As your business grows, the key information you need to track and manage increases as well.
There will come a time when you will need a data management system, such as CRM and ERP software, to collect and understand this data. Without using these systems, you’ll struggle to maximize performance across the company.
To help make sense of the acronyms and jargon, we break down two of the most powerful solutions: Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP).
The difference between these systems can be confusing, with their functions seeming to overlap in places, but knowing which strategy or piece of software is right for your organization’s needs is vital for efficient growth.
We’re here to walk you through:
- Who CRM and ERP are for
- Why you would want either of them
- The features they provide to make your life easier
If you’ve been asking yourself “CRM vs. ERP, which should I choose?” then this article will help you find the answer and reveal what to do next if you’re interested in one of these programs.
What is CRM?
CRM, or Customer Relationship Management, is a business strategy designed to improve a business’s ability to generate leads, keep prospects engaged, build strong relationships with external contacts and close deals.
When talking about CRM, we refer to two things:
- The strategic behavior and guidelines that help make the sales process more efficient and successful with both existing and potential customers
- The feature-rich software specifically designed to streamline the selling process of a business
While the software aspect of CRM isn’t the only part of the strategy, it’s the key piece that enables the strategy. A successful CRM strategy implements the data that CRM software provides about how best to build relationships with leads, customers and more.
Who is CRM for?
The primary function of CRM software that is designed for sales teams (and many of them are) is to present a clear picture of who your prospects are and what stage of the buying process they’re in. This software includes tools to help you progress leads through your selling process, providing data about how to refine your selling techniques.
Other teams can use information stored on a sales CRM too. HR departments and Customer Support can access communications between a company and buyer to better understand a client’s position, while marketing teams can review the number of qualified leads a previous campaign delivered to the sales team to determine its success. Senior management, meanwhile, can use CRM software to check on projected sales for the next month and forecast revenue.
CRM helps make sense of who you should be looking to sell to and communicate with about your products. Thanks to CRM’s outward gaze on your leads and customers, you can identify and maximize your sales options by collecting data about how you sell and who exactly you’re selling to.
CRM used to be an expensive outlay for a company, but with the move to the Cloud in recent years, CRM is now an affordable option for even small companies—subscription-based models remove the huge overhead and CRM providers take care of server storage on their end.
Many providers have mobile apps too, so as long as you have an internet connection, you’ll be able to access your CRM database on the go.
When should you use CRM?
It’s never too soon to implement a CRM strategy. Even as a start, you should have techniques and guides in place on how to manage leads at different stages of a deal, the best ways to communicate with prospects and so on. There’s a reason why high performing organizations use CRM to carry out many of their key sales activities, such as:
- Keeping track of who they’re selling to, logging all previous communications and future engagement activities with each lead
- Using powerful in-built features, such as Pipedrive’s Smart Contact Data or LeadBooster, to gain a better understanding of their leads and how best to approach them
- Automating a large variety of time-consuming manual jobs like email campaigns, call logging, form filling, lead qualification and more
- Tracking metrics and producing sales data on the success of their selling techniques, allowing new strategies to be tested and the results collected, as well as accurate forecasting
How does it work?
The first step of CRM is to identify the different stages of your sales pipeline: essentially, the different stages each lead moves through on the way to making a deal. This includes leads you’re intending to cold-call, one’s who’ve expressed an interest in your product, any who are close to becoming a genuine prospect, existing customers you’re hoping to upsell or cross-sell to—in fact, all the leads you have (even those yet to properly enter your funnel, thanks to tools like Leads Inbox).
With your pipeline laid out, you can then begin to build an actionable and repeatable sales process that guides your team through every interaction they have with leads. You can also monitor the success of each stage in your sales process and identify where they could be improved.
Once you have a clear idea of the different sections of your pipeline, you can begin to use your CRM software to expand your abilities within those sections. One of the most powerful ways a CRM can help you is by automating parts of the lead prospecting process—something that can sap a large amount of time away from your reps when you’d rather they were selling.
In fact, in our State of Sales 2019-2020 Report, over half (54%) of respondents said that they at least regularly struggle to find leads.
How does automation help?
Once you’ve populated your pipeline with leads, you can continue the lead qualification process with tracked engagement activities.
You can reach out to them with automated emails personalized for each contact based on criteria such as their job role, lead source and industry, tracking the click-through rate of your communications. By integrating your CRM with an email marketing tool like Mailigen, you can even create flows that react to triggers in your sales process, such as when a deal moves to the next stage.
Once you’ve made contact with your leads, your CRM will automatically record all your correspondence, making it easy for anyone on your team with the right permission settings to check where leads are in the sales funnel and what their specific needs are at a moment’s notice.
Understanding the data
By this point, you’ll have a fairly good idea of not only who your individual leads are and what they want, but also common traits your successful leads have in common. You can then use this to optimize your lead qualification automations, updating chatbots and webforms to prioritize leads who are more likely to convert to high-value customers.
