CRM and ERP – What is the Main Difference and Why to Use Them

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CRM and ERP - What is the Main Difference and Why to Use Them

Last Updated: 08/12/2019

CRM and ERP – these are two of the most widely used software in the industry today. According to Destination CRM, 91% of North American companies with more than 10 employees are using CRM software today. On the other hand, ERP software has also received wide acceptance. According to Panorama Consulting Solutions, 81% of the companies have either implemented ERP software or thinking about implementing it in the near future.

Looking for CRM Software? Check out SoftwareSuggest’s list of the best CRM software solutions.

Why is almost every company in the world implementing this software? We will definitely get into that, but for those who are unsure of the difference between CRM and ERP, let’s understand that first.

CRM and ERP Software: What’s The Difference

Customer Relationship Management Software (CRM) is mainly used by marketing, sales, and business development teams to keep track of new and existing customers, to record and analyze their behavior.

On the other hand, Enterprise Resource Planning (ERP) software is a huge suite of software with multiple purposes. ERP software helps a business in diverse areas like human resources, finance, marketing, sales, inventory, planning, reporting, etc.

In a way, ERP software covers a part of CRM software, but their approaches are different. CRM software mainly focuses on the cycle of new and existing customers and increases profit. ERP software mainly helps in reducing the overhead and other costs to increase profits.

Both CRM and ERP help companies boost their profits, but they have essentially different approaches.

Let’s have a look at both software and understand their individual importance.

Why Do You Need CRM Software?

The main objective of building a custom CRM solution is to help build trust and a long-term healthy relationship with your customers. 

What CRM does is that it acts as a centralized database for all the information related to your customers. It collects, stores, and organizes information like name, contact number, email address, and more. Not only that, but it also analyzes customers’ activities like their buying behavior, purchase record, and their interaction with the company so that sales reps can make a smarter approach. 

Besides, it includes information about potential customers, too, including their needs and preferences to help you provide better products and services. Thus, CRM improves the ability of the company to launch successful marketing campaigns based on different segments, which results in increased company sales and improved customer loyalty.

CRM strategy allows you to carry out marketing activities in the most efficient manner.

An online CRM software mainly contributes in the following ways:

  • Keeping track of new and existing customers,  recording their buying behavior.
  • Identify new business opportunities and generating new leads.
  • Making the sales and marketing process easier for the company.
  • Implementing marketing functionalities like sending emails, newsletters, articles, and handling campaigns.
  • Creating a better support environment for the customers.
  • Salesforce automation (SFA software) functions.
  • Handling social media and other accounts and keep a track of them.

Why Do You Need ERP Software?

When we talk about CRM vs ERP, an ERP system does much more than analyzing your customers’ behavior. 

An ERP is an invaluable tool that streamlines and optimizes every complex activity. It collects and records information from various departments of the organization and integrates it with both internal and external management of the organization. It makes the management of supply chain, inventory, warehouse, distribution to order completion, accounting and finance, and more, easier. 

An ERP system improves the performance and productivity across every department by making all information accessible. This is especially useful for large enterprises or small- and- medium-sized companies looking for expansion. Thus, it helps in standardizing processes and reporting procedures that are common in the industries.

In a nutshell, it is a pre-packaged business management software that smoothens the business processes and flow of information across the organization. ERP software contributes to the following areas:

  • Looking purchase and product planning cycle.
  • Planning manufacturing and delivery process.
  • Managing the inventory and keep track of the incoming and outgoing material.
  • Handling payment and shipping numbers.
  • Supply chain management.
  • Handling the incoming and outgoing of finances.
  • Tracking the status and marketing & sales numbers.
  • Customer relationship management (CRM).

Why There’s an Age-Old Confusion?

As we can see, some of the features of CRM software are already included in the description of an ERP software. As a buyer in need, you might also get confused between what to choose between an ERP and CRM software. Let’s end the debate.

Large enterprise ERP software is an enormous suite of applications that covers almost everything from human resources to finance. That means, ERP software hugely helps in connecting every department of business and bringing all the data on one platform. So, with an ERP software, you can manage every department of your business viewing every data on a single platform. Pretty convenient right?

But, it is essential to understand why so many companies have started relying heavily on CRM software.

Although many features of an ERP software overlap with that of an online CRM software, it is still not specifically designed for sales and marketing. A CRM specifically gives insights on sales strategies and predictions, and an ERP might not possess such specialized features. CRM also helps in automating marketing and sales campaigns, and you might not see such features in an ERP.

Pricing is another huge factor!

Since ERP software has multiple applications in one big suite, it costs a lot. You can easily say it is one of the most important investments for any business. But, with an ERP software, you can bring all the data on a single platform and plan strategies for upcoming business years.

CRM vs ERP: Key Differences

If you are still feeling confused, these summarized points will help you. 

  • CRM is customer-oriented, whereas ERP is referred to as business management software. CRM enables organizations to track every activity and transaction with the clients and customers. And, ERP helps manage the entire business process by integrating different departments. 
  • ERP is mainly concerned with the planning of resources and looking for ways to optimize utilization to reduce operating costs. Whereas, CRM is responsible for the management of customer relationships and ways to increase sales for profit maximization.

When To Buy CRM and ERP Software?

If you’re looking for a tool that can simplify your sales and marketing process, go with a CRM system. It helps you in simplifying the entire customer lifecycle. Starting from feeding new lead data to sending plan upgrade emails to customers, CRM can automate the entire process for you. After setting up the automation, you don’t have to waste another second. The CRM will get everything done, right on time.

Meanwhile, if you’re looking for a tool that can bring each element of the company altogether, go with an ERP software. Many businesses and enterprises need ERP to handle every aspect from a single platform because of the overwhelming number of clients and employees. ERP software can bring all the departments together and create a productive environment. ERP will help you in identifying and deleting repetitive and tedious processes, saving your time and money.

Bottom line

Both ERP and CRM software have their own importance. Both contribute to profits to a great extent. Of course, ERP software is a bigger investment compared to a CRM, but it carries irreplaceable importance for many enterprises out there.

Depending on the type and volume of business, your company may need either or both. 

Now that you’ve learned the exact difference between these two software, you’re equipped to make an informed decision!

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