ERP vs. CRM: A full comparison guide

Analysis paralysis hits hard when you're debating between new running shoes or your summer vacation destination—it hits even harder when choosing the systems that will run your business. Both your internal team and customer-facing staff need support; favoring a department too far in either direction can lead to operational chaos, missed sales goals, or passive-aggressive Christmas cards from your coworkers.

That said, deciding between ERP and CRM shouldn't stress you out: they're both highly functional frameworks that can make a positive impact on your team.

Here, I'll walk through ERP vs. CRM in detail so you can learn what each does best, find the right fit for your business, and get back to planning your vacation.

Table of contents:

• What is CRM?

• CRM benefits

• What is ERP?

• ERP benefits

• What is the difference between ERP and CRM?

• CRM and ERP similarities

• Do I need a CRM, ERP, or both?

• Integrate ERP and CRM systems with Zapier

What is CRM?

Customer relationship management (CRM) is a method that helps organizations manage interactions throughout the customer lifecycle—most importantly, all the external relationships important to your business. CRM software is often the backbone of sales and marketing operations, as teams use it to organize lead data, track prospect interactions, manage sales pipelines, and automate workflows.

Most CRMs are essentially advanced data management platforms with a fancy little sales hat on. They collect key details about where your prospects have been, what they've interacted with, and their preferences, so you can use that data to bolster your pipeline management.

CRMs connect natively to other apps, so your sales and marketing teams can connect the CRM to the other tools they use. With Zapier, you can extend those integrations to include thousands of apps across everyone's tech stack. That way, you can get data into and out of your CRM so everything is in sync. Here are some examples of what that might look like.

CRM benefits

If I sat down and listed every CRM benefit, I'd have a list that would stretch longer than this entire article. To spare your attention span—and to keep us moving—I've highlighted the top four.

• Improved customer service: Prospects and existing customers expect personalization. Even if they're the 47th lead your sales team has contacted this week, they don't want to feel like 47—they want to feel like your only one. With a CRM, your team gets reliable, up-to-date information on each prospect, their history, and their preferences. This allows you to deliver personalized communication that impresses your clients and builds better customer experiences.

• Source of truth: Without a CRM or similar tool, your sales team would be running around like a headless chicken. Google Analytics data is over here, Facebook ad leads are over there, LinkedIn company status updates are somewhere in between. CRMs aggregate all of this data into one place so your team spends less time chasing information across different tools and more time nurturing leads.

• Increased customer retention: When I need to get my oil changed, I still go to the same dealership where I bought my car. I know it's at least $30 more expensive than if I went to a Firestone, but I keep going back because they have excellent service. A good CRM can have the same effect on your customers—when you consistently follow up, remember their history, and treat them like a name, not a number, you can build lasting customer relationships.

• Refined insights: Many CRMs come with powerful analytical and reporting features you can use to spot things you may not have noticed on your own. For example, a quality CRM might flag that many of your recent leads are coming from the same industry or business sector. You can use that information to refine your messaging and double down on those types of prospects. 

What is ERP?

ERP, or enterprise resource planning, is a method that connects teams and core business processes to promote collaboration, reduce data silos, simplify workflows, and foster better decision-making. Compared to CRM, it focuses more on internal systems.

ERP software can specialize in finance, HR, supply chain management, marketing, and sales to create an interconnected workplace.

You can think of ERP as one massive shared database for business information. For example, let's say a warehouse manager needs to access billing information. They can look at their ERP software and find the information they need, even though it's not technically their department (as long as they have the right permissions). Without an enterprise resource planning system, they would likely need to send an email to the accounting department and wait two business days for an answer (maybe longer if it's tax season). 

Just like CRMs, you can typically link ERPs to your tech stack, and you can extend that connectivity with Zapier. By connecting your ERP to Zapier, you can make sure your ERP talks to even the most niche apps in every department, all with enterprise-grade security built in. Here are some examples of how it might work.

ERP benefits

ERPs connect systems across departments, so the benefits are organization-wide. Here are the hits.

• Fewer data silos: Data silos are the iceberg to the Titanic of productivity—when team members need to ask other departments for information, workflows stall, and data falls through the cracks. ERPs allow authorized users to access the data and tools they need across departments, limiting disruptions for smoother sailing.