You can also tailor your sales pitches to their needs. Your proposals should be about letting your leads see how your product can solve their problem, and you can create a much more effective sales proposal template if you understand your leads.
Good CRMs also make it easy to share data between team members and people in other departments, using accessible dashboards and viewing options. This makes handovers easy, and if a manager needs to be brought in regarding a client issue, it can happen immediately without interrupting the rep’s workflow.
With all this in place, you’ll have everything you need to cultivate a powerhouse sales team. With your clearly defined pipeline, your repeatable processes and sharable sales data, you’ll be ready to use the secret weapon in the CRM arsenal: data-driven sales.
By charting your key sales metrics, you’ll record valuable information about your pipeline, such as the percentage chance of a lead moving from one stage of the pipeline to the next. When you combine this metric with the revenue created from a potential deal, you have the beginnings of a sales forecast, giving you an expected revenue based on real-time data from your CRM.
Expand your capabilities
You can also sync third-party integrations or apps with your CRM to provide specific tools your business might need, such as call center capabilities, multi-platform campaign planners and much more.
What is ERP?
Like CRM, ERP (Enterprise Resource Planning) is a business strategy built around powerful software. However, if CRM is the outward gaze of a business, focusing on the customer, ERP is the organization’s inward gaze, looking internally to remove bottlenecks and inefficiencies.
While CRM is focused on maximizing revenue, ERP shifts the focus onto reducing internal costs.
ERP is the domain of production. Though its benefits can be felt by all teams across the company, with all using it to record data, its primary role is to monitor cash flow relative to the maximum level of productivity and highlight where high costs and scheduling hold-ups are associated with the process.
Like CRM, ERP relies on specialist software that takes the same name, recording information that relates to the supply and production side of business clearly and concisely.
Who is ERP for?
ERP requires input from the whole company, as every department’s responsibilities factor into the internal workings of a business.
The departments that benefit most from ERP are those most associated with making sense of your business processes to understand the day-to-day running and make data-driven decisions based on it:
- Finance departments will benefit from the automation of time-consuming manual tasks and easily accessed metrics in dashboard overviews
- Streamlined data management for HR departments, with powerful features such as performance tracking, so that potential staffing issues can be predicted and required recruitment made
- Large feature sets to automate basic tasks and present real-time information to Manufacturing teams to help with customer demands and resource management, as well as tools to optimize planning and management
- Automation of time-consuming manual data-entry and stock records to maximize the efficiency of the supply chain
- Ability to automate purchase requests (with customizable content to match each business’s process) for procurement teams
- Project Management teams receive a comprehensive real-time feed of data, ensuring they’re empowered to make decisions, with risks monitored and planning altered as needed, based on this data
- Clear data tracking means compliance teams have a much easier time monitoring the statistics vital to maintaining industry standards
When should you use ERP?
ERP software solutions are primarily used by large (enterprise) companies. In fact, the larger the company, the more they stand to save using ERP—due to the numerous complicated factors involved it can be almost impossible to coordinate a supply or value chain without a centralizing hub.
Other good signs you should be considering ERP solutions include:
- Your current software solution is limiting growth
- You’re starting to find that the current systems you have in place don’t mesh and data transfer between teams is becoming a hassle
- Your teams aren’t equipped with the tools and oversight to meet your customers’ needs
How does it work?
The goal of ERP is to collate data relating to the internal operations of the entire business, with all sectors of the organization contributing to data input.
With this oversight, an ERP tool can flag up delays or issues that may affect different teams, such as manufacturing issues, difficulties in finding staff to fill certain roles in the company, etc., allowing teams to identify problems before they become a serious issue.
ERP also includes many features specific to particular areas of the business:
- With a constant feed of up-to-date information, trends can be spotted and changes made on an organizational level to help improve the running of the business
- Automation of various processes, such as setting up billing and fulfillment alerts depending on what data has been input to the system
- Detailed information about each stage of an order, of manufacturing, logistics and more
- Management of employee information, such as payroll, individual benefits and anything else pertinent to the business, as well as giving you control over any recruitment processes underway
- Risk assessment associated with implementing new processes to improve productivity by providing you with data on the existing process and a real-time assessment of the transition
Unlike CRM, ERP isn’t specifically targeted at fulfilling a few goals. It’s a localized information source for each department and location in a business that tracks the running of the company, its ability to fulfill its deals and the underlying costs of running the business.
ERP excels at identifying unnecessary expenses and cutting running costs, unlike CRM, which focuses on maximizing the number of sales and amount of revenue your business can make.
ERP and Sales and Marketing
While not tailored specifically to the sales or marketing team, ERP can offer a variety of insights to help these departments.
Your sales process can be managed using ERP software, though to a far lesser extent than CRM software. The data you collect will reflect what’s happened in your pipeline but may not have the information surrounding your leads, communications and key sales metrics your reps need.
