CRM vs. ERP: What’s the Difference, and Which Do You Need?

The age of analytics has spurred on the development of powerful technologies that can help you manage, analyze, and interpret vast amounts of data, leading to greater business success. For example, customer relationship management (CRM) and enterprise resource planning (ERP) software are exactly these types of tool.

The difference between CRM and ERP is this: CRM is a database used to manage sales, customer service, and marketing data, while ERP is a database used to manage financial and operational data. But they’ve both revolutionized the way businesses manage their data, eliminating the need for multiple applications and making business operations  easier.

This guide to CRM vs. ERP will tackle the uses, benefits, similarities, and differences between both platforms. You’ll gain valuable ERP and CRM insights to help you choose the best option for your business, or work out whether a CRM-ERP integration is a good fit for you.

What is CRM?

CRM, or customer relationship management, is a kind of software that was originally developed as a marketing database for monitoring the customer’s life cycle. Over time, CRM has undergone groundbreaking changes, becoming  a unified interface that enables you to manage your relationships with your customers throughout the customer lifecycle, helping you to map out your marketing, sales, and customer service strategies, and generate data that you can use to predict business opportunities.

There are three kinds of CRM system:

1. A marketing CRM stores customer data, and can be used to create campaigns, such as email campaigns, that’ll generate leads and drive sales.

2. A sales CRM streamlines and enhances sales processes, with pipeline management, sales force automation, and data analysis.

3. A customer service CRM, now also known as helpdesk software, provides quick access to customer information, enabling your team to deliver a personalized customer service experience that fosters relationships and boosts customer retention.

What is ERP?

ERP, or enterprise resource planning, is a software that was created to help businesses migrate all their finance, manufacturing, and project management data into one place to streamline processes and improve data visibility. However, to keep up with technology trends, it has evolved to the ERP cloud system, enabling cost-effective automation of business processes, and unifying key functions across different departments, including  accounting, manufacturing, supply chain management, and human resources.

CRM vs. ERP: Uses and Benefits

CRM vs. ERP: What’s the Difference?

CRM is a platform used to manage customer data, including relationships and interactions, to improve marketing strategies and business relationships. ERP is a fully integrated back office suite of financial and operational systems that centralizes these business processes in a single source.

Front and Back Office Tools

CRM is primarily used in the front office, enabling organizations to communicate effectively with customers and monitor their interactions and transactions. It’s built with features for analyzing customer data to create strategies for customer retention and lead conversion.

In contrast, ERP is a back office tool that you’d use to manage crucial business operations, including accounting, operations, HR, manufacturing, logistics, and purchasing, while CRM is mostly used by customer-facing teams, such as marketing, customer support, and sales.

Sales and Profit Tools

CRMs come with data visualization tools that enable sales teams to track, predict sales metrics, and boost sales. Meanwhile, ERP focuses more on reducing costs because, with data from every back office team, it immediately identifies issues. In logistics, for example, ERP enables businesses to practice real-time monitoring of their stocks and inventory, which will help them avoid overstocking and lead to cost savings.

Business Sizes

Most large businesses or enterprises choose ERP to run their operations because this fully integrated system is capable of tracking so many movements or updates from backend departments, such as supply chain management, purchasing, or accounting, allowing businesses to have seamless management over costs, inventory, and people. Meanwhile, CRMs are designed for businesses of all sizes, with different price plans that cover the needs of different sizes.

Price Points

ERP systems are more expensive than CRMs because of the differences in the services each software offers. For a medium-sized business, an average ERP costs $9000 per user, per month, with an implementation fee that can cost between $150,000 and $750,000. This is because, as their name would suggest, ERP systems offer a wider range of features and services targeted at enterprises, such as supply chain management, financial data management, and employee life cycle automation.

Meanwhile, a CRM can range in price from free or cheap pay-as-you-go options, which start at $12 per user, per month, to several thousand dollars per user, per month, with feature-rich plans available and affordable for small businesses. Some of these features include built-in telephony, digital sales tools, and data visualization tools.

How Are CRM and ERP Similar?

CRMs and ERPs are applications that enable businesses to store, organize, and analyze large amounts of data to improve efficiency in our data-driven world. The key similarities between them are:

• These two software programs both come with on-premise or cloud-based options

• Both have CRM features, however, the CRM features on most ERP systems are lightweight

• CRM and ERP provide businesses with a data-first strategy to help them develop  coherent business processes and clearer business targets

Do I Need CRM, ERP, or Both?

Both systems are effective business solutions. However, before making a decision, you need to consider your business focus, complexity, size, and services to determine which system is the best fit for increasing your sales and profitability.

If your primary goal is  to improve your organization’s sales and marketing strategies, a CRM software is the solution you need – especially if your backend operations are running on entry-level. CRMs can accommodate data from small, midsize, and large businesses, allowing room for growth and easy scalability.

However, if you work for a larger corporation and need a full business application suite to manage operations across all departments, investing in an ERP system can fulfill your business and data management needs. This database will be able to support the growth of the company while mitigating cyber risks with excellent data security.

Meanwhile, a CRM and ERP integration provides the biggest advantage for big businesses. Instead of having two separate systems to handle the front and back office, integrating the two provides a streamlined process to manage financial structures, employee performance rates, and customer life cycles.

Should I Integrate CRM and ERP Together?

A CRM-ERP integration is an innovative synergy solution that you can adopt to gain a higher level of visibility into your business processes.

An ERP enables you to streamline business processes that need improvement, allowing you to address roadblocks and achieve scalable growth. However, if you find that your sales and marketing processes need to be more efficient, purchasing a separate CRM tool to address this can be impractical. Integrating the two systems creates a less expensive software that provides a simplified workflow, automates front and back office functions, and offers  real-time updates, resulting in dynamic business operations.

Next Steps

CRM and ERP systems enable businesses to practice a digital-first strategy. Both have the ability to manage a huge volume of data, the successful analysis of which can contribute significantly to a company’s success.

However, each of these systems has a different business focus. CRM allows you to manage customer data that’ll help drive sales, manage marketing, and deliver a quality customer experience, while ERP is used to enhance the operational aspects of the organization through data analytics and management practices.

CRM solutions are perfect for small and midsize businesses due to their  budget-friendly pricing, intuitive features, and supportive services, whereas  ERP solutions are designed for larger corporations that require a single tool to house all backend office data, from departments such as HR, accounting, logistics, and manufacturing. In many cases, large distributors or manufacturers use ERP systems to manage their business operations.

If you’re interested in getting a CRM software for your business, use our free quote-finding tool to find the providers that fit your business’ needs. Just answer a few questions about your business, and we’ll match you up with the best CRM providers for you. Sit back, and they’ll reach out to you with tailored, obligation-free quotes for you to compare.