If you're running a business, you've probably considered using software to optimize operations. Two terms that you may have come across in your research are Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM), for small businesses as these are two of the most popular software suites available for customer-centric businesses. But what are they doing? How do they differ? And does your business need both to be successful?
Take a look at the difference between ERP and CRM software (and where they overlap) to see how these two types of software benefit your business. Here are the basics:
What is ERP?
ERP, known as enterprise resource planning, generally refers to any software suite made up of business tools such as accounting, budgeting, and forecasting. There are also human resources tools for planning, attendance monitoring, and employee integration. Finally, there are applications for inventory and supply chain management.
The many features of ERP make it an incredibly popular option for optimizing business processes in all departments in real-time. And its versatility makes it useful for any industry.
What is CRM?
CRM stands for "Customer Relationship Management" for B2B and B2C operations. As a software suite, it contains all the possible functions to optimize communication between your customers and your company. This software includes:
• Contacts management
• Integration and messaging models
• Integration of the call center and call scripts
• Monitoring planning
• Monitoring of prospects and history of customer orders
• Social media management
CRM is used as customer relationship software by each company that deals directly with customers or clients. This can mean sending newsletters to customers visiting a physical store or billing suppliers who buy your products earlier in the supply chain. Whatever interactions with customers your business relies on upon, CRM can manage them.
By scale
ERP suites are generally more complete than CRM software because they must cover more parts of your business. As already mentioned, ERP must cover all aspects of your business, from the beginning of the supply chain to the end. Essentially, you keep the entire company informed of changes to your business process via a single platform.
For example, imagine that a lack of raw materials means that you have to slow down production. You can use an ERP to inform each step of the supply chain at the same time so that each department can start to prepare.
CRM only focuses on improving and maintaining interactions with customers, prospects, and opportunities. The number of customers determines the size of your software. There are CRM systems that focus on one form of communication, while others contain several options. Use email templates and call scripts to keep all outbound communications consistent in your marketing campaigns.
By department
The essential functions of ERP can be used by an entire company at each stage of the supply chain for products or services. Manage the production of raw materials until the arrival of a finished product on store shelves. ERP has tools for financial employees, manufacturers, merchants, HR representatives, sales, marketing and, in some cases, for legal services. An ERP system minimizes misunderstandings by standardizing data between departments.
In comparison, CRM is primarily intended for sales and marketing departments to maintain control over customer communications. Although some other services can benefit from CRM, it depends on the level of interaction. For example, you can use CRM to issue tickets for customer support issues. The IT department is generally not in contact with customers but can maintain personalized communication via a CRM system created through multichannel sales.
By industries
General ERP applications can be used by any industry as they provide universal business functions such as accounting, planning and more. However, there are types of ERP software designed for specific industries:
• clothing
• automobile
• cannabis
• construction
• Higher Education
• Manufacturing (MRP)
On the other hand, CRM software is more useful for companies that regularly deal with a high volume of B2B and B2C customers. In B2C companies, the retail trade and the hotel industry, in particular, rely on clear communication with customers in order to avoid overstocking and overbooking errors.
ERP or CRM: what does my business need?
After knowing the main differences between ERP and CRM, do you know which one needs your business? Both help to clarify communication and reduce errors. Which one you use depends on whether you need general enterprise software or a specific solution for a single objective.
If you want your business to take full advantage of ERP and CRM without paying twice as much, there is good news! There are many ERP suites containing CRM modules. It may make more sense for your business to purchase an ERP suite with CRM than to purchase two separate programs. For example, a distributor who works with only one supplier would have only one contact and probably would not need the entire software suite to manage this relationship.
However, if your business is very customer-oriented, you may want to have standalone CRM software separate from your ERP system to meet these requirements. If your marketing or sales department is very important, you can only benefit from an integrated CRM system for them.