s functions or introduce additional capabilities to fully match your organization’s needs.
- Can the ERP platform support foreign operations? Doing business in other countries is often different in regulations, culture, legal, and market standards.
Choosing a CRM or ERP
To recap, what is a CRM? A tool for managing customer relationships and interactions. What is an ERP? A tool for managing information mostly concerning back-office activities. Those are short definitions that should help you remember the core differences between the two platforms.
CRM and ERP are important systems that enable business growth. They eliminate duplication, inconsistencies, and redundancies in data, including streamline processes in an organization. The result is improved efficiency and productivity, which often leads to more revenue.
The important thing is conducting thorough research before deciding on which one is best for your business right now. Consider the number of logistics and processes your company has when making a decision. Good luck.