CRM and ERP: What’s the Difference?

There’s no disputing that today’s market offers you many user friendly products that can help you manage your business a little easier.

What’s the challenge in this scenario? You may not know which product to purchase. All businesses work with budgets and chances are you may only have the money to add one tool or resource to your business this year.

When faced with this predicament common questions relate to CRM and ERP products. What’s the difference? Do you need one or both?

The first important fact: they’re not the same thing, even if vendors tell you they are. Read on to get some inside information, empowering you to make informed decisions on where to invest your funds.

What is an ERP?

Here we’re talking about an enterprise resource planning system. As the name suggest its core purpose is to help you manage business operations better. Of course business operations are found in many aspects of your business:

  • Orders and sales
  • Accounts
  • Payroll
  • Human resources

A quality ERP system will easily deploy across various departments, providing dynamic features to different employees.

An important benefit you’ll immediately enjoy after implementing it is that all your departments will have access to standardized information. A high-end system offers this data in real time. If one department notices a problem the entire spectrum of role players will receive alerts instantly.

These features enable you to become more proactive and efficient. Also, when everyone works with the same information it improves efficiency and data accuracy & will enable fast decision making.

What is a CRM?

A CRM is a customer relationship management system. You can see there’s a focus here on a very important aspect of your business: how you interact with customers.

Different role players in your business interact with your customers and a quality CRM will provide the necessary—up to date—information of any customer to whoever needs it. This happens without one party needing to ask someone else for contact details, an update on a query or the latest news on someone’s account.

The system doesn’t only store basic information about the customers, but the details about your interactions with them.

With instant access to all this information sales representatives, customer care agents and your accounting department can get work done faster. Customers also get their feedback faster than usual, resulting in more satisfied clients.

Advanced CRM systems can even assist in the following:

  • Help you with lead generation
  • Steps in planning a marketing campaign can be automated with client information being instantly accessible
  • Analysis of customer activities such as buying habits becomes easier, resulting in more effective marketing

You’ll also enjoy automation of various tasks your employees perform manually at the moment. You can save time while delivering better service than ever before.

The Differences Explained

With ERPs being active in many departments of your business it’s clear that some of their features will overlap with CRMs. To gauge which one you should invest in, let’s discuss similarities and draw clear lines between these systems.

Purpose & Functions

Your CRM is customer focused and will specifically help you improve your relationship with them. But note that this does affect multiple departments, all focused on your customers’ experience of your company:

  • Customer service
  • Marketing
  • Sales

The systems will help automate sales processes thereby saving time, speeding up your activities and meeting customer expectations faster than before.

A CRM is therefore a handy tool if you realize the lack of customer satisfaction is the main problem in not reaching your planned sales figures. Instead of restructuring your entire business this one small adjustment of implementing a CRM could bring the change you need to be successful.

In contrast an ERP can help you upgrade processes in even more parts of your business. You can become more proactive as access to information will help you notice challenges before they become problems.

You’ll have a one data base that supports all the features. Features will assist with tasks such as:

  • Costing
  • Supply chain management
  • Scheduling
  • Life cycle management of products

CRM functions such as sales, marketing, call centers and customer services may form part of an ERP’s functions too.

Effect on Your Business

It makes sense that any resource you acquire should affect your bottom line.

Your ERP helps you do this as you will invest less of your capital in managing business processes. You’ll less to cover overheads which instantly frees up cashflow for other aspects of your business.

If you use your CRM effectively you’ll notice an in crease in sales. This is thanks to close relationships with customers that make them more loyal to your brand.

Users

There are similarities in who will use the systems as both can be used by multiple role players. With an ERP an employee can enter new data while managers will use the data when making decisions. In a similar fashion the CRM’s data can be updated by sales clerks while upper management will draw on the data to create sales projections.

Which One do You Need?

You can see they’ll have different results, but that doesn’t mean you need both right now.

Smaller business can often function well without an ERP system. Your departments may by physically in close proximity to each other and employees can easily share information to the few relevant role players. Once you grow and the infrastructure becomes more complex it’s a smart move to implement an ERP.

In contrast almost any business would be wise in acquiring a CRM. Your relationships with your customers at the start of your company will determine how quickly you grow. Implementing a structured, effective way to manage client information—instead of a messy paper based system many small businesses settle for—is an investment worth making.

Should you invest in an ERP that can handle CRM functions too? Simply make sure you don’t pay for features you’ll never use.

Conclusion

There’s no question that these products can influence your productivity and even your revenue for the better. But it only happens if the system’s core functionalities relate to your needs. And yes, some businesses may need both.

Research well before you buy and then enjoy how streamlined your business becomes.