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CRM vs ERP: What Businesses Should Know

How do you choose between CRM and ERP software? Learn the ins and outs of these two business process systems to know which better fits your needs.

A customer relationship management (CRM) system can help you manage customer relationships. On the other hand, an enterprise resource planning (ERP) system allows you to manage various aspects of your business, such as company finances and the customer journey, in a centralized place.

Despite their different purposes, ERP and CRM systems aim to boost efficiency, streamline operations, automate workflows, and increase your bottom line. Both systems also store valuable data that can enable you to create effective marketing campaigns and make informed decisions.

So, which one should you implement in your business? We’ll cover the main differences and the benefits of each type of software below to help you.

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What is CRM?

A customer relationship management system acts as a repository for customer data, storing names, phone numbers, email addresses, mailing information, and other valuable details. It’s also able to keep a record of your interaction with clients.

For example, if someone emails customer support, their message will automatically be added to the CRM. You can even input information manually into a CRM, which is useful for adding guests you meet at trade shows and other in-person events.

The purpose of a CRM is to provide an overview of your relationship with those engaging with your business, specifically prospects, and customers, and monitor every interaction. As a result, you gain a deeper understanding of their expectations and interests, allowing you to establish a connection, build trust, and craft effective marketing campaigns.

Moreover, this system can help you determine the most appropriate time to reach out to leads and clients since it lets you see where prospects are in the sales funnel. This enables you to automate emails and marketing messages so that they reach the right people at just the right moment.

A CRM can also make it easier to anticipate customer requirements, ensuring you stay one step ahead and cater to their needs.

Plus, it can be shared easily, so every sales representative knows how to communicate with customers based on prior interactions. When new information is received, it’ll be available to everyone who can access the CRM.

What is ERP?

Enterprise resource planning software allows you to manage different business processes in a central location, making it easy to streamline and simplify daily operations. This enables departments to communicate with each other in real-time.

So, instead of having multiple systems for each of the processes above, you can assemble your data and provide a single source of truth. This makes working with stakeholders and other departments easier since information is readily available. You can also reduce friction among teams and eliminate barriers that may delay decision-making. Additionally, having 1 software solution for different operations can standardize workflows and increase operational efficiency.

Not only does ERP software ensure you can effectively manage day-to-day operations, but it also provides valuable insights into the health of your business with analytics tools. With the ability to create data-driven forecasts, you can make informed business decisions and position your company for success.

Ultimately, an integrated ERP system aims to boost efficiency and productivity by facilitating the management of organizational processes.

Keep in mind that not all ERP systems are created equal. Some provide the tools to manage your employees and customers, while others don’t. Consider your goals as you search for an enterprise resource planning solution.

What’s the difference between CRM and ERP?

Now that you know the answer to “what is an ERP and CRM?”, you may wonder what sets the 2 systems apart.

Like a CRM, an ERP acts as a repository of information, saving data from different departments at your business. But while a CRM can help you manage your interactions with customers, an ERP system may do that and more. As mentioned, not all ERP software will have a CRM module.

The purpose of each system also differs. A CRM is primarily used by sales and marketing teams who want to oversee client communications, automate transactions at various touch points, and convert leads to customers. On the other hand, an ERP is used by several departments to minimize organizational inefficiencies, improve how resources are managed, and lower costs.

In many cases, an ERP is seen as a solution for back-office activities, whereas a CRM assists with front-office activities. Back office activities consist of operations (e.g., human resources, order fulfillment, and customer service) that aim to support the front office, which is often customer-facing and generates the most revenue.

An ERP is also a superset of SAP (Systems, Applications, and Products), while a CRM is a subset of SAP. This means that ERPs have the same components as SAP.

Can you use ERP and CRM systems together?

Businesses of all sizes can use ERP and CRM systems together to aggregate, manage, and organize data. The 2 programs ultimately help your organization accomplish different goals, so they’re both vital. Small and midsize businesses (SMBs) and larger corporations can take advantage of the benefits of CRM and ERP systems, especially when implemented and used correctly.

