Difference between CRM and ERP, what is best for your business?

How CRM and ERP help businesses

Many times companies knock on our door asking what is the difference between CRM and ERP, and what is best for their business? Often there is no clear understanding of their functionality and where one ends and the other begins. In this post we want you to know the main differences between one and the other.

A CRM refers to Customer Relationship Management [Customer Relationship Management] would be like the front office of the company. Discover a CRM Software.

An ERP to Enterprise Resource Planning [Enterprise Resource Planning] in this case we would consider the back office of the company. Discover an ERP Software.

Both CRM and ERP are two business management software that help companies improve their business operations and customer management. Both provide a complete view of the business from the inside (internal management of the company) and from the outside (customer management).

Difference between CRM and ERP as if the company were the human body

ERP is like the body's central nervous system, which controls and coordinates all bodily functions, from breathing to muscle movement. ERP handles enterprise resource management, including inventory management, shipping logistics, production planning, financial management, and human resource management. What is an ERP?

On the other hand, CRM would be like the senses of the human body, which allow the body to perceive and respond to its environment. CRM is in charge of customer relationship management, gathering information about customers. Such as their references and needs, and using it to personalize service and improve customer satisfaction.

Main differences between CRM and ERP

Although we have already defined the concepts a bit, let's now define the difference between CRM and ERP, knowing that both are complementary business tools in an organization. Although there are key differences between the two solutions:

Different main function.

The main function of a CRM is to manage and improve the relationship with customers, while an ERP is a management system that focuses on the internal management of business resources.

Data collected in each solution

A CRM focuses on collecting and managing data about customers, such as their purchase history, preferences and needs. On the other hand, an ERP focuses on collecting and managing data about business resources, such as inventory, production and financial management.

Departments it affects in a company

A CRM is generally used by the sales, marketing and customer service teams. While an ERP is used by human resources, logistics, production, finance and other internal departments of the company.

Processes it influences in an organization

A CRM focuses on tracking the sales process, from a lead to a customer, also considering business opportunities if necessary. While ERP focuses on internal business processes, such as inventory management or production planning.

Benefits of CRM

To understand the differences between crm and erp, it is necessary to know the benefits of CRM. The main benefit of CRM for the organization is to keep track of the situation of customers, and to create objectives and strategies to obtain or retain customers.

The main benefits of CRM are

1.- Improvement of the relationship with customers.

A CRM helps companies to know their customers better, allowing them to personalize interactions with them and improve customer satisfaction. Establishing not only professional but also personal links. Since it serves to note certain aspects of their way of life and / or habits, which can help create a greater connection with each customer.

2.- Improving sales efficiency with your CRM

By automating many of the manual sales and marketing tasks, a CRM helps companies save time and resources, allowing them to focus on more important activities.

For example: there are CRMs that allow you to record the activity of a potential customer via voice and then transcribe it into the software [which reduces the tedious task of typing it by the salesperson], or you can generate segments of customers with affinities for marketing campaigns.

Increased collaboration between departments

When customer-facing departments such as sales, marketing and customer service have the same software, the customer-facing vision is unified. Providing greater strength to the customer in the sales and after-sales process.

Benefits of ERP

A company that has an ERP in its organization uses it to manage and coordinate all the activities and processes of a company. From resource planning to financial and human resources management. Hence the difference between crm and erp.

The benefits that an ERP brings to an entity are:

1.- Process integration

With a management software, all the processes of the company can be integrated into a single system. This facilitates the exchange of information between different departments and eliminates the need to use several applications and systems. It is also important to choose a software that allows the connection with other software so that the information is centralized in a single software.

2.- Greater operational efficiency with ERP

An ERP helps to automate and optimize business processes, allowing companies to operate more efficiently and effectively. In many companies the ERP allows to improve the processes that up to that moment have been carried out in the same way due to ignorance or fear of change. These systems provide a more global and complete vision, helping companies to improve their processes.

3.- Improves visibility and business control

An ERP provides a complete and real-time view of all aspects of the company, allowing better decision making and greater control over operations. This avoids duplication of tasks or resources in different areas and provides a single view of the company.

4.- Cost reduction with ERP

By automating processes and reducing the need for manpower, an ERP can help reduce a company's operating costs. And also to know which areas bring more value to the business, focusing efforts on those that can still be improved. It also reduces costs associated with paperwork, manual processes and the maintenance of several different systems.

5.- Improved data quality

An ERP ensures that company data is accurate, up-to-date and available in real time, which improves data quality and reduces errors. In addition to unifying the data available within the company and that it is not scattered in different software with contradictory information.

6.- Improved customer service

By providing a complete view of customer information, an ERP can improve customer satisfaction and retention, which is beneficial for the long-term growth of the company.

How to choose between a CRM or ERP?

To choose between a CRM or an ERP, it is important to understand the difference between crm and erp. In addition to knowing the specific needs of your business. And throughout this post we have tried to explain the functionality that characterizes each of them.

As discussed, a CRM is focused on managing customer interactions and improving the customer experience, and an ERP is designed to improve business efficiency and productivity.

If your business is focused on sales and customer support, a CRM might be the best choice. If your business has a wide range of internal business processes that need to be managed efficiently, an ERP may be the best option.

However, it's important to keep in mind that some CRM and ERP systems have overlapping functionality, and some vendors offer combined systems that may be suitable for SMBs that need both customer relationship management and internal business management.

And most of the time both systems coexist to provide a 360-degree view of the customer for each SME.

Does my company need both solutions?

It all depends on your business focus and market priorities, whether you prioritize business processes or customer relationships. We recommend you to arrange a meeting with us to help you discover the difference between crm and erp. In addition to see what are the priorities of your business and see what solution is the one you need at this time for your company, if an ERP or a CRM, or both. The important thing is to understand how you are working and what are the most critical points to improve.