Comparing CRM and ERP: Understanding the Differences

Customer relationship management(CRM) and Enterprise Resource Planning(ERP) are similar in many ways but have different core functionalities. Both are important for business solutions which increase revenue, automation and productivity. In this article, we will learn more about the differences.

What is CRM?

CRM at its simplest is processes and systems for managing an organization's interactions with potential and current customers. When we talk about CRM we usually are talking about CRM applications like Salesforceand Microsoft Dynamics CRM. CRM applications are used to automate, organize sales, customer service and marketing.

CRM applications have developed to connect all areas of the customer experience, keeping the customer happy and in turn keeping them loyal and more valuable to your business. It is the process of identifying potential leads/prospects, guiding them through the sales process to close the business. Once they are a customer it is ensuring that you maintain that relationship and encourage repeat business either more higher value or frequent orders.

What is ERP?

Where CRM manages the customer, ERP is used to manage the business. Your company's business processes can improve with the ERP system. Like CRM, ERP allows for the continuous sharing of valuable information throughout all departments. Employees all enter information into the ERP system, creating real-time information. It will create automatic alerts in other departments if problems in any department are found. This allows departments to begin planning for issues before they become a problem in that department.

In short, ERP is efficient in delivering business processes by allowing the business to focus on the data, instead of the operations. Some of the known ERP vendors like Epicor, SAP, and Microsoft use applications with ERP and CRM integration.

What is the Difference?

ERP and CRM systems use different approaches to increase revenue. ERP focuses on cutting costs and reducing overheads. ERP will reduce the amount of capital spent on the processes by making business processes more efficient. CRM works to increase profits by producing increased sales volume.

Different Approaches to Business Process

Both CRM and ERP systems improve efficiencies in business processes. But business processes become more efficient by reducing cost and when implementing ERP systems. Both solutions offer central repositories for customer data.

A CRM system works best as a facilitator of higher sales volume and as an improvement in customer interactions. Regardless of business size, deploying a CRM or an ERP system is better than searching for customer data via email chains, handwritten notes, and instant chats.

Since every company needs to optimize customer relations, a CRM helps to ensure customers are satisfied and loyal. With an ERP system, every department can understand the workflow with other departments.

Executives can also get a real-time overview of what is happening in every department. This is highly critical for growing companies and companies who want to scale.

What Are Common Functions of ERP?

• Human Capital Management
• Financial Management
• Supply Chain Management
• Customer Relationship Management
• Inventory Management

What Are Common Functions of CRM?

• What Are Common Functions of CRM?
• Client Interaction Tracking
• Contact Management
• Database Management
• Lead Management
• Marketing and Campaign Management

Should I select CRM or ERP?

This answer depends on two factors: what are your current business needs and IT capacity, and what are your requirements in the future?

If you are looking to streamline all your processes and replace existing applications, an ERP system might be the solution for you. On the other hand, if you need to handle customer management and marketing, a CRM system is probably your best bet.

For example, many CRM systems enable sales reps to use real time data to personalize customer interactions. This allows for customer experience transformation.

If neither of these scenarios describes your company, and you’re considering overhauling your entire IT landscape, then you may need both ERP and CRM software with an integration between the two.

How ERP and CRM can transform the Customer Experience?

Our clients often focus their process improvement efforts on the customer experience. We work with them to assess their current state and determine what is working and what isn’t.

Following are some opportunities for customer experience transformation we’ve found in several organizations.

• Using advanced analytics capabilities to enhance customer intelligence.
• Leveraging new technology (mobile, eCommerce, etc.) to enhance sales.
• Integrating customer touch points into a seamless experience.
• Automating processes to allow workers to focus on innovation and creativity rather than repetitive efforts.
• Using real-time data to improve performance management.
• Augmenting physical products/services with digital products/services to share content across organizational silos.

How CRM helps companies during the recession?

While the 2008 recession seems like a strange time to invest in expensive technology, CRM software actually helped many companies weather the storm during this time.

For instance, we were working with a company at the time that was really feeling the recession because their business was directly correlated to the health of the housing and construction industry.

In late 2008, they were planning on selecting and deploying an ERP system, but due to their drop-off in revenue, they determined that their greatest and most immediate need was a CRM system. They chose this path because they projected that CRM would help them sell more effectively and stop some of the hemorrhaging of revenues.

To save money, they decided to look at SaaS CRM systems. This allowed them to deploy CRM at a lower initial cost with a strong return on investment.

How does this apply to companies today? Well, maybe your company is struggling with revenue with COVID 19 pandemic lockdown 2020. If this is you, we are here to tell you that it is not completely crazy to implement a CRM or ERP system during this time. These systems can be an effective way to weather the storm and better position your company for long-term growth.

Conclusion:-

As you can see, companies need both an ERP and CRM system to optimize revenue. Our team can help you to identify which system is the right fit for your business. Check out our CRM and ERP Portfolio.

Frequently asked questions:-

1.) What does the CRM system do?

A CRM system helps manage customer data, sales management, delivers actionable insights, integrates with social media and facilitates team communication.

2.) What are the top 5 CRM systems?

Some of the popular CRM systems are Pipeliner, Zoho CRM, Salesforce desk, Monday.com, and Freshdesk.

3.) Why is CRM needed?

CRM is an essential tool for lead generation because it frequently deals with past customer data such as previous marketing campaigns, purchases and service satisfaction.

4.) How much does a CRM system cost?

CRM system costs start from around $12 per user, per month for small businesses. More advanced packages for larger organisations range from $50 to $150 per user, per month, while the most expensive CRM systems charge up to $300 per user, per month.

5.) How much does an ERP system cost?

Small and medium size companies can consider costs ranging from $150,000 to $750,000. The cost of ERP includes the costs of software, hardware, maintenance, training, data conversing and reengineering.