If you are looking for ways to improve and automate your business processes, you probably found two leading software solutions – enterprise resource planning (ERP) and customer relationship management (CRM.)
Both serve as vital data repositories, but there are many differences to consider when deciding which solution will best suit your needs.
In this article, we'll cover the core features and benefits of ERP and CRM and how they differ so you can make an informed decision to help your business run smoothly, improve customer relationships, and close more deals.
What Exactly are ERP and CRM?
Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) both emphasize the planning of business resources to increase their efficiency, effectiveness, and economy.
But, each platform focuses on different areas.
What is ERP?
ERP acts as a centralized system to streamline all processes and information flow within an entire organization. Its applications are web-based and can be accessed through any interface, making up-to-date information available to all company divisions at any time.
According to the 2020 ERP Report, 95 percent of companies found implementing ERP systems improved their business processes.
But what exactly are the improvements you can expect? Let’s talk about the benefits of ERP so you can better understand how it can help you.
Enhanced Business Reporting and Planning
All the essential real-time data consolidated into one place gives you a clear overview of the whole business. As a result, you can create custom, always up-to-date reports that allow you to make better decisions and plan your activities accordingly. No more guessing, but a data-driven business.
ERP software will be simply responsible for monitoring the growth of the whole organization.
Cost-Effectiveness
Because ERP connects different technologies used by each part of a company, it helps eliminate costly duplicates and incompatible technology. Since you have all the actual data in front of you in real-time, you can control if money is not flowing in the wrong direction and optimize costs.
Improved Coordination and Productivity
ERP applications allow different departments to communicate and share information more easily within the company. That leads to improved internal communication, lighter mailboxes, and even fewer meetings. As a result, coordination improves, and the team's productivity rises.
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Better Data Security
The number of reported attacks by cybercriminals in recent years has rapidly increased. However, ERP is a great way to protect sensitive data from getting into the wrong hands. ERP systems emphasize data security, providing multiple layers of overlapping security technologies.
Of course, there might be differences between various solutions. So, when choosing ERP software, pay attention to its data security measures to ensure your data is protected at the highest level.
Improved Data Quality
Having correct quality data is vital. After all, an ERP system can be only as good as the data flowing through it. Unfortunately, there is ample room for mistakes in duplicate entries, forgotten fields, invalid e-mail addresses, and incorrect addresses.
However, even though the human hand is necessary at this stage, the ERP system will notify you about missing fields, incorrect addresses, and other possible errors when uploading the data.
What is CRM?
A CRM consolidates all communication streams (calls, e-mails, text messages, chats, and meetings), documents, purchases, quotes, and tasks associated with each contact. The data is constantly updating automatically as your leads and customers take action.
That’s possible thanks to integrations with other software, such as e-mailing systems, social media platforms, phone systems, and much more. For example, one of the most well-known CRM software, HubSpot, offers hundreds of integrations. As a result, your entire team always has all the client's data by hand to close a sale or deliver outstanding service.
The fact that 91 percent of companies with ten or more employees use a CRM system showcases its importance for business success.
Let's discuss the benefits of CRM further so you can see how it could help your business as well.
Proactive Customer Service
CRM enables you to make the first move to help your customers before they even feel they need to reach you. For example, you can notify your client through an email that it’s time to put their device into service because it’s been a certain time since they bought it. Or you can craft personalized offers based on their past purchases.
CRMS makes it possible to reach out to customers through the proper channels and give them the relevant information in a brief manner.
Proactive customer service plays an essential role in increasing customer retention as well as customer delight.
Simplified Collaboration
As you can collect, organize, and share customer information across the whole company, your teams' collaboration improves. No more data will be lost in various spreadsheets, e-mail attachments, or group chat conversations. With suitable shared inbox software within a CRM, everyone can access the centralized source of all data at any time.
Centralized Database of Information
Whether the client reached out to you on the phone, e-mail, social media, or another platform, you have all the information about previous communications with the company. Your customer support team doesn't have to ask for the order number, the client's previous requests, or any information they provided last time they called. That improves your customer's experience and increases your team's productivity.
Improves Customer Retention
A centralized database gives your customer support team a solid tool to surpass your clients' expectations and deliver high-class service. Statistics show that 77% of consumers say good customer service is critical to earning brand loyalty and generating business. So, make sure you don’t fall behind your competition and earn your customers' loyalty.
ERP vs. CRM: How Do They Differ?
The core difference between a CRM and an ERP is their purpose. CRM platforms manage the organization's relationships with potential and current clients, while ERP manages the entire organization's business processes. Sometimes, people refer to an ERP as a back office and CRM as a front office. However, some ERP software also includes a CRM system.
If you decide between these two solutions, there are key differences.
CRMs Focus on Increasing Sales, while ERPs Focus on Reducing Costs
CRM makes your sales team well-equipped to close as many sales as possible, and your customer support team delivers an experience that creates loyalty to your brand. It allows you to give personalized offers that are hard to resist and make your customers buy repeatedly.
On the other hand, ERP is focused on optimizing processes within the company and reducing unnecessary costs. Some of the features might increase sales, but that’s not the aim of the solution.
CRMs Focus on External Processes: Customer Service and Sales, ERP Mainly Focuses on Internal Processes and Management
CRM helps you better manage all the communication streams outside of the company. It also improves your internal processes, as it holds all the data about your customers and leads in one place, making it easy for your team to collaborate and share information. However, the goal is to enhance external communication.
Meanwhile, ERP focuses on internal processes and management to optimize your business, reduce unnecessary costs, and make better decisions and planning. It captures all important departments' activities in one place, so you always have up-to-date data to manage the company most efficiently.
ERPs Consolidate Data from Multiple Tools, Including CRM
ERP is termed the superset of SAP (System Analysis Program Development), while CRM is a subset of SAP. ERP consolidates data from customer relationship management, human resources management, network and consumption management, supply chain management, finance, and other areas. It’s a place where all company data, including customer information, should be stored.
The data uploaded to ERP can be automated thanks to many possible integrations.
ERP vs. CRM: Comparison Table
ERP vs. CRM: Which is Better for Your Business?
Unfortunately, there is no simple answer to this question. Each solution is focused on different areas and will help you improve the business in different ways. Both are important; if your company is growing, you will probably need them both.
If you have more than 100 contacts in your database, you can not effectively manage them without a CRM system. And if your company is so big that you can not personally oversee all the activities, ERP is incredibly helpful. Integrating your CRM and ERP will provide a powerful tool to optimize internal processes and external communication so your business can thrive.
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