A better way for ERP to be useful to your sales and marketing teams is by making use of data to determine the historic trends around your most valuable customers. With this data, your marketing and sales drives can be timed to correspond to when prospects are most interesting in buying.
ERP is a powerful asset that can contribute to your data-driven sales but ideally shouldn’t replace it.
How CRM can help enterprise businesses
While Cloud CRM is available to all sizes of business, there are certain benefits a larger company will see by using CRM that solves some of the issues they face.
As a company grows and expands over different locations, there’s a very real danger of each location using its own data processing methods and tools, making data sharing and migration difficult. Reports that have come out of said data may be inaccurate, or records of the data may be incomplete.
Without a centralizing system to manage all the information relating to sales, dirty data is inevitable. CRM provides the solution, ensuring that all teams, regardless of location and timezone, have up-to-data access to the same accurate information, recording everything in the same way.
By basing all information in the Cloud, there’s no delay in data transfer between teams, no matter how far away they’re located. With just an internet connection, all sales teams have access to the information they need exactly when they need it.
Forecasting and reviews
In a large company, there’s a lot depending on the sales teams to make consistent sales. A key to that consistency is in sales forecasts and reviews, ensuring a regular revenue is being brought in, and that any potential issues in the selling process can be smoothed out before they become a problem.
Without CRM, analyzing the vast amounts of sales data collected by teams would be laborious, but with it, gathering and presenting the information needed takes just a few clicks.
Armed with this data, teams can regularly review their performance with monthly, quarterly and annual reviews, and senior management and finance will have the information they need to budget for the rest of the business to operate without a hitch.
Due to regulations such as the General Data Protection Regulation, keeping your business’s and clients’ data private and secure is incredibly important, and the larger the company, the more sensitive information there is to worry about.
Without secure data storage, you could not only lose one of your company’s most valuable assets, but you could also suffer significant reputation damage if there’s a breach.
Rather than having to keep data on-site, installing costly servers and hiring IT teams to maintain them, Cloud CRM allows the data to be kept off-site, leaving servers and their security to the CRM provider—and the best CRM providers take data privacy seriously.
CRM software also includes access-limiting functions, ensuring that only the people who need to see sensitive data do and keeping prying eyes away.
As a business grows, its list of customers becomes longer.
Without a database like CRM software, it’s impossible to access vital data on your leads and existing customers at a moment’s notice.
CRM saves reps time and it saves having to rebuild relationships with customers. Unique information about each customer’s wants and needs makes selling much easier.
CRM vs. ERP systems: the key differences
Here are the pros and cons of using an ERP vs. CRM system:
Rather than thinking of the problem as ERP vs. CRM, think of these two as complementary systems that deal with very different fields, offer very different results and data, but use similar admin systems to achieve them. It’s not a case of determining which one’s better than the other, but which is right for your needs—and you may well benefit from both.
ERP and CRM integration
We’ve already mentioned that CRMs can integrate with third-party software to add extra features a company may require, and while these generally relate to the sales or marketing process, a CRM can also integrate with an ERP.
With an integration tool like Zapier, for example, you can sync Pipedrive with a number of ERPs, such as Bind ERP, in various ways:
- Create automated responses across your systems, so that adding leads, communicating with customers and closing deals in your CRM all get recorded in your ERP
- Access information from both systems regardless of which you are connected to
- Improve the efficiency of internal communication with easy data transfer between sales and fulfillment
- Provide a real-time overview of the value in your sales pipeline to your finance team
- Improve the accuracy of quotes from your reps, as they’ll have clear information relating to stock and costing in ERP
- Eliminate report duplication by different teams, as data is now visible to both systems
- Ensure your financial forecasts are more accurate than ever by giving your sales team access to pertinent financial information kept on the ERP
- To help your sales team be as cost-effective as possible, provide them with sales process efficiency data from your ERP
It’s not strictly necessary to integrate your CRM and ERP, but with integration tools making it easier than ever, there are a host of beneficial reasons for doing so.
So, CRM vs. ERP, which side do you choose—or maybe you don’t need to! CRM and ERP are both incredibly useful systems when used correctly.
Rather than asking what’s better for you in the ERP vs. CRM debate, instead think of them as separate entities that, while similar in how they’re used, focus on very different areas of a company and bring different results to the table. They’re not competitors, they’re systems to be used alongside each other if the conditions are right.
Any team can benefit from implementing a CRM. If you’re interested in seeing what a CRM could bring to your business, then why not check out Pipedrive’s free trial?
Knowing if your business is at the right stage to implement ERP is dependent on the structure, size and location of your teams. If software is becoming a limiting factor in your growth and ability to fulfill requests, it’s probably time to invest.
As with any software solution, shop around for the functions you actually need. There’s no point paying extra for tools you don’t want. Make a plan about what your issues are, why you think CRM, ERP or both would help, then find the software platforms that fulfill your unique needs.