Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) are the two key business operations for every company. But provided the similarities between the two, most businesses have a hard time understanding how they differ in terms of functionality and value.
In this post, you’ll learn the benefits, differences, and similarities between CRM and ERP software.
Similarities Between CRM and ERP
At the core, both CRM and ERP solutions help reduce overhead costs and increase operational efficiency. Both systems automate recurring, time-consuming processes that may exhaust your organizational resources.
Both ERP and CRM systems utilize data input to help you make informed decisions. They tie all the front-end and back-end company procedures together, thereby allowing everyone to stay organized and productive.
Differences Between CRM and ERP
CRM stands for customer relationship management, whereas ERP stands for enterprise resource planning. Clearly, CRM focuses on the customer’s side of things, and ERP focuses on the enterprise or company’s side of things.
Hence, the best CRM software helps you manage the front-end – sales, marketing, customer service, whereas the best ERP software assists you in managing the back-end – HR, accounting, reports & analytics, etc.
Let’s look at some key disparities between CRM and ERP solutions.
- Type of Data: A CRM system handles front-office customer data that helps you streamline your sales, marketing, and customer service operations. An ERP solution, on the other hand, focuses on back-end information, such as accounting and operational data.
- Type of Operations: The best CRM software assists you in managing customers, contacts, sales opportunities, appointments, support activities, and marketing. The best ERP software helps you manage operations like invoicing, payables, accounting, manufacturing, HR, and inventory.
- Type of Objectives: CRM and ERP systems differ in terms of goals they help you achieve. A CRM system enables you to generate leads and sales, drive revenue, manage customer relationships, retain customers, and leverage cross-selling and up-selling opportunities. An ERP solution allows you to optimize production, reduce costs, and automate admin tasks like reporting and accounting.
- Types of Integrations: CRM software integrates with sales, marketing, and customer service tools like MailChimp, Buffer, and HootSuite. ERP software integrates with operational tools, such as QuickBooks, Zoho Inventory, and BambooHR.
- Types of Users: The primary user group of CRM software includes sales, marketing, support, and service teams. On the other hand, the main users of ERP software are accounting, HR, and warehouse teams.
Benefits of Customer Relationship Management Software
A CRM solution can go a long way in increasing leads, generating more revenue, nurturing better relationships with your customers. Let’s look at some key advantages of using a CRM system.
1. Better Understanding of Customers
CRM software helps you collect detailed insights about your customers. This goes beyond the name, address, and email, and telephone information. You can determine how your customers use the internet – the businesses they interact with, products they purchase, and the type of content they consume.
With this information, you can better understand your customers and provide them with better, more personalized experiences.
2. Improved Segmentation
Segmentation and targeting are the key objectives of an effective marketing strategy. To improve sales and revenue, you need to reach the right audience. Here’s where a CRM system excels.
The best CRM software breaks down and divides customer data based on numerous criteria and categories. You can then use these segmented lists to enable laser-targeted marketing and advertising.
3. Increased Customer Retention
An Invesp report stated that increasing your customer retention rates by 5% can increase your profits by up to 95%. Hence, most companies have lately been focusing on retaining customers. While customer acquisition is crucial, overlooking customer retention can hurt your business.
A CRM system makes customer retention easy. It helps you understand and engage your customers, making them feel that they’re not being neglected. And when you identify and engage your customers, you have a better chance of retaining them.
4. Seamless Communication
How many channels do you use to interact with your customers? Email? Social media? Helpdesk? What if you could integrate all of them?
The best CRM software helps you do the same. It consolidates all customer communication channels, helping you ensure speedy communication with your customers.
5. Improved Data Privacy
Over the years, businesses have had a hard time protecting themselves against cyber attackers and security threats. When customers share their information with you, they expect you to protect it. With a CRM system in place, you can keep customer data safe from theft and cyber attacks.
Benefits of Enterprise Resource Planning Software
ERP software is an essential asset for organizations, especially those with multiple departments. Here’s how an ERP system can add value to your business.
1. Reduced Expenses
Increasing overhead costs is one of the biggest challenges faced by growing organizations. As the company grows, the workforce and company area expands, resulting in higher operational expenses.
The best ERP software centralizes all business operations in one place. This enables you to better oversee everything and identify unnecessary costs.
2. Increased Transparency
In large-scale organizations, getting visibility into all procedures can be challenging. An ERP system resolves this hurdle. It integrates all business processes, allowing you to gain insights into them from a single dashboard.
3. Improved Planning
In-depth reporting and planning is another key benefit of ERP systems. These solutions create visually enticing reports that help you determine and compare the performance and efficiency across all departments.
4. Enhanced Collaboration
An ERP solution brings all teams and departments together. It integrates all workflows, resulting in improved collaboration and communication.
5. Improved Efficiency
Reduced expenses, improved planning, and increased collaboration all lead to enhanced productivity and more efficient operations. In the end, the best ERP software impacts the bottom line by improving your company’s operational efficiency.
Conclusion: Which One to Choose?
If you’re a startup or small business looking to drive revenue and increase profits, starting with the best CRM software will be the ideal choice. But as your business will grow, you’ll need an ERP system to make your operations transparent and efficient. You can also invest in integrated ERP-CRM solutions to get the features and benefits of both solutions.
