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. These systems will help you maximize performance across the company.
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.
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. There are differences, though, and knowing which strategy or piece of software is right for your organization is vital for efficient growth.
We’re here to walk you through:
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, improve the customer experience 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 customer life-cycle 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. Human Resources and Customer Support can access communications between a company and buyer to better understand a client’s position. 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 (instead of manually referring to a spreadsheet which increases the risk of human error).
Thanks to CRM’s outward gaze on your leads and customers, you can identify and maximize your sales options by collecting customer 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 businesses. 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, a great convenience for sales reps on the move.
When should you use CRM?
It’s never too soon to implement a CRM strategy. Even as a startup, you should have guides in place on how to manage leads at different stages of a deal, the best ways to communicate with prospects and so on.
High-performing organizations use a CRM tool 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 built-in 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 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, which lets them test new strategies, collect results and forecast more accurately
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. As you consider the stages, you should include leads you intend to cold-call, those who’ve expressed an interest in your product, any who are close to becoming a genuine prospect and existing customers you’re hoping to upsell or cross-sell to. You can even include leads yet to properly enter your funnel, thanks to tools like Leads Inbox.
With your pipeline laid out, you can begin to build an actionable and repeatable sales process that guides your team through every customer interaction. You can also monitor the success of each stage in your sales process and identify where it could be improved.
Once you have a clear idea of the different stages of your pipeline, you can begin to use your CRM software to expand your abilities within those stages.
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 2020-2021 Report, over half (54%) of respondents said that they regularly to always struggle to find leads.
Do you Struggle to find enough sales leads?
How does automation help?
CRM software allows you to automate large parts of the lead generation process. For example, you can create chatbots to talk to visitors to your website, starting the relationship with your lead immediately.
Once you’ve populated your pipeline with leads, you can automate the lead qualification process with tracked engagement activities.
You can reach out to leads with automated emails personalized for each contact based on criteria such as 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. This makes 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 traits your successful leads have in common. You can use this data 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. 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. It also means that if a manager needs to be brought in regarding a client issue, it can happen immediately without interrupting the rep’s workflow.
With your clearly defined pipeline, your repeatable processes and shareable sales data, you’ll have everything you need to cultivate a powerhouse sales team. You’ll be ready to use the secret weapon in the CRM arsenal: data-driven sales.
Charting your key sales metrics gives you 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 with integrations
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, social media, e-commerce 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 front-office of a business, focusing on the customer, ERP is the organization’s back-office, looking internally to remove bottlenecks and inefficiencies.
ERP vs. CRM
While a CRM solution is focused on maximizing revenue, ERP focuses on reducing internal costs. They can be two complementary tools, so it’s not really a case of “CRM vs. ERP.”
ERP is the domain of production. Though its benefits can be felt by teams across the company, its core function is to increase organizational efficiency. It does this by monitoring cash flow relative to the maximum level of productivity. It helps you see how company resources could be better used by highlighting high costs and scheduling hold-ups.
Like CRM, ERP relies on specialist software that takes the same name. Teams use this software to record information that relates to the supply and production side of business clearly and concisely.
Who is ERP for?
ERP requires input from the entire organization, as every department’s responsibilities factor into the internal workings of a business.
The departments that benefit most from ERP are those that will use is to make data-driven decisions about day-to-day operations:
Finance benefits from easy-to-access metrics and time-saving automation of manual tasks (such as payables, receivables, billing, inventory management) HR can streamline data management with powerful features such as performance tracking to predict potential staffing issues
Manufacturing can automate basic tasks and see real-time information around customer demands and resource and supply chain management
Procurement teams can automate purchase requests (with customizable content to match each business’s process)
Project Management has a comprehensive real-time feed of data, ensuring they’re empowered to make decisions and monitor risks
Compliance teams can monitor 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 system is limiting growth
Your current systems 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 data from every team,ERP software can flag concerns like delays, manufacturing issues or difficulties in finding staff to fill certain roles, allowing teams to address problems before they become serious issues.
ERP also includes many features specific to particular areas of the business:
A constant feed of up-to-date information that allows you to spot trends on an organizational level to help improve the running of the business
Automation of various processes like billing and fulfillment alerts
Detailed information about each stage of an order, of manufacturing, logistics and more
Management of employee information, such as payroll and individual benefits, and control over any recruitment processes underway
Risk assessment around implementing new processes to using 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. It tracks the company’s day-to-day operations, its ability to fulfill its deals and the underlying costs of running the business.
