Happy customers are the key to your company’s success.
That's why companies are always looking for new ways to improve customer relationships.
And it’s technology that can actually help you do that! The question is – which one?
In your search for the perfect tech solution, you might have come across the terms "ERP" and "CRM", and weren’t sure which one would best help you build a better customer experience.
That’s perfectly understandable. People often get the two terms confused.
In this article, we’ll try to clear that up for you by:
- Defining ERP and CRM,
- Explaining the differences between the two,
- Giving you a few pointers on which to choose.
Definitions of CRM and ERP
CRM stands for "Customer Relationship Management."
CRM platforms help businesses manage their customer interactions and data.
ERP, on the other hand, stands for "Enterprise Resource Planning."
ERP software is designed to help businesses manage their back-end operations, such as accounting, finance, HR, and inventory.
The key differences between CRM and ERP
People often lump CRM and ERP together.
Although both ERP and CRM systems are important for businesses, they are different in function and purpose.
✔️ CRM is focused on customers, while ERP is focused on resources.
As its name suggests, CRM is all about the customer.
Every aspect of the system is designed to help businesses manage their customer relationships more effectively.
ERP, on the other hand, is focused on resources rather than customers.
While it does include some features for managing customer interactions (such as quotes and invoicing), its primary focus is on helping businesses manage their internal resources more effectively.
This includes things like inventory management, production planning, financial accounting, and HR management.
✔️ CRM is sales-oriented, while ERP is finance-oriented.
Another key difference between CRM and ERP lies in their orientation.
CRM systems are designed with sales in mind – they’re meant to help businesses close more deals and increase revenue.
All these features are geared towards helping sales teams achieve their goals more efficiently and effectively.
ERP systems, on the other hand, are finance oriented.
They’re designed to help businesses automate their financial processes and improve back-office efficiency.
This includes things like:
- Accounts receivable/accounts
- Payable management
- Financial forecasting and reporting
- Budgeting and cost control
✔️ CRM is proactive, while ERP is reactive.
CRM systems help companies take a proactive approach to their customer relationships.
You can use the CRM to proactively acquire new customers, retain existing customers and improve customer communication.
ERP systems, on the other hand, are reactive.
An EPR system automates and manages back-office activities, such as accounting, purchasing, pricing, transactions, and reports.
There’s nothing in an ERP system that helps you actively build better customer relationships.
And when we talk about building better customer relationships, it isn’t about choosing one or the other.
You need both!
Why integrating your CRM and ERP systems is a good idea
Integrating both systems offers you huge potential to improve business success.
For example, although you keep most of your customer data in your CRM solution, you store your financial data, together with some customer information, in your ERP system.
This means that your organization not only works with two sets of data, but spends time updating customer data in both systems.
Working this way impacts your results. That’s why we don’t recommend this way of working.
Here are the 4 main reasons why you should consider integrating the two systems:
1. Increased sales revenue
ERP and CRM integration gives companies the ability to upsell and cross-sell products and services more effectively.
By understanding what products or services a customer has purchased in the past, businesses can make targeted, and personalized recommendations that are more likely to result in a sale.
In addition, you can use data from both systems to identify trends and patterns that can be used to generate new sales opportunities.
For example, if you notice that a particular type of customer is purchasing a certain product more often than others, you can create targeted marketing campaigns specifically for that group.
2. Improved customer service
When your ERP and CRM systems are integrated, your customer service team will have a 360-degree view of each customer.
This means they will be able to see every interaction the customer has had with your company, including past purchases and number of orders. Having this information readily available helps your team resolve issues faster and provide better customer service.
3. Better decision-making
Integrating ERP and CRM can also help businesses make better decisions by giving them access to real-time data analytics.
When a business's core operations are integrated into one system, it becomes easier to track key performance indicators (KPIs) and identify trends. This information can then be used to inform strategic decisions about where to allocate resources or how to improve processes.
For example, let's say that you own a clothing store. You might use your ERP system to track inventory levels, while your CRM system tracks customer purchase histories.
By integrating these two systems you would be able to obtain valuable insights, such as which items are selling quickly, or which customers tend to buy certain items together. You can use this information to make decisions about restocking inventory or developing new product lines.
Without access to real-time data analytics, decision-makers often must rely on gut instinct or guesswork when making strategic decisions.
4. Enhanced collaboration
One of the biggest benefits of integrating your ERP and CRM systems is that you get a single source of truth for all your customer data. In one place, you have access to all your customer data – including contact information, purchase history, support tickets, and more.
This single source of truth for your customer and financial data ensures that everyone in your organization is working with the same up-to-date information.
When information is shared between departments in real-time, everyone can work together more effectively towards common goals – improving customer relationships.
It takes two to succeed
We believe an integration between the two systems is essential for any business that wants to succeed in today’s competitive marketplace.
The ERP and CRM integration provides numerous benefits for businesses, including increased sales, improved customer retention, enhanced decision-making, and more.
You can’t afford to waste time on silos or manual ways of working.
If you want to provide the best possible experience for your customers, ERP and CRM integration is the way to go.