Differences between CRM and ERP that every company

What is a CRM?

A customer relationship management system acts as a repository for customer data , storing names, phone numbers, email addresses, mailing information, and other valuable information. It is also capable of keeping a record of your interaction with customers.

For example, if someone sends an email to customer support, their message will automatically be added to the CRM. You can even manually enter information 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 who interact with your business, specifically potential and existing customers, and to monitor each interaction. As a result, you will have a better understanding of their expectations and interests, allowing you to establish a connection, build trust, and develop effective marketing campaigns.

Additionally, this system can help you determine the best time to reach out to potential and existing customers, as it allows you to see where potential customers are in the sales funnel. This allows you to automate marketing emails and messages so that they reach the right people at the right time.

A CRM can also make it easier to anticipate customer requirements and ensure that you stay one step ahead and meet their needs.

Plus, it can be easily shared, so every sales rep knows how to communicate with customers based on past interactions. When new information is received, it will be available to everyone who has access to the CRM.

What is an ERP?

An enterprise resource planning software allows you to manage different business processes in one centralized location, making it easier to streamline and simplify daily operations. This allows departments to communicate with each other in real-time.

So, instead of having multiple systems for each of the above processes, you can bring your data together 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 between teams and remove barriers that can delay decision-making. Plus, having one software solution for different operations can standardize work processes and increase operational efficiency.

Enterprise resource planning software not only ensures effective management of day-to-day operations, but also provides valuable insights into the health of your business with analytics tools. With the ability to create data-driven predictions, you can make informed business decisions and position your company for success.

Ultimately, an integrated ERP system aims to increase efficiency and productivity by making it easier to manage 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 do not. You should also consider your goals when looking for an enterprise resource planning solution.

What is the difference between CRM and ERP?

Now that you know what an ERP and a CRM are, you may be wondering what the differences are between the two systems.

Much like a CRM, an ERP acts as a repository of information, storing data from different departments in your business. However, while a CRM can help you manage your interactions with customers, an ERP system can do that and much more. As mentioned, not all enterprise resource management software will have a CRM module.

The purpose of each system is also different. CRMs are primarily used by sales and marketing teams who want to monitor customer communications, automate transactions across multiple touchpoints, and convert leads into customers. ERPs, on the other hand, are used by various departments to minimize organizational inefficiencies, improve the way resources are managed, and reduce costs.

In many cases, an ERP is considered a solution for back-office activities, while a CRM helps 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 typically customer-facing and generates the most revenue.

An ERP is also a superset of Systems, Applications and Products (SAP), 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 two programs ultimately help your organization accomplish different goals, so both are critical. Small and midsize businesses (SMBs) and large enterprises can reap the benefits of both CRM and ERP systems, especially when implemented and used correctly.

Here is an example of how ERP and CRM work together:

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

So, does your business need an ERP, CRM, or both? The answer is often based on your business needs.

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

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

As mentioned, both systems are advantageous for small, medium, and large businesses. However, smaller organizations that are not prepared to address growth may want to avoid implementing an ERP system for the time being. This is because most businesses that are just starting out need to focus on building brand awareness and generating revenue. Additionally, they often have a limited number of departments. As your business grows and your processes become more complex, it may be worth considering an ERP.

Customer relationship management systems

CRM systems can streamline communication with your prospects and customers, allowing you to improve your sales and marketing efforts. It also provides several advantages, allowing you to increase sales , customer satisfaction, and your revenue, making it essential for businesses of all sizes.

Main functions of a CRM

Contact management

Contact management tools offer in-depth insight into your interactions with customers. This feature often provides historical data on communications exchanged between customers and your business, plus purchases made. It will also collect contact details, updating this information in real time whenever changes occur.

Marketing support

A CRM is a valuable tool for marketing professionals who want to strengthen their strategies. With a CRM, you can segment contacts into different groups to create targeted campaigns.

Workflow Automation

CRM systems allow you to automate your work process, saving time and money while increasing productivity. For example, 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 the capabilities of your CRM. For example, you can integrate your existing CRM with Mailchimp to create engaging email marketing campaigns tailored to individual customers.