Here’s an example of how ERPs and CRMs work together:

If there’s a disruption in the supply chain that’ll cause several orders to arrive a week late, the fulfillment component of your ERP system can notify your CRM about this issue quickly. As a result, you can inform your customers, share the new delivery date, and provide a discount code for the inconvenience.

So, does your business need an ERP, CRM, or both? The answer typically relies on your company’s needs.

For example, having both systems may not be helpful if your teams don’t need to work together. While an ERP can streamline communication, boost collaboration, and close organizational gaps, it may not be necessary to implement if different departments don’t depend on each other to finalize deals or move forward with campaigns.

Moreover, say one of your company’s goals is to improve the customer journey, generate more qualified leads, and increase conversions. In this case, an advanced CRM system is what you’ll need rather than an ERP. An ERP system may also not contain the CRM features you’re looking for, and you’ll likely have to invest in a robust CRM.

As mentioned, both of these systems are advantageous for small, medium, and large businesses. However, smaller organizations that aren’t ready to tackle growth can avoid implementing an ERP for the time being. This is because most businesses that are just starting must focus on building brand awareness and generating revenue, plus they often have a limited number of departments. As your company grows and your processes become more complex, an ERP may be worth looking into.

Customer relationship management systems

CRM systems can optimize communication with your leads and customers, allowing you to enhance your sales and marketing efforts. It also provides several advantages, allowing you to increase sales, customer satisfaction, and your bottom line, making it essential for businesses of all sizes.

Key features of a CRM

Contact management

Contact management tools offer an in-depth view of your interactions with customers. This feature often provides historical data of communications exchanged between customers and your company, plus purchases made. It’ll also collect contact details, updating this information in real time whenever changes occur.

Marketing support

A CRM is a valuable tool for marketers who want to strengthen their strategies. With a CRM, you’ll be able to segment contacts into different groups to create targeted campaigns.

Workflow automation

CRM systems empower you to automate your workflow, saving you time and money while boosting productivity. For instance, you can set custom rules within your CRM to run drip marketing campaigns and automatically send abandoned cart emails, follow-up messages, and more.

Third-party integrations

Third-party integrations allow you to connect to other programs that can enhance your CRM’s capabilities. For example, you can integrate your existing CRM with Mailchimp to create compelling email marketing campaigns tailored to individual customers.

Analytics

Analytics offers an in-depth view of your customer data, giving you the necessary information to make smarter business decisions. You can see which interactions missed the mark and which were successful with analytics reports so that you can improve your strategy.

Customizability

It’s a good idea to invest in a customizable system when looking for a CRM. This way, you can modify the application and ensure it meets your needs.

CRM system benefits

Some of the benefits of using CRM software include:

Provide better customer service

By giving your team access to customer data, sales representatives will know everything they need about a client before sparking a conversation. Your client satisfaction team will also have access to relevant customer information, allowing them to see recent purchases, order numbers, and more. As a result, customer-facing departments can personalize every transaction and ensure it exceeds expectations.

Connect with qualified leads

Leads are often interested in your products but may not be ready to finalize their purchase. With a CRM, you’ll be able to identify prospects and reach out at the right time based on where they are in the buying process.

Improve your sales pipeline

A CRM provides an overview of the buyer’s journey, ensuring you know where consumers are in the sales pipeline. So you can identify the best touchpoints in order to move them to the next step in the funnel and land the sale. When looking at your pipeline, you may notice that some paths require you to send more emails to be effective.

Boost productivity

Instead of manually sending emails to potential customers when they sign up for a demo or download a white paper, you can automatically deliver these messages at the best possible moment. This frees up your time, encouraging you to allocate your time and energy to other essential business efforts.

Increase customer lifetime value (CLV)

CLV is a metric that indicates the profit a business is expected to earn from a customer as long as the relationship is intact. When you use a CRM to nurture relationships with existing clients–continuing to build trust and provide valuable content–you can strengthen your bond with them. This can be beneficial for creating long-lasting connections and retaining more customers.

