CRM Vs. ERP: What Is The Difference?
Oct 21, 2022
Digitization has made it easier for businesses to streamline their processes. Software solutions help businesses operate at all scales, automate their processes and increase productivity. However, companies are often confused between CRM and ERP.
CRM and ERP solutions implement process automation and enhance an organization’s productivity and revenue generation. However, they differ in methodology and scope.
To drive digitization within your organization, it is essential to understand the difference between CRM and ERP. Do not confuse one with the other, as it will hamper your business processes.
We can understand how CRM and ERP solutions differ by looking into their definitions and functions.
What Is CRM?
CRM stands for customer relationship management. It is a software solution that helps you manage your customer database. CRM tracks your relationships with your customers and prospects. It stores all relevant details about your customers.
The primary purpose of a CRM solution is to satisfy your customers. It lets you tailor your services to the needs and preferences of your customers. From managing leads to creating marketing campaigns, CRM is about nurturing your customers as they engage with your business.
Moreover, CRM is a front-office tool that departments like marketing, sales, and customer service. It intends to improve customer experience and understand the audience you target.
Service providers may offer CRM as a standalone or part of an ERP solution. This implies that the scope of CRM is narrower as compared to that of ERP.
What Is ERP?
ERP stands for enterprise resource planning. It is a software solution that helps you streamline business processes in multiple departments, such as finance, HR, distribution, inventory management, etc. It integrates multiple processes onto a centralized digital solution.
ERP is wider than CRM. Some ERP solutions let users add modules according to their business needs. An ERP solution comprises tools for front-end and back-end management. It facilitates the seamless automation of processes to handle multiple workflows.
Key Functions Of CRM
Let us have a look at some of the significant CRM functions to make its contrast with ERP clearer:
Database Management
The customer database plays a vital role in CRM. It provides users across an organization with the same information and source of truth. In addition, CRM facilitates seamless management of your database using automated tools.
Contact Management
CRM specializes in recording, storing, and analyzing contact records. These records store valuable information about your organization's contacts. Seamless contact management lets CRM show you a 360-degree view of customers.
Lead Management
From the moment your sales rep acquires a lead until they convert it into a customer, CRM helps them nurture the lead. CRM solutions provide users with automated sales pipelines where the leads can be added once acquired. While your sales reps nurture your leads, CRM provides valuable information about them that helps them personalize communication.
Campaign Management
CRM also helps businesses build targeted marketing campaigns. Depending on the KPIs you want to focus on and the audience you want to target, the digital solution enables you to create and manage campaigns across multiple platforms. A robust CRM solution helps you engage your audience across email, the web, social media, and more.
Data Analytics
CRM analyzes your interactions with customers, leads generated, deals closed, and other essential information to give you valuable insights. These insights help you assess the performance of your teams and make necessary changes in your approach. In addition, you can enhance the data analytics performed by a CRM solution by incorporating technologies like artificial intelligence and machine learning.
Modern CRM solutions help you forecast sales, predict customer behaviors, and analyze risks involv
ed in performing specific business processes. Customized reports and dashboards help the management make essential business decisions to increase revenue and generate more ROI.
Key Functions Of ERP
Here are some significant functions of ERP that help businesses drive digitization:
Financial Management
An ERP solution helps you manage your finances and accounts using digital tools. It gives you a modern alternative to traditional financial activities to enhance productivity. Some enterprises also use ERP solutions for budget preparation and tax calculation.
Human Capital Management
ERP solutions provide you with robust human capital management (HCM) tools to manage the people working in your organization. It streamlines activities like scheduling work hours, salary distribution, leave management, complaint management, etc. With HCM, an ERP solution ensures that your employees work in a conducive environment.
Inventory Management
ERP also helps you manage your stock and track the inventory in real-time. It lets you stay updated about the SKUs in your warehouse and tracks the inventory entering and leaving the premises. Moreover, you can set up automated reordering points and notifications regarding low stock levels for smooth inventory management.
Supply Chain Management
ERP solutions provide powerful supply chain management (SCM) software to users to manage different supply chain stages from a centralized platform. From handling purchase orders and overlooking distribution to manufacturing and warehousing, ERP offers a comprehensive solution for all SCM processes. These solutions also help businesses with regulatory compliance and quality monitoring depending on their requirements.
CRM Vs. ERP: An Overview
Now that we are aware of the purposes CRM and ERP serve, let us have a brief overview of the differences between the two:
• While CRM helps businesses track customer relationships and manage customer databases, ERP helps them streamline business processes that go beyond managing customer relations.
• While CRM is a standalone solution, ERP is a consolidation of multiple software solutions onto a centralized platform.
• ERP solutions were developed before CRM.
• CRM is a part of ERP solutions.
• While CRM helps you manage front-office activities, ERP manages both front-office and back-office activities.
• While CRM’s primary focus is increasing sales, ERP’s primary focus is reducing costs.
CRM Vs. ERP: What Should You Choose?
When comparing CRM and ERP, there is no clear winner. Both provide businesses with automated tools and features to fulfill their objectives. However, the solution that best suits you depends on your needs and preferences.
ERP is a more holistic solution as it handles multiple workflows. On the other hand, CRM specializes in building healthy customer relations via sales, marketing, and personalized customer service. Therefore, if you want to boost your sales and manage your customer database to perfection, you should implement CRM.
However, if managing a customer database is one of your many requirements, and you want to streamline other business processes, go for an ERP solution. ERP helps you manage multiple facets of your business, including finance, accounting, supply chain management, human resource, and more. Your decision should solely depend on the objectives you want to fulfill and the approach you want to take while driving digitization within your business.
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