Know The Differences Between an ERP and CRM

ERP and CRM  have become essential tools for many businesses. But do they have the same usefulness? Each of these programs has complementary functions that allow comprehensive management of all business areas. However, not all of them are suitable for the same types of companies. That is why it is very important that you know what your real needs are.

In this article we are going to analyze  what a CRM is ,  what an ERP is  and the main  differences between ERP and CRM . In addition, we will explain to you which are the most relevant advantages of integrating them into the day-to-day life of your company and we will help you make a decision about which one is most suitable for you.

CRM  and ERP  have become essential tools for many businesses. But do they have the same usefulness? Each of these programs has complementary functions that allow comprehensive management of all business areas. However, not all of them are suitable for the same types of companies. That is why it is very important that you know what your real needs are.

Table of Contents

What is a CRM

CRM ( customer relationship management ) programs , which in Spanish would be translated as customer relationship manager, are used in the company to manage the relationship with users at a comprehensive level. But what is a CRM ? These tools allow you to manage all the files in the database and in them you can record any contact you have with a client.

The platform through which the contact occurs does not matter, since the ideal is for all customer service employees to use the same  software . In addition to the above, these programs are very useful for  analyzing user data and patterns , which is why they are of great help in offering more personalized treatment.

In recent years,  its growth has been exponential , and it is not by chance. Its great ability to provide closer treatment to users has become a key factor for many companies. Above all, when they need to gain the trust of users.

Advantages of using a CRM in a company

There are many benefits that a  quality CRM  can offer you. We are going to show you the most relevant ones so that you have more information when making a decision about purchasing them.

Better relationship with users

One of the most important points for any company has to do with improving relationships with users. By having this  software , there is a  much closer follow-up  of all previous contacts. This makes interactions more fluid, since customers do not need to update their interlocutor again. In addition, it facilitates a better understanding of your needs, which consolidates the long-term relationship.

Personalization and customer focus

Another advantage associated with these programs is their  great capacity for customization . By having detailed information about each user in the database, it is much easier to carry out advertising campaigns.

On the other hand, consumers  feel more valued  and get interesting promotions, which increases their loyalty to the brand and also their level of overall satisfaction. This makes customers more likely to recommend the products to their friends and family, or even through their social networks to the rest of their contacts.

More control over transactions

Each  purchase, claim or return  that a customer makes is recorded in the program and is stored securely. In this way, it is possible to analyze in a very simple way some interesting data, such as, for example, the average expenditure that the client makes each year.

You can also find out what steps each consumer follows before confirming their purchase or the number of times they place orders each month. In the same way, these statistics are useful to  know what percentage of orders are returned  and whether this is done regularly with a specific product.

Thus, if there are undervalued items in the inventory, they can be replaced with others that are more attractive to customers. Or, in the case of users with a high percentage of returns, it is possible to apply additional measures to prevent the company from losing money. This is something that many companies have already implemented and that has a very positive impact, since losses due to merchandise returned in poor condition and also transportation costs are reduced.

All of the above benefits have a significant impact on the evolution of the business. Above all, they are very useful for increasing sales conversion rates, so income also grows progressively. One  difference between CRM and ERP  in this field is that enterprise resource management software does not have the same ability to analyze customer habits.

Which companies benefit from a CRM

Not only the B2C  ( business to customer ) sector  can take advantage of the virtues of a CRM to help their business grow. Those in the  B2B  ( business to business ) sector also obtain the same benefits with its implementation. Generally, any customer-centric business with elastic demand is able to achieve greater performance with this tool.

However, some companies almost necessarily need to have a CRM. This is the case of online sales companies   and also of retail stores.

What is an ERP

ERP programs ,  also known as enterprise resource planning tools, are a comprehensive solution for the vast majority of departments in any company. And with them it is possible  to control the accounting, logistics and inventory of a business , as well as the orders placed for both the purchase of merchandise and the sale.

In addition, they are responsible for automating many daily tasks, which is a great relief for a large number of companies. All these processes are included under a single platform that controls all the information.