Standardize workflows

Standardize business processes and unify your sales team with a CRM. Doing so ensures every customer receives the same level of service from employees representing your company. CRMs can also help standardize data collection.

Enterprise resource planning systems

ERP software is a powerful tool used to manage multiple aspects of your business, from human resources to procurement. This solution is vital for allocating resources wisely and ensuring your company runs efficiently.

Key features of an ERP

Integration

ERP systems are fully-integrated, meaning that the software gives teams access to information from different departments. Since information is aggregated in a centralized location, employees can reference a single source of truth. This makes it easier for your staff to remain on the same page.

Human resources

With an ERP, you can handle your human resources processes, such as hiring, onboarding, and timekeeping. Like other ERP components, the HR module can save time, boost efficiency, and decrease errors.

Tracking and visibility

ERPs provide greater tracking and visibility, specifically for supply chain management. By understanding how your supply chain is moving, you can be ready for delays and other issues that may arise. Moreover, you’ll receive real-time tracking updates, so you’ll always know where your inventory is.

Financial management

Making sure your company’s finances are in good standing is essential. An ERP system can help you keep an eye on your financial data, which can be extremely beneficial for businesses with multiple revenue streams and expenses.

Analysis and reporting

An ERP automatically analyzes and aggregates data to create customized reports for your organization. The data is collected from several sources, giving you an in-depth view of different departments.

Sales and marketing

ERP systems also have a sales and marketing component that lets you track your campaigns, orders, and most important metrics. Like a CRM, this module will also provide an overview of your audience to help you understand their needs and create successful marketing campaigns.

Automation

ERPs can automate different tasks, including invoicing, reporting, and payroll. As such, you can reduce time spent on tedious, repetitive duties and focus your efforts elsewhere. This feature can also minimize the risk and human errors caused by manual data entry.

ERP software benefits

Here are a few most important benefits of ERP systems:

Effective resource management

As the name suggests, an ERP enables you to effectively manage your organization’s resources, such as money, staff, and materials. This reduces the risk of allocating too many resources toward 1 project or setting aside too few resources. For example, you can stock up on your best-selling products instead of buying more inventory of products that don’t sell well based on the information gathered by the ERP.

Better scalability

ERP systems are specifically designed to grow with your organization, providing you with must-have tools that any business will need as it evolves. As a result, you can save money and avoid investing in new technologies.

Reduce errors

By leveraging the power of automation, you can reduce the likelihood of human errors that can negatively impact your business.

Improve customer satisfaction

Like a CRM, an ERP can help improve customer satisfaction. With an integrated system, answer questions and respond to concerns quickly. Some ERPs will have a CRM component, so you don’t have to invest in 2 different systems.

Obtain real-time updates

With real-time updates, you can have the latest information at your fingertips. This ensures your team always has access to accurate and relevant data.

Facilitate collaboration and communication

Multiple departments can use an ERP system, which facilitates collaboration among team members since up-to-date information is consolidated in one place. Even if employees aren’t working directly with one another, this type of software provides transparency.

Protect data

On-premise and cloud-based ERPs often have advanced security features that prevent data from falling into the wrong hands. Some security measures ERPs have included automatic backups, data encryption, and malware protection. Moreover, rather than storing information across various systems or holding on to paper documents, your data is assembled under one system, thus decreasing the risk of mishandling or losing information.

Streamline customer support

When it comes to the CRM vs. ERP debate, there’s no clear winner. CRMs and ERPs are primarily used for different reasons, even though there’s some overlap in their features. Both systems have distinct advantages that are beneficial for your business and are essential for every organization. Ultimately, the system you use depends on your overall goals.

If you’re looking for CRM software for your business, our web-based application is comprehensive, easy to use, and secure. With Mailchimp’s CRM, you can obtain a holistic view of your audience, organize contacts, and obtain extensive reports on a simple yet in-depth dashboard. Plus, you can use our advanced marketing tools to create targeted campaigns and enhance customer relationships.

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