CRM and ERP are two different types of software. CRM stands for customer relationship management, which is what businesses use to interact with their customers on a day-to-day basis. ERP stands for enterprise resource planning, which is a system that connects all aspects of your business from production to inventory control.
The best thing you can do when deciding between these two options is learn about the needs of your business so you can find the right fit. In this blog post, we'll go over some common features found in both systems as well as how they work together to help a company succeed in today's marketplace. We hope our readers will find it helpful!
ERP and CRM are both business applications that store and analyze data in a relational database. Both are delivered either through a traditional on-premises model or through software as a service (SaaS). The vendor manages the software in its own data centre, and customers access it through the cloud.
From small and midsize businesses (SMBs) to enterprises, nearly all growing companies will eventually need both an ERP and a CRM system — or a single platform for both.
Companies running their finances on entry-level accounting tools like QuickBooks or even spreadsheets often turn to an ERP system when they find those systems are holding back their growth, inefficient, or simply need something more robust.
The same can be said for businesses managing customer relationships in individual sales reps’ email clients, spreadsheets or contact management systems.
Whether a company first invests in CRM or ERP will depend on its business model. For example, a company with a small set of high-value customers and complex financials might be more apt to first invest in an ERP system.
In contrast, a company with relatively straightforward financials and a large customer base requiring frequent contact might do the opposite.
What is CRM?
CRM at its simplest is systems and processes for managing a company’s interactions with current and potential customers. When we talk about CRM, we usually are talking about CRM Software. CRM software is used to organize, automate and synchronize sales, marketing and customer service.
CRM has developed to include all areas of the customer experience, keeping the customer happy and, in turn, keeping them loyal and more valuable to your business. First, it is the process of identifying potential leads/prospects, nurturing them and guiding them through the sales process to close the business. Then, once they are a customer, it is ensuring that you maintain that relationship and encourage repeat business – either more frequent orders or higher value.
CRM systems are designed to record and store every piece of information regarding customer interactions. The data is standardized and easily shareable throughout the organization. To illustrate, if an inside sales rep has a call with a prospect, they might enter new information such as contact details and notes about the conversation.
Then, a marketing person might use that information to tailor a new, personalized newsletter. All they have to do is pull up the record in the CRM system. With the right system, organizations can organize and segment every single aspect of the customer experience.
Moreover, CRM systems can create sales projections, nurture the prospect through the sales funnel, manage invoices and communication, and more. As a result, a CRM improves efficiency, increases sales and offers more accuracy with customer data. As a result, customer relations are enhanced.
Here are several features you can execute with a CRM system:
- Automate and manage marketing campaigns
- Analyze purchasing patterns
- Offer high-quality customer support
- Automate redundant tasks
- Identify new leads
- Streamline the sales process
What Is ERP?
Where CRM manages the customer, ERP is used to manage the business. ERP is a system for improving the efficiency of business processes. Like CRM, ERP allows for the rapid sharing of standardized information throughout all departments.
Employees all enter information into the ERP system, creating a real-time, enterprise-wide snapshot. Problems in any area will automatically create alerts in other affected areas. This allows departments to begin planning for issues before they become a problem in that department. In short, by allowing the business to focus on the data instead of the operations, ERP provides a method for streamlining business processes across the board.
Microsoft Dynamics NAV and Microsoft Dynamics for Finance and Operations can directly integrate with Microsoft Dynamics 365 for Sales.
Like a CRM, ERP software is designed to streamline business operations. However, while a CRM focuses on the sales side of the organization, an ERP system is integrated and implemented across multiple departments.
At its core, an ERP system offers interconnected management of specific business processes. So, you can get standardized information throughout every department in real-time. Any issues are sent as alerts to designated recipients.
How Are Erp and CRM Related?
Both ERP and CRM systems handle contacts, companies, quotes, orders, and forecasts. In addition, both systems manage line-item configuration, bundles, delivery schedules, and invoices. Although there is still a high degree of confusion surrounding both systems, the average user does not know how either system connects to the other and how core functionalities differ.
For example, a prospective buyer calls you up and says that they’re not sure if they need a new ERP or CRM system.
They are aware of the essential functions of a CRM system but are unsure whether an ERP will offer the same functionality.
This is a classic example of misinformation due to a lack of knowledge. Most ERP systems will have some, if not all, CRM components along with the ability to integrate with a third-party CRM system. Although, generally, the CRM components of ERP systems will not be as full of features as the cream of the crop or standalone, specialized CRM platforms.
Similarly, most ERP systems that have CRM components will offer marketing and sales force automation. However, these ERP systems might lack extra features such as call centre support, community management or social media management. The absence of these components will not be detrimental to the system's performance, but it will decrease the overall user experience.
The business can then focus more on data and less on operations. As a result, there are fewer errors, and organizations can make better decisions.
Features you can utilize with an ERP system:
- Enter business process information in real-time
- Get alerts about issues
- Manage hiring initiatives
- Track manufacturing and supply chains
- Manage benefits, payroll and employee information
- Create enterprise-wide strategies
- Update accounts
- Process orders
What Are the Benefits of CRM?
