ERP vs CRM | What's the difference? What's the Better?
By Sam Nguyen
Drive 20-40% of your revenue with Avada
Have you ever heard about CRM and ERP? These two acronyms are not strange to people in the world of software. They are used for the sole goal: increase the company’s profits. However, the methods each system chooses to reach the goal are pretty different. That’s the reason many of them have a vague understanding of CRM and ERP, even mistake them for each other.
So what exactly are ERP and CRM? How are they different? Why should it be applied in business, and Which one is suitable for you?
They are all answered accurately and sufficiently in this article!
What is ERP?
Enterprise Resource Planning or ERP is a powerful system to control every activity in a business. With it, you will increase the efficiency of the work in your organization by allowing your staff to share the standardized data simply and rapidly.
People from every department in your organization or company can also upload the information to this system, which helps generate a comprehensive overview of your business in real time. Thus, whenever there is trouble in a department, all the rest will receive alerts automatically. They will then be aware of what is happening immediately and analyze the situation to find out the solution to deal with it quickly.
Hence, it can be understood that ERP systems concentrate on data to simplify the procedures in a company or organization, rather than the operations as usual.
What is CRM?
While ERP focuses on the business, the concern of CRM is customer satisfaction. CRM, which stands for Customer Relationship Management, is a system used for ensuring that your company will get on well with both your purchased customers and the potential ones.
In a CRM system, your customers will be the center; they will be provided the best experience, which makes them satisfied when shopping in your store. Moreover, it also supports you in seeking potential customers, taking care of them, and advertising and offering them multiple promotions to change leads to customers. This increases your store’s sales, maintains your customers’ good impression on your store, and makes them loyal to your brand.
Actually, when thinking about CRM systems, CRM software is always the first thing appearing in people’s mind. With the software in terms of CRM, companies will be given lots of tools to control and sync the data about transactions, customer service, and marketing automatically.
The Key Differences between ERP and CRM
In fact, both CRM and ERP share the same goal: help boost sales and bring as much profit as possible for the companies. The different things are just the way they reach the goal. So, what exactly is it?
ERP
ERP’s primary concern is how to help businesses reduce the workload in every stage of the workflow. It is created and developed to match this desire by connecting the data from everywhere and then streamlining the business process. Thus, it is said that the ERP system will be more suitable if you want to upgrade your company’s efficiency in such issues as warehouse, finances, marketing, accounting, logistics, human resources, and more.
CRM
While ERP increases the profit by decreasing the cost spent on running the company, the way CRM does it is to rise in the number of transactions. That is why CRM focuses on the relationship between the company and customers instead of the company itself as in custom ERP software.
Quipped with a CRM system, you will have an additional layer for customer information that support from salesmen to managers in strengthening the relationship with not only current customers but also the potential ones. This, of course, will increase your client’s loyalty, and then boosting sales will become much simpler.
Actually, in the ERP system, users are also provided with several features related to CRM. Nevertheless, the main thing that makes a CRM system a better choice than ERP when looking for a system for enhancing the customer experience and loyalty is the scale. If your most important point is the customer, ERP is insufficient; you should make use of CRM systems.
Why Should You Use ERP?
As mentioned in the previous part, ERP is a wonderful tool to enhancing the business process by simplifying the way people send information between different departments in the companies. Not only large-sized businesses but also the small and medium-sized ones are suitable for this system. So whether your company’s scale is large or small, ERP should be one of your top priorities for upgrading the company management system.
You can take advantage of ERP system for such purposes:
- Control finance of the company: It empowered you to manage data in terms of the income, the account payable, ledger, fixed property, and more. This, hence, supports you in making suitable and stable methods as well as strictly following the requirements about budget. In some cases, you are given the ability to estimate the tax, predict the financial condition and the budget growth.
- Manage the human resources: Via it, you can set time for employee hours in advance, estimate the proper amount of salary for each staff based on their performance, and accept the requests about Paid time off (PTO) or sick leave. Besides, it also allows users to keep track of the project and evaluate its capabilities. You, afterwards, can exploit this information as a reliable source for distributing labor.
- Maintain and develop Customer Relationship: You are also provided with some features to take care of your customers better. This system is obviously not as professional as a system specified on customers as CRM. However, if you are looking for a system with basic functionality about CRM, ERP will be the best choice.
- Manage the inventory: With ERP system, you can set the points for reordering, send notifications about the low stock without human control, and manage purchase orders. Furthermore, this functionality is often accompanied by the ability to monitor warehouse, distribution, and producing items. So, you will have a clear overview of your inventory and deal with all the problems about it in the shortest time.
- Monitor the supply chain: In fact, Supply chain management software is also a type of ERP system. It enables users to control many components in the supply chain like inventory, orders, product quality, etc., which helps you decrease the huge amount of workload.
Therefore, the ERP system is absolutely an essential system for business management. If you integrate your company completely with the ERP system, all the members in your company will be updated with the latest information in real-time. Particularly, your data will be displayed much clearer with the help of the third-party Business Intelligence (BI) solutions like Power BI.
Why Should You Use CRM?
Since the CRM system concentrates on the interaction between businesses and customers, it is a mighty tool to improve their relationship. With its help, the information and figures about customers will be stored in only one system and easily accessed by all the company members.
More than that, there are multiple functions that are available for you in the CRM system, such as:
- Monitor the contact: It gives you the right to import, keep track of and edit customers’ information with ease. The information can be everything about customers as contracts, invoices, and more. You, then, can simply access the necessary information about customers for the next time.
- Keep track of the interaction with customers: Not only the information about customers, but the CRM system also allows users to track the data in terms of the interaction between customers and your stores. You can check their history in your shops. By classifying customers into different groups like intend to buy, have interest, and already purchased, you will immediately know how to attract and take care of them with a couple of clicks.
- Manage the database: By collecting and storing information in a CRM system, your data will be centralized in only one place, which helps people save lots of time in seeking information. In addition, duplicate and “dirty” data (the incorrect data that could lead to the inaccurate insight) will be identified and removed so that you will have an accurate and reliable source to develop your strategies.
- Monitor leads: your leads are not only displayed clearly but also detailedly in this system. It tells you anything about leads, such as their sources (emails, landing pages, or referral) progress, relationship, etc.
- Control activities of marketing and campaign: CRM system also offers the feature of marketing and campaign management, which helps seek potential targets in the campaign and estimate its effectiveness. Additionally, some of them integrate with email marketing apps so you will find it much easier to manage your email marketing strategies.
As a result, CRM will be the top priority if you are looking for a system to collect and display information related to customers and their behavior in a specific and scientific manner. Via it, you will have a helpful tool and be more likely to succeed in your marketing campaigns.
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ERP or CRM is Right for Your Business?
In short, both CRM and ERP are useful systems for any business, and they both have their own strengths and weaknesses. You can possess only ERP or CRM systems, or even both of them. They are all possible, but you should think carefully before deciding since different contexts and companies will need different options. Thus, it is advisable to look thoroughly at three elements in the process of looking for the right one: needs, budget, and size.
Based on your company needs, CRM or ERP will be a better option. So analyze your needs and then read all the above sections carefully to see which one is more fitted.
In fact, the price of ERP systems are often more expensive than the one of CRM so if both ERP and CRM are suitable for you but your budget is not too much, let’s take a look at CRM.
With its ability to streamline the business process, ERP seems more suited to large and complicated companies. Meanwhile, a CRM system will be a greater choice for small and medium-sized businesses.
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