• Faster and more nuanced reporting: Finance teams need accurate figures to close the books every quarter. Sales and marketing teams need consumer data to tweak outreach strategies. Upper management needs hard data to see how the business is performing. Without an ERP, a poor intern may be knocking from department door to department door trying to get the information they need to build a report. With an ERP, teams can access data from one central system so they can compile quicker reports that encapsulate all relevant data.

• Consolidated costs: Some ERP platforms include automation features that streamline repetitive tasks like basic payroll, bookkeeping, and order processing. This translates to better resource allocation, lower labor costs, and empowering your team to work on the meat and potatoes of their jobs instead of repetitive admin work.

• Better security: ERP systems act as a single source of truth for information throughout your organization. For this reason, most ERP providers offer robust, enterprise-grade security measures to safeguard data and keep private information secure. 

What is the difference between ERP and CRM?

The main difference between ERP and CRM is that ERPs focus primarily on managing internal operations such as finance, HR, inventory, and supply chain, while CRMs focus on managing external customer interactions related to sales, marketing, and customer service.

In practice, there is some overlap—many ERP systems include basic CRM capabilities—but you can typically think of ERP as "internal" and CRM as "external." 

To make that more concrete, imagine you're in a world-class restaurant. CRMs are the waiters. They expertly interact with you (the customer) and make sure you have a great experience. They remember you came in last week and ordered ossobuco, and tell you the chef just got a delivery of the best veal shanks he's ever seen. Throughout the meal, they suggest wines and desserts they think you'll love.

ERP is like the head chef or general manager. They oversee back-of-the-house operations—the sous chefs, the line cooks, the dessert station—and make sure everyone is working as efficiently as possible. They're dedicated to producing amazing food with impeccable timing, and they even monitor distributors to make sure they're getting quality products at affordable prices. They could go out and talk to customers—and some do—but they know the waiters are usually a better fit for that.

CRM and ERP similarities

I know I just spent four paragraphs and a crawlable table telling you how ERP and CRM are different, but they do share some similarities.

• Centralized data: At their core, CRMs and ERPs both seek to centralize data and make it more accessible for your team. This helps businesses create a single source of truth and limit hours spent digging through spreadsheets and disconnected data sources. 

• Reporting and analytics: These tools don't just congregate a pile of crucial data and be done with it—they both have dashboards to spotlight trends, and can generate comprehensive reports in seconds.  

• Process automation: Both methods use AI and automation to streamline processes and eliminate repetitive tasks. For example, a CRM could help you build an automated lead follow-up system, while an ERP tool could automate product ordering, invoicing, or general supply chain logistics.

• Integrations: CRMs and ERPs don't build data dictatorships; it's a democracy. They can both integrate with other tools (even with each other), so teams can connect all their systems under one technological umbrella. If you want to integrate even more tools—say, 8,000+ of them—you can connect both types of platforms to Zapier to build AI-powered, automated systems across your entire tech stack. 

Do I need a CRM, ERP, or both?

I can't definitively tell you if you need a CRM, ERP, or both—I can't read minds (and I've tried). However, I can point you in the right direction.

If you're a smaller business without too much going on behind the scenes, you can definitely start with a CRM. Even enterprises that are focused on improving the customer experience should go with a CRM if they already have other department-specific tools they rely on and love. A CRM will help you nail your sales process so you can generate more revenue, increase customer lifetime value, and—most importantly—grow.

If you're looking to consolidate  HR, finance, supply chain, and the next quarterly report—as well as supporting your sales team—an ERP could do the trick. An ERP tool will help you manage your internal needs and turn chaos into continuity.

There are some situations where you may want to leverage both a CRM and an ERP. Maybe you're a large operation that needs an ERP for internal personnel, but the limited CRM capabilities aren't supporting your sales team enough. In that case, you may want to invest in a dedicated CRM to supercharge your sales process while also leaning on ERP to take care of your non-customer-facing staff.

Integrate ERP and CRM systems with Zapier

Whether you plan to invest in an ERP or CRM (or both), you'll need to find a way to integrate it into your current systems.

Zapier is an AI orchestration tool that can help you connect your CRM or ERP to all your other tools and build fully automated systems across your entire organization. Anyone can deploy automations without IT bottlenecks, so you can manage leads, keep departments connected, and destroy data silos—on and off your CRM/ERP.

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• The best free CRM software