In some ways, CRM and ERP are similar. They may both handle information about contacts, quotes, invoices, forecasts and more. They both help you organize your business and coordinate your teams. Some vendors even describe CRM as a part of ERP.
But there are some differences between CRM and ERP. Namely, the former focus on the customer, while the latter focus on the business. When you get into the details of the systems, the distinctions will become clearer.
In this article, we define CRM and ERP and talk about the differences between them to help you decide which is right for your businesses. Here’s what you need to know.
What Is a CRM?
CRM stands for customer relationship management, the key word in that phrase being “relationship.” CRMs are all about helping you to build better relationships with your customers. It’s easy to see why CRMs are so beneficial. Relationships are at the core of any successful business, and anything that helps you to improve those connections can benefit both you and your clients.
The core concepts of customer relationship management are nothing new. All businesses practice them. Any time you note a customer’s contact information or keep track of your interactions with a client, you are managing your relationships with your customers. Over time, though, the methods used to accomplish this have evolved. Businesses used to use Rolodexes or just plain pen and paper. Many then graduated to spreadsheets such as Excel. As technologies improved, CRM software was introduced, and it changed the world of customer relationships.
- Record communications had over phone, email, social media, and other channels
- Automate some workflows such as assigning tasks
- Provide analytics for assessing productivity
- Phone calls
- Social media
- And much more
What Is an ERP?
ERP stands for enterprise resource planning, and at its most basic level, it takes the data of the various functions within a business and organizes it into one complete system. These functions include accounting and finance as well as everything that is required to produce goods and get them to the customer including supply chain, manufacturing, distribution and more. ERP can also help to automate various back-office processes.
The goal of ERP software is to improve the efficiency of business processes and reduce the costs associated with them. Rather than dealing with customer-facing systems like a CRM, an ERP focuses on the internal, back-office operations of the business. ERP software is highly data-driven.
- Accounting and finance: An ERP may collect data related to all aspects of accounting and financing within a business, including accounts payable, accounts receivable, transaction journaling, taxes and more. It can assist in producing quarterly statements and making financial decisions.
- Manufacturing: An ERP can assist with product development, planning and production by helping to organize data related to production scheduling, budgeting, demand forecasting and procurement.
- Inventory management: ERPs can help businesses keep track of their inventory so they can fulfill customer orders on time. Demand forecasting also helps with this.
- Distribution, shipping and fulfillment: An ERP can help a business keep track of data involved with getting products from the warehouse to customers. It can help with tracking orders, warehouse inventories, shipping schedules and more.
- Supply chain management: You can use an ERP system to keep track of purchasing, shipping and other information related to the materials you need for the production of goods.
- Reduced redundancies: Using one system reduces redundant tasks that might occur if multiple departments were tracking the same information separately.
- Enhanced cohesiveness: Because there is only one source of information, it ensures that the whole business is on the same page and can help with standardizing business procedures.
- Faster report generating: Having all of your information in one place makes it easier to generate reports, which can help ensure compliance with regulatory standards and help the company make better business decisions.
- Improved agility: It also enables the business to respond to opportunities quickly since you can more easily coordinate across departments.
Who Uses a CRM?
Any business that has customers and interacts with those customers in any way can benefit from using a CRM. A CRM can improve really any business, regardless of size.
The more customers you have, the more need for a CRM you have, as it gets more challenging to keep track of your relationships as their numbers grow. You don’t have to be a huge corporation to benefit from having a CRM though. Larger companies may have more complex CRM systems, but small and medium-sized businesses can also improve their relationships by leveraging data.
Within an organization, the sales team and those supporting them are the primary users of a CRM. Marketers, customer service representatives and other customer-facing staff may use it as well.
- Sales: A CRM can help your sales team to keep track of their interactions with customers and leads. You can create standardized sales processes and see where each customer is in the sales pipeline. This helps you to win deals, cross-sell and up-sell. You can also use a CRM to assign contacts and deals to salespeople and track progress toward sales goals.
- Marketing: The marketing team may also use a CRM to track interactions with leads, manage campaigns, evaluate the effectiveness of their marketing activities and send out marketing emails and other communications. Once they qualify a lead, the marketing team can send details about that contact to the sales team who can use that information to close the deal.
- Customer service: Your customer service department can also use your CRM to track their interactions with customers. A CRM enables them to record calls, manage call scripts, track help requests and more. Through the CRM, the customer service team can get access to information about the customer’s past purchases. The sales team will also be aware of service requests the customer made.
Who Uses an ERP?
As with CRMs, a wide range of businesses use ERPs. ERP systems are very flexible and can be used for a variety of business functions associated with producing goods and getting them to your customers.
As an organization gets larger, its need for an ERP will increase. Organizations of all sizes can benefit from using an ERP, though, because of the increased efficiency and reduced costs it enables. If a company finds itself using several different kinds of software, having trouble accessing information or dealing with slow processes, it may be time for them to start using an ERP.
Within an organization, the people who will use an ERP are typically those who focus on producing and distributing your company’s products. ERP users are internal and supplier-facing, rather than customer-facing. Some examples of people within a company who might use an ERP include:
- Accountants: Accountants are one of the main users of ERPs. They can use the ERP to keep track of customer orders, payments received, goods purchased by the company and other transactions. Having easy access to this information through an ERP increases financial transparency.
