Debating CRM vs. ERP is an Industrial Sales Mistake

Ed Marsh | Jan 27, 2023

Tl;dr - Industrial companies think of themselves in the context of their products. Therefore they value tools that help them manufacture - e.g. ERP. If those are the primary emphasis of operational and software decisions, they may debate the value of proper CRM vs. ERP sales modules that can be plugged into their "primary" system. That's a mistake with large potential revenue implications.

Five Reasons Industrial Manufacturers Should Actively Use CRM

A CRM isn't a contact manager. That's where they started, but today a proper CRM is a set of business tools, processes, and reporting that should improve the efficiency and effectiveness of marketing, industrial sales, sales management, and general management.

There are five high-level reasons why industrial companies should use a CRM.

  1. Process engineering of revenue growth - Companies should bring rigor to the front end of their business that's analogous to what they have long applied on the back end of the business. That means iteratively engineering the revenue growth process through all stages of marketing and sales. CRM provides the data and framework for that continuous loop of improvement.
  2. Treat the business asset appropriately - Market, prospect, and customer data are valuable business assets that must be protected from loss of all types; from cyber events to sales reps walking away with data when they're fired or quit, or even losing it if a rep dies suddenly in a car accident. The data is worth even more when viewed in the context of other data. For instance, a prospect's information is more important if they're with a company that matches your target perfectly and three of their colleagues have been on your website in two weeks. Harvesting and acting on dynamic data insights requires a sophisticated CRM that's well-integrated with marketing automation.
  3. A good CRM is a business financial management tool - Accurate pipeline forecasts don't come from ancillary spreadsheets and documents with month-end "narratives" of deal status. Rather, they're a product of precise, consistent execution against process. CRM provides the framework for mapping deal activity to process, confirming qualifying criteria, and therefore realistically projecting the likelihood of close and an accurate aggregate forecast.
  4. Buyer experience is an increasingly important differentiator in closed/won deals - CRM should help reps maintain an important flow of project information to customers, prospect for new business respectfully and successfully, cultivate and nurture early-stage leads effectively over long periods, and engage prospects at the time, via the channel, and with context according to their expectations. 
  5. Boosting efficiency - CRM helps reps, managers, and business leaders get more done faster and more effectively. From sales force automation to real-time alerts, dynamic dashboards and contextual sales enablement recommendations, and sales acceleration, CRM provides tools to do more, and better.

Why do Industrial Manufacturers Have an ERP

While CRM is about the front end of the business, and improving customer experience, ERP is about the back end of the business (which is where most industrial manufacturing companies focus.) Common ERP functions include inventory control & procurement, order entry and confirmation, production planning, costing, invoicing, purchase history, and financial budgeting.

ERP vendors often provide modules for other business functions, including human resources and sales. But those aren't the initial motivating reasons for manufacturers to consider ERP implementation and upgrade investments.

The ERP investment is about better insights into supply chain, manufacturing, and operations.

And that's what ERPs are built around and designed to support, so those are the core, important functions that induce companies to undertake the tortuous implementations of ERPs.

Information Often Found in an ERP That Also Belongs in CRM

Frequently important data ends up siloed in systems and databases.

Sometimes this is inadvertent - a new customer maintenance contact calls to order spare parts and is routed to customer service who captures their details in the ERP for order processing - and sometimes, it's by design - a decision is made to only add CRM contacts to the ERP if they're an order contact. Some information only belongs in the ERP. For instance, the BoM for a machine doesn't need to be in the CRM. 

The result is orphan data in both systems. Data that are often found in the ERP of capital equipment companies and which should also be in CRM include:

  • order history to tie marketing investment to lifetime value and to profile account tiers
  • contact details for all support and maintenance contacts to support ongoing customer marketing
  • machine details which will populate custom objects and customer portals