Advantages of using an ERP in a company

These are the most important benefits of integrating this type of programs.

Much easier access to information

When a company has multiple data sources, it is quite common for them to only be accessible to a specific department, or for it to be very difficult to find the information they are looking for.

This problem completely disappears with an ERP, since  all the information is in one place  and is accessible by all users who are granted permission to do so. In this way, apart from streamlining the work a lot, you can control who should access this information.

Furthermore, thanks to its location,  the data is much more secure . And, as long as the information remains in the cloud, it will be encrypted and protected from any possible attack.

Facilitates decision making

An ERP collects a large amount of information constantly. In addition, it has multiple metrics that can be integrated into graphs to facilitate analysis. All of this is very practical for company managers to decide to establish a new strategy. This is what is known as the   data-driven approach  .

This takes improvisation out of the equation and also reduces the risks of setting a new course or making compromised decisions. The entire strategy is organized taking into account the information that is available to those responsible.

Cost reduction

One of the main advantages of using these programs has to do with the automation of processes, as we have explained in the section on  what an ERP is . In this sense, many daily tasks are executed in the background and do not require any type of human intervention. Such is the scope of these systems that they are capable of automatically placing orders if the warehouse begins to run out of supplies.

Therefore, at an operational level, waiting times and errors are reduced (since no human is involved) and, in addition, the use of additional computer systems is controlled. For all this, it is possible to obtain much lower costs not only due to savings in labor, but also due to increased productivity. This is a  very important CRM and ERP difference  .

Which companies benefit from an ERP

Smaller companies may be able to function without the need to digitize their management, or even doing so with very simple accounting programs. However, any SME that is in full growth and is no longer able to keep its management up to date will benefit from the use of an ERP.

Furthermore, these programs are basic in companies that have several departments, since communication between them is greatly simplified. They should also be used if your business is in charge of distribution and logistics or if you have a warehouse where merchandise continually enters and leaves, something that we have shown you in the section that explained what an ERP  is .

Also Read: Prompt Engineering: Everything You Need To Know

What are the differences between ERP and CRM?

The main  difference CRM and ERP  lies in their approach. The first of these programs is more focused on the relationship between the business and its customers. However, an ERP covers the management of most of the business resources to optimize internal resources. Therefore, while CRM is much more useful for the  marketing  or sales department, an ERP can provide a very useful platform for the rest of the departments.

Both are very practical to improve the efficiency of the company. However, there are  differences between ERP and CRM  due to the way they achieve this objective. And the first of them helps automate many business processes. Thanks to this, the need for personnel is reduced and, consequently, costs. Therefore, the  difference between CRM and ERP  is that the former, although it increases operational efficiency, does so thanks to an increase in sales.

Another  difference between ERP and CRM  has to do with the type of information they handle. While a CRM has, for the most part, customer information, in an ERP the files and files in its database focus on internal business data such as invoices, inventory levels or communications between different departments.

How to know what is best for me to use in my company

Once we are clear about the difference CRM and ERP, to choose between one or the other, we must take into account the needs of your business. As we have explained to you at the beginning of this article in the section on  what a CRM is , if what you are looking for is to improve the relationship with your clients and marketing  , without a doubt a CRM can become your best ally.

On the other hand, if what you want is to optimize the management of your warehouse, reduce your management needs thanks to automation and integrate the entire financial section of your company under the same software, ERP programs are a great  solution . In fact, don’t forget that the  difference between CRM and ERP  is that the former does not focus as much on the business management section.

However, it is possible that your requirements are broader and that you could benefit from both tools. In that case, it is best to opt for  applications that can be linked together , like the ones we develop in our company. With them you will be able to enjoy the benefits of both platforms without duplicating information or work, since all data is automatically transferred between both.

Now you know  what an ERP is ,  what a CRM is  and what the  differences are between ERP and CRM . Which one best suits your company? If you have any questions or need more information, do not hesitate to contact our team of professionals. We will advise you to find the best solution and help you implement it in your business.