- Factory managers: Factory managers, who oversee factory operations, might us an ERP to keep track of staff training needs, standardized procedures and production needs. They can use this information to allocate tasks to workers and analyze trends to make efficiency improvements.
- Production schedulers: Production schedulers may use an ERP to keep track of inventory and customer orders to ensure that all orders are fulfilled on time. They can also use it to generate reports and find ways to make production more efficient.
- Buyers: Buyers may use an ERP to track inventory of goods or raw materials as well as orders with suppliers. This enables them to ensure that the business has the supplies it needs at all times.
Which Is Right for My Business?
It’s important to remember that ERP and CRM software do have some things in common. They accomplish similar goals but get there in different ways. An ERP reduces costs, while a CRM boosts sales. An ERP focuses on internal operations, while a CRM focuses on the customer. Some ERPs also have a CRM component. However, the CRM capabilities in an ERP will be less advanced than those of a stand-alone CRM. The sales and marketing features likely won’t be as extensive, and it likely won’t have functions such as call center, customer service and social media management.
- What are your goals? What are you hoping to accomplish with this new software? If your goal is to increase sales and improve customer satisfaction, using a CRM is the most direct approach. If you want to reduce your manufacturing costs, you may need an ERP.
- What are your pain points? Perhaps, you’re hoping to solve a specific problem by introducing an ERP or CRM. Consider the issues your business is facing and whether those issues are focused on sales, marketing, manufacturing, distribution or some other area. Then, choose the system that focuses on that area.
- How large is your business? The size of your business is another important factor. Large enterprises have more data and more complex systems, so they likely need both a comprehensive ERP and CRM. ERPs help to streamline complex processes and reduce costs. Because large enterprises have more complex systems, they can get more benefit from an ERP than a smaller business would. A CRM, however, is focused on growing the business, so any business looking to expand can benefit.
- Are you expecting growth? Consider the current size of your business as well as its projected size in the future. If you have reason to believe your company will grow significantly in the near future, you may want to invest in a more comprehensive system. Keep in mind that a CRM helps you grow your customer base, so be prepared to start filling more orders.
- Are you happy with your software? Consider the software you use across different areas including sales, marketing, accounting, order fulfillment, and supply chain. If your current system is working well, you may be able to keep using it. If not, you should consider an upgrade.
- What is your software budget? Your budget also makes a difference. Think about the money you can spend on software as well as how much time and IT resources you’re willing to dedicate to it. With a larger budget, you can get a more comprehensive solution, while with a smaller one, you will have to prioritize the essential features.
Integration of CRMs and ERPs
If you are deploying separate CRM and ERP software, you need to integrate the two systems to get the most benefit out of them. One of these critical advantages of using CRMs and ERPs is that it keeps your data updated and accessible across various functions of your business. If your data can’t move between your CRM and ERP, that benefit will be diminished.
One way to ensure that the data in your ERP and CRM is consistent is to update the information in the other whenever the data in one changes. This approach, commonly called “swivel chair” data entry, is time-consuming and increases the risk of errors. You can make this task easier by using a data loader application to import and exports large amounts of data at once. However, this still isn’t the most efficient means of keeping your data updated.
The best way to ensure consistency and accuracy in your data is to integrate your CRM and ERP. Luckily, vendors know how essential integration is, so most of these systems are made with integration in mind. Some businesses use the point-to-point integration method, which involves connecting the data points in the two systems one by one. This method works but is time-consuming and requires substantial IT knowledge or help from a professional.
There are also many tools out there that enable integration. These tools can quickly connect many of the common elements of ERPs and CRMs, making integration much faster and easier. You may need to configure the system a little bit or connect some points manually, but these tools can join the majority of the points for you.
Integration provides various benefits, including:
- A better understanding of your customers: Integration helps you to get a full view of your customers by enabling easy access to their data across all functions of your business. This improved understanding of your customers helps you to understand them better so that you can better meet their needs.
- Improved cross-department collaboration: With integrated systems and consistent data, all of the departments within an organization are on the same page and can work together more effectively.
- Faster access to data: When all of your data is in one system, you don’t have to switch back and forth between systems or contact another department to get the information you need. This speeds up your processes and helps you fulfill customer requests faster.
- More efficient data entry: If you have two separate systems for your customer-facing and internal processes, you may end up entering data twice — once in each system. With an integrated approach, you only need to input it once, and staff across your entire business can see updates as well.
The Most Adopted CRM Among SMBs
Pipeline CRM is a CRM that is easily adoptable, approachable, affordable and geared toward small-to-medium businesses (SMBs). It features a user-friendly interface, and your sales team will be able to learn how to use it quickly even if they have no prior experience with CRMs. Pipelines CRM is the most adopted CRM among SMBs with an 83 percent adoption rate, according to business solutions review site G2 Crowd.
The Pipeline CRM Customer Success team will also work with you on adoption, plus you get access to free customer service via phone, chat and email. Our system is affordable at a low cost and easily integrates with other tools such as Gmail, Excel and Mailchimp.