As with ERP, there are many valuable business benefits of CRM. Primarily, it enables your business to become more customer-focused, enabling you to be more profitable.
CRM technology gives you a clear, bird’s eye view of your customers while also helping you drill down into their individual preferences, needs, requests, issues, dislikes, how they’re responding to marketing campaigns, what they’ve purchased and more — all in one easy-to-navigate database.
With this information stored under a unified dashboard, all users across your company can participate and stay informed. This optimizes functions for the business, but it also provides a more personalized and consistent experience for the customer.
Ultimately, enlisting a CRM system cuts unnecessary costs while increasing profits. Customer information funnels into a business through various sources, including sales phone calls, marketing forms, emails, social media networks, customer support calls, website chats and external sales meetings.
Without a system to house and make sense of all that information about your customers as a whole and individually, you risk providing your customers with an inconsistent, even poor, experience with your company. The result can be the loss of business.
For sales and marketing departments, CRM tools allow users to better understand incoming prospects and optimize marketing campaigns using clear data. CRM systems provide advantages for customer support roles as well.
Because customer interactions can happen across a variety of channels, a unified CRM system pulls all of a customer’s questions, feedback, complaints, requests, and more together to help customer support representatives provide the help that is better customized to the customer and takes into account a more holistic view of the relationship between the customer and the business.
For businesses of all sizes, this level of visibility provides valuable business-enhancing insight. For small businesses, in particular, having CRM software can fill roles that would normally require hiring additional team members, which is beneficial for smaller companies that need to conserve resources.
What Are the Benefits of ERP
The benefits of an ERP system come from having a single, shared database for all financial and operational data. This greatly impacts reporting — both static monthly reports and ad hoc reports requested by leadership.
A single source of financial and operational data also means employees can drill down into reports to uncover financial insights without needing IT or finance teams to conduct the analysis and reporting. This allows businesses to make faster, data-backed decisions that can impact everything from profitability to new growth opportunities to creating efficiency across the organization.
Another benefit of moving to an ERP system companies frequently cite is a faster financial close. Finance teams typically account for all income and expenses and tabulate the results at the end of each month or quarter, commonly known as closing the books.
Closing the books using spreadsheets or entry-level accounting systems typically requires extensive manual work, data entry and contacting different departments for financial information. With a centralized ERP system automating many of those tasks, companies have reported reductions in monthly close times; this task now may take only a week to just a few days.
ERP systems also introduce much greater financial controls into an organization. With a centralized system and role-based permissions, only those with the proper job functions get access to sensitive data, improving audit trails and reducing financial risk.
How Integrated Should a CRM or ERP Be?
If your business is facing issues under both lists above, enlisting the help of both an ERP and CRM system can prove highly valuable, and integrating these systems within one database can be even more beneficial. Integrating ERP and CRM software into one larger system may seem intimidating, but it’s much easier to manage than two separate systems. Essentially, you’re combining frontend and backend operations for a more unified, 360° view of your business.
For starters, when these systems are integrated, any automatic updates are made to both systems simultaneously. Having these systems be in sync is helpful when changes occur within operations or adding different requirements.
Business data also improves when these systems can “talk” to one another. Data will always be up to date, and you’ll be able to have a more well-rounded data story and reporting capabilities. The need to have someone manually enter data between systems is removed, allowing employees to better manage their time and reducing the opportunity for human error.
For sales teams, forecasting product demand becomes a lot easier when both systems work in tandem. With order history data in hand from the ERP side and customer tracking data from the CRM side, sales departments are better qualified to make sales. Then, when sales members enter orders into the CRM tool, it’s automatically transferred to the ERP, further eliminating manual entry and speeding up processing times.
With higher visibility across operations, all roles can better collaborate to support processes, pipelines and profits. In addition, integrating systems provides all-around enhanced speed, clarity, automation, and better use of resources for a seamless workflow that benefits all involved, as well as your bottom line.
What is the Key Difference Between CRM and ERP?
While the entire organization will rely on both ERP and CRM systems, the fundamental difference between ERP and CRM is that ERP is primarily for financial data and the finance department, while CRM is customer data used by the sales and customer service departments. The former is commonly referred to as the back office, and the latter is the front office.
Some ERP systems include a CRM component, while others do not, but CRM software systems do not include ERP components. For example, Salesforce.com is not an ERP system because it does not handle transactional data. It may access order history or invoices, but that data is brought in through an integration with the ERP system.
Frequently Asked Questions
The CRM applications are a convergence of functional components, advanced technologies and channels. Functional components include campaign applications, sales applications, marketing automation, and customer service and support applications. Channels include the Web, call centers and phone, and mobile devices.
Examples of CRM activities include automating repetitive sales, marketing, and service tasks, storing and managing customer and deal data, and reporting and forecasting.
Bad CRM data leads to missed opportunities for new customers, and it could create issues for your sales cycle.