Every manufacturer should have both ERP and CRM software. Both will improve your profitability, but CRM software allows you to manage customers. In contrast, ERP software streamlines all business processes within your organization.
Businesses looking to automate core business processes have two main software options: enterprise resource planning (ERP) and customer relationship management. ERP integrates financial and operational systems into a single database. CRM controls how customers interact with the company.
Both are vital data repositories. Multiple departments use both. Although they may be built on the same platform at times, many software products can be purchased separately and integrated as needed.
This article will discuss the main characteristics of ERP and CRM, their differences, and how to determine if a company needs either CRM or ERP.
CRM: What Is It?
CRM, or customer relationship management, software, tracks all interactions between a company and its customers. CRM features were first designed for sales departments. They were previously known as sales force automation (SFA).
Many other systems, particularly in call centers, were quickly developed to manage customer service and marketing interactions. Previously, the contact center was just another channel for customer service.
CRMs centralize all of your sales data. This enables your sales team to manage all accounts, leads, opportunities, communications, and other details through a single system. A CRM consolidates all of your sales data. This contributes to the development of trust among existing clients and customer satisfaction. It also improves communication, which increases the likelihood of a successful transaction.
Bottom line: A more organized and managed sales team will result in higher close rates and higher returns for your company.
Sales, marketing automation, and customer service departments use CRM software to perform the following tasks:
- Keep track of your customers' orders.
- Marketing campaign management can be automated and managed.
- Search for new business opportunities and sales leads.
- Manage the sales pipeline
- Reduce repetitive tasks and simplify sales processes.
- Customer experience service should be automated.
- Improve your support for existing customers.
- Produce precise data reports
- Learn which products are popular and when they sell.
Through acquisitions and development, software vendors have begun bringing all these areas under one umbrella. This is referred to as customer relationship management. Some CRM systems include sales performance management and sales incentive commissions. Still, due to their complexity, these are frequently sold separately.
Common Functions of CRM
CRM's primary goal is to nurture leads and provide a positive client experience. Users become prospects and hopefully return customer records. These are just a few of the many features available in CRM software to assist you in reaching your goal.
Contact Management
Users can use these tools to track and modify customer information. Using this feature, you can assign contacts to different representatives and add them to multiple accounts. You can track the client's involvement in the purchasing process for their business functions. It can save invoices, contracts, and other documents related to customers.
Client Interaction Monitoring
This tool lets users track past client information to improve their sales process. Sales reps may be able to segment potential customers according to their buying habits, purchasing intentions, and interests. This allows users to view and track payments.
Database Management
This tool allows employees from different departments to access the same information in a central location. Data cleaning functions are available in some programs to eliminate duplicate or "dirty" data that could lead to incorrect insights. This repository contains information that can be downloaded to assist in prospect development and analysis.
Campaign and Marketing Management
Advertising targeting is a key component of modern marketing strategy. Users can use this feature to identify potential campaign targets and measure their effectiveness. Some vendors provide integration with various email programs, allowing contacts to be uploaded and emails to be sent.
Leadership
This tool allows you to generate leads from various sources, such as email, landing pages, referrals, and more. Users can use this tool to create lead routing and track how leads progress using pipeline tracking, hierarchy relations, and territory management tools. This feature allows you to assign leads to different sales representatives.
CRM Benefits
The central premise of Customer Relationship Management is to provide a centralized repository for all customer data and to track all customer interactions. Midsize Businesses can make better decisions about which customers to pursue to increase revenue, what sales teams are doing, how to serve customers efficiently and appropriately, and other things by combining this information with analytics.
Sales representatives can see if customers have outstanding customer service tickets and respond accordingly. Customer service can also quickly determine whether a caller is a high-value or potential high-value customer and route them to the appropriate service tier.
What is ERP?
Enterprise resource planning (ERP) evolved from material requirements planning (MRP), a method for manufacturers to understand, manage, and control all resources required to run a successful business intelligence. ERP is a shared database that connects all parts of a company. This includes finances (GL), accounts payable, receivables, payroll, and financial reporting.
ERP software, instead of CRM software, which manages customer relationships, will manage all aspects of your manufacturing business operations. ERPs integrate your business and streamline operations. They also boost productivity and reduce overall costs.