Analysis

Analytics offers deep insight into your customer data, giving you the insights you need to make smarter business decisions. You can see which interactions missed the mark and which were successful with analytics reports so you can improve your strategy.

Personalization

It's a good idea to invest in a customizable system when looking for a CRM. This way, you can modify the application and make sure it fits your needs.

Advantages of CRM system

Some of the advantages of using CRM software are:

Offer better customer service

By giving your team access to customer data, sales reps will know everything they need to know about a customer before starting a conversation. Your customer success 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 each transaction and ensure it exceeds expectations.

Connect with qualified leads

Potential customers are often interested in your products, but may not be ready to complete their purchase. With a CRM, you can identify potential customers and reach out at the right time based on where they are in the buying process.

Improve your sales process

A CRM gives you an overview of the buyer’s journey, allowing you to know where consumers are in the sales process. This way, you can identify the best touchpoints to move them to the next step in the funnel and land the sale. By looking at your sales process, you may realize that some paths require you to send more emails to be effective.

Increase productivity

Instead of manually emailing potential customers when they sign up for a demo or download documentation, you can automatically send these messages at the best possible time. This frees up your time and encourages you to devote time and energy to other essential business activities.

Increase Customer Lifetime Value (CLV)

CLV is a metric that indicates the profit a business is expected to make from a customer, as long as the relationship is intact. When you use a CRM to foster relationships with existing customers, in order to continue building trust and providing valuable content, you can strengthen your bond with them. This can be beneficial in creating long-lasting connections and retaining more customers.

Standardize work processes

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

Enterprise Resource Planning Systems

Human resource planning 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 intelligently and ensuring your business runs efficiently.

Main functions of an ERP

Integration

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

Human Resources

With an ERP, you can manage your HR processes, such as hiring, onboarding, and time tracking. As with other ERP components, the HR module can save time, increase efficiency, and reduce errors.

Tracking and visibility

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

Financial management

It's essential to ensure that your company's finances are in good shape. An ERP can help you monitor your financial information, which can be extremely beneficial for businesses with multiple streams of income and expenses.

Analysis and reports

An ERP automatically analyzes and aggregates data to create customized reports for your organization. Data is collected from multiple sources, giving you in-depth insights across different departments.

Sales and marketing

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

Automation

ERPs can automate different tasks such as invoicing, reporting, and workforce management. As such, you can reduce the time you spend on tedious and repetitive tasks, and focus your efforts on other things. This feature can also minimize the risk and human errors caused by manual data entry.

Advantages of ERP software

These are some of the most important benefits of ERP systems:

Effective resource management

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

Better scalability

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

Minimizing errors

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

Improving customer satisfaction

Like a CRM, a resource planning system can help improve customer satisfaction. With one integrated system, you can quickly answer questions and respond to concerns. Some ERPs will have a CRM component, so you won't have to invest in two different systems.

Getting real-time updates

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

Easier collaboration and communication

An ERP system can be used by multiple departments, making collaboration between team members easier as up-to-date information is consolidated in one place. Even if employees aren't working directly with each other, this type of software provides transparency.

Data protection

On-premise and cloud-based ERP systems often have advanced security features that prevent data from falling into the wrong hands. Some security measures that ERPs have adopted include automatic backups, data encryption, and malware protection. Plus, instead of storing information on multiple systems or keeping paper documents, your data is collected in one system, reducing the risk of misuse or information loss.

Optimizing customer service

When it comes to the CRM vs ERP debate, there is no clear winner. CRMs and ERPs are primarily used for different reasons, even though their functions slightly overlap. Both systems have clear advantages that are beneficial to your business and are essential for all organizations. Ultimately, which system you use will depend on your overall goals.

If you're looking for CRM software for your business, our web-based app is comprehensive, easy to use, and secure. With Mailchimp CRM , you can get a holistic view of your audience, organize contacts, and get extensive reporting in one simple, yet in-depth dashboard. Plus, you can use our advanced marketing tools to create targeted campaigns and improve customer relationships.