Although both the CRM and ERP tools are used to increase profitability, ERP systems excel at identifying unnecessary expenses and inefficient processes, while a CRM focuses on increasing sales and revenue.
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.
You can manage your sales process using ERP software, though to a lesser extent than with CRM software. The data you collect will reflect what’s happened in your pipeline but won’t have information about leads, communications and key sales metrics.
A better way for ERP to serve sales and marketing is by compiling reports on your most valuable customers’ past buying trends. Seeing when and how customers typically purchase your products or services can shape your marketing campaigns and timing going forward..
ERP is a powerful asset that can contribute to your data-driven sales but ideally shouldn’t replace it.
Free templates to track sales
Before spending a cent on CRM tools, try out this 100% free and effective sales tracking template.
How cloud-based CRM can help enterprise businesses
While cloud CRM is available to all sizes of businesses, there are certain benefits a larger company will see from using CRM software hosted on an external server.
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. This makes data sharing and migration difficult. Reports that come out of said data may be inaccurate, or records may be incomplete.
Without a centralizing system to manage all the information, dirty data is inevitable. Cloud-based 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.
When all information is based in the cloud, there’s no delay in data transfer between teams, no matter how far away they are located. With just an internet connection, all sales teams have access to the information they need exactly when they need it.
Due to regulations such as the General Data Protection Regulation, keeping your business data and customer information 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. Server maintenance and security is left to the CRM provider – and the best CRM providers take data privacy seriously.
CRM vs. ERP systems: the key differences
Each system has a different purpose, though some of their functionality overlaps. Here’s a list of the key differences between the two systems:
CRM and ERP Descriptions
- A system used to help companies manage their relationships and improve sales and marketing processes.
- Highly specialized features related to sales and marketing.
- Helps users assess the potential of future deals.
- Leadership can plan budgets based on sales forecasts.
- Helps sales reps understand how they relate to their prospects and customers and how to best approach them.
- Enables the sales team to make use of data-driven sales to boos productivity and efficiency by measuring key sales metrics and results from the sales process.
- Saves time by automating repetitive manual tasks.
- Provides information on every facet of the selling process, including automated tracking of all communications with leads.
- Increases the ease of lead generation and qualification to help fill the sales pipeline.
- A system used to make sense of the entire internal workings of a business, with an emphasis on finance and productivity.
- A company-wide program with many uses for different teams.
- Enables teams to assess the cost-effectiveness of processes.
- Helps businesses understand how each of their departments affect and relate to one another.
- Useful for senior leadership who are planning company-wide and departmental strategy.
- Saves time by automating repetitive manual tasks.
- Alerts relevant departments to issues that may affect them, giving them time to find solutions.
- Teams can use ERP data to assess risks associated with making changes to the business.
Rather than thinking about which software you need (ERP vs. CRM), think of these two as complementary systems that deal with different fields and offer different results and data but use similar admin systems. It’s not a case of determining which one’s better, but which is right for your business needs. 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. You should note that CRM software can also integrate with ERP software.
With an integration tool like Zapier, for example, you can sync Pipedrive with Bind ERP. Integrations boost your efficiency by letting you:
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 either system
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 to improve financial management
Give your reps clear information on stock and costing so they can improve the accuracy of quotes
Eliminate report duplication by different teams, as data is visible in both systems
Ensure your financial forecasts are more accurate by giving your sales team all pertinent financial information
Provide your sales team with sales process efficiency data so they can be more cost-efficient
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 reasons for doing so.
So, CRM vs. ERP, which do you choose? Maybe you don’t need to. CRM and ERP are both incredibly useful systems when used correctly and collectively.
Rather than asking what’s better for you in the ERP vs. CRM debate, 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 that can 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?
Whether your business needs an ERP system depends on the structure, size and location of your teams. If the lack of software is limiting your growth and ability to fulfill requests, it’s probably time to invest.
As with any software solution, shop around for the functionality you actually need. Analyze what your issues are, why you think CRM, ERP or both would help, then find the software platforms that fulfill your unique needs.