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HomeComputersWhat Is the Difference Between ERP and CRM?

What Is the Difference Between ERP and CRM?

Companies often wonder about whether to get an Enterprise Resource Planning (ERP) software or a Customer Relationship Management (CRM) software. While similar in many ways, including a focus on automation, productivity increase, and revenue generation, these programs differ in core functionalities that should be considered when making a comparison.

Here, we’ll be delving deeper into the common functions of the ERP and CRM systems and the factors to consider when deciding which solution to use for a business.

What Is a CRM System?

CRM systems handle the recording and storing of every piece of transaction-related customer information. They assimilate the data, converting it into a standard form that’s easily shareable throughout the whole organization. Examples of information entered into this program are a customer’s contact details and pertinent notes about his or her conversation with a company representative.

Marketing employees might then get a hold of this information to use for creating a personalized newsletter. For them to do that, they simply need to pull up the records in the CRM software. A good system allows companies to classify and organize every single facet of the customer experience.

In addition to these functions, CRM software can also manage invoices and communication, deliver sales projections, and nurture business prospects through the sales process. It also boosts the efficiency of an organization, increasing sales and providing more accurate customer data. This then results in the enhancement of customer relations.

With a CRM system, you can leverage the following features:

  • Automate inessential tasks
  • Manage and automate marketing campaigns
  • Determine new leads
  • Simplify the sales process
  • Improve the quality of customer support
  • Assess purchasing patterns

What Is an ERP System?

The ERP system, like the CRM, works to simplify everyday business operations. However, instead of focusing on the sales side of the business, the ERP is absorbed in multiple departments.

The very core of ERP software focuses on interlinking several specific business processes. This allows anyone from any department to acquire standardized information in real-time. Any issues that arise are also sent as alerts to the designated recipients.

Thanks to the ERP, the business can now pay more attention to data and less on its operations. It ensures that errors are fewer, and better decisions are made for the future of the organization.

Here are some of the main features you can leverage with ERP software:

  • Receive alerts about different issues
  • Track supply and manufacturing chains
  • Get accounts up to date
  • Process orders
  • Input business process details in real-time
  • Supervise hiring initiatives
  • Implement business strategies across several departments
  • Manage payroll, benefits, and employee information

How Do They Differ in Their Approach to Business Processes?

Both the ERP and CRM software work to make business processes more efficient. While the ERP accomplishes this by focusing on cost reduction, CRM strives toward this goal by facilitating higher sales volume and improving customer interactions. Both programs serve as repositories for customer information.

Whether you run a small or large business, you’ll always fare better implementing an ERP or CRM system as opposed to rifling through emails, chats, and handwritten notes in search of customer-related data.

In a company’s efforts to optimize customer relations, CRM works to earn its customers’ satisfaction and loyalty. The ERP, on the other hand, focuses more on an organization’s internal workings, helping ensure that each department has a sufficient understanding of their workflow with other divisions of the company.

The ERP also gives the higher-ups a real-time overview of the everyday occurrences in each department. This helps them make the best decisions for company growth or scaling.

Should You Choose an ERP or CRM System?

Some companies that aim towards growth often get confused about whether to implement the CRM or ERP first. The decision isn’t as easy as it seems since each program has its own unique benefits. For organizations looking to scale, the more obvious choice would be the CRM system because of its focus on increasing sales and profit.

Conversely, the ERP software serves as a business’ driving force, thanks to the accurate data it holds on inter-departmental workflows. Prior to cutting costs, an organization needs to have profits. Furthermore, a company can have exceptional organization strategies yet still fall short on sales. The possibility of business processes is directly tied to consistency in sales revenue.

Given the above explanations, you can’t simply choose between these business systems. You will need both—a CRM for driving sales and an ERP for simplifying operations and reducing overall costs. The good news is that a single software that offers both ERP and CRM functionalities is available in the market, so you don’t need to choose. Armed with these programs’ combined features, you should be well on your way to maximizing the growth of your organization.

Final Thoughts

To maximize the growth of your business, you need both an ERP and CRM system. The CRM focuses on improving sales, allowing for the consistent generation of revenues that facilitate business processes. The ERP then works to optimize these processes and reduce their costs.

Thankfully, there’s no need to limit yourself to only one type of system since you can acquire a single software offering both ERP and CRM functionalities.

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