ERPs are essential components of successful manufacturing businesses. They link financial and operational systems to a single database. This will enable you to streamline your business processes and share error-free data across your organization.
Manufacturers use ERPs to manage inventory, schedules, capacity planning, and shop floor control. They also offer accounting, human resources, and project management services.
ERP, or enterprise resource planning, is the most effective way to integrate a company's people, processes, and technologies. The advantages are virtually limitless.
- All departments in your company can be connected and integrated
- To streamline processes, share data among departments
- Standardize important business processes
- Lower inventory costs
- Facilitate better project planning
- Automating processes can increase throughput
- Use accurate data and reports to track performance, productivity, and progress.
- More jobs delivered on time
- Lower purchase costs
- Eliminate purchasing errors
- A consistent user experience and design can boost user adoption rates.
- Improved data integrity and financial control can reduce risk
- Lower operating costs
- Increase accuracy in financial data
- Reduce job costs
- Accounting processes simplified
- Manage human resources
ERPs provide accurate, real-time information that can be used to improve efficiency and performance in your company.
ERP can also manage service organizations' inventory, orders, supply chains, and other data. ERP systems can also manage manufacturing, distribution, and fulfillment. Many ERP systems include Human Resource Management Systems (HRMS), CRM, and ecommerce capabilities.
Common Functions of ERP
Although features vary depending on your chosen vendor, there are common capabilities. You may want to be aware of these tools when looking for a solution.
Financial Management
Financial management and accounting tools are used to build systems. They allow many business processes to run smoothly. Financial tools make the solution viable and compliant with budgetary constraints. The most common functions are accounts payable, receivable, and general ledger. Other programs can also assist with budgeting, financial forecasting, and tax calculation.
Human Capital Management
ERP software can assist you in effectively managing your employees. Some HCM tools allow you to schedule employees, pay them, and approve sick and personal leave requests. A few vendors provide project management capabilities, which allow users to view the projects that staff members are working on and allocate labor resources accordingly.
Customer Relationship Management (CRM)
CRM will be discussed in greater depth in the following section. However, it is important to note that not all vendors provide CRM functionality. Although the capabilities will not be as extensive or comprehensive as those of a standalone CRM system, ERP may be a viable option for businesses with basic CRM and other business processes.
Inventory Management
Inventory management may include the ability to notify customers of low stock levels and set automatic reordering triggers. IM does not stand alone as a solution. It is frequently combined with warehouse, distribution, and manufacturing management to provide a more comprehensive solution.
It is critical to be able to track and monitor inventory and see the status of machines that produce your products, as this provides you with a better view and control over the entire manufacturing process.
Management of the Supply Chain
SCM software includes a variety of tools. As previously stated, IM is a critical component of this function. It also includes aspects like purchase order and distribution management, quality control, regulatory compliance, manufacturing, and regulatory compliance. This area has a lot to offer in terms of technology and features. However, how these capabilities can be linked and automated varies from vendor vendor vendor to vendor vendor vendor.
ERP Benefits
An ERP system provides numerous advantages, including storing all operational and financial data in a single database. This greatly improves both monthly and ad-hoc reporting. Employees can also drill down into reports to uncover financial insights without relying on IT or finance teams for analysis and reporting. Businesses can make data-driven decisions more quickly, affecting everything from profitability to new growth opportunities and efficiency.
Companies frequently cite the advantages of switching to an ERP system to accelerate their financial close. Closing the books is a term that refers to closing the books. Typically, finance teams keep track of all income and expenses.
Closing the books with spreadsheets or entry-level systems necessitates manual labor, data entry, and contact with various departments for financial data. Companies have reported that the time it takes to close their books has decreased. A central ERP system that automates many tasks can now handle this task.
ERP systems can also help an organization's financial controls. Only job function holders can access sensitive data in a centralized system with role-based permissions. This improves audit trails while lowering financial risk.
What are the Similarities Between CRM and ERP?
ERP and CRM are business applications that use relational databases to store, analyze, and manage data. Both can be delivered as on-premises software or as software as a service (SaaS). In this case, the vendor hosts the software, and customers have cloud access to it.
What's the Difference between CRM and ERP?
Although the entire organization will rely on both CRM and ERP systems, there is one key distinction between the two. ERP is primarily used for financial data and the finance department. In contrast, CRM is primarily used for sales and customer service. The former is commonly referred to as the "back office," while the latter is called the "front office."
Some ERP systems include a CRM component, while others do not. CRM software systems, on the other hand, frequently lack ERP components. Salesforce.com is not an ERP system because it does not manage transactional data. Although it has access to order history and invoices, that data is obtained through an integration with the Enterprise Resource Planning.
The Key Differences Between CRM and ERP
These points are significant in determining the differences between CRM and ERP.
- CRM software allows a company to track all client and customer transactions. ERP is software that enables a company to manage its business processes across all departments.
- ERP systems, such as CRM, Supply Chain Management (SCM), Human Resource Management (HRM), and others, consolidate information from various functional groups within an organization.
- ERP was created earlier than CRM.
- CRM is primarily used in front-office operations. ERP is used to complete back-office tasks.
- CRM is concerned with managing customer relationships with the enterprise. In contrast, ERP is concerned with planning and managing an organization's resources to maximize its potential.
- While CRM is focused on increasing sales, ERP focuses more on reducing costs.
Do I need CRM, ERP, or Both?
Nearly all companies growing, from small and medium businesses (SMBs) to large enterprises, will eventually require both ERP and CRM systems. When they feel that their current accounting tools, such as spreadsheets or QuickBooks, are limiting their growth or are inefficient, companies often switch to ERP systems.
Businesses managing customer relationships can do the same in email clients, spreadsheets, or contact management systems. A company's business model will determine whether it invests in ERP or CRM. An ERP system might be more attractive to a company with a limited number of high-value customers or complex financials than one with many simple customers. However, a company that has a lot of customer contact and requires frequent communication might choose to invest in CRM.
Both systems are crucial for most companies.
ERP System and CRM System Integration
ERP and CRM systems must be able to exchange information. This is more convenient than having two distinct sets of data. A fully integrated CRM with your ERP is the best option for manufacturers, particularly complex custom ones.
The heart of your manufacturing operations is your ERP system. It will connect to your ERP system or, even better, to your CRM. This will allow information to flow between them seamlessly.
To cross-sell or upsell, a sales representative might need to see a customer's credit history, order history, and outstanding payments. Finance departments may also require CRM system access to calculate sales commissions for bulk order discounts or payroll. A CRM system built on an ERP platform may also benefit business leaders. This enables them to consolidate pricing structures and manage key performance indicators (KPIs) such as customer acquisition costs and life expectancy.
CRM integration saves time and gives your sales team access to price lists, past deals, and your product configurator. It greatly simplifies the creation of quotes, a common issue for custom-made manufacturers.
A fully integrated CRM system enables sales teams to quickly access previous deals and other data to generate accurate quotes. If a product is more complex, your sales team can quickly bring in your engineering department to assist in developing and refining quotes that meet your customers' needs.
CRMs and ERPs are both critical tools for manufacturing companies. Investing in the right tools can increase the profitability and performance of your shop. Configure, price, quote (CPQ) is a common process that necessitates close ERP and CRM integration.
Many businesses require CPQ tools, which require ERP and CRM systems data. Larger CRM and ERP vendors frequently offer pre-built integrations or can access them through a third-party partner. After a CRM or ERP system upgrade, these integrations can become costly and difficult to maintain.
Choose a Solution that Unifies ERP and CRM
ERP companies frequently place a premium on the finance module. This automates basic accounting tasks while providing stakeholders access to cash flow and available cash. However, the next step is to implement a CRM that improves customer communications.
ERP systems that integrate CRM with the platform offer numerous benefits. Unified ERP and CRM systems are generally less expensive than purchasing point solutions separately. Because of the unified data model, all information can be updated immediately without batch uploads or middleware connections. ERP systems designed from the ground up can handle transactions more efficiently, making them easier to program, customize, and integrate with third-party tools.
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Conclusion
Customer Relationship Management allows the company to build long-lasting relationships with customers. It is important to understand the preferences and build trust with clients. ERP is a system that integrates various functional units within an organization to easily share information and communicate in real time using a single computerized system.
ERP and CRM are both excellent tools for increasing revenue. They serve different functions. CRM handles customer relations, sales, and marketing, whereas ERP centralizes front- and back-office processes. Which program is best for you will be determined by the scope of your requirements and the level of investment you are willing to make.
Apart from these differences, the two software have one thing in common: they all aim to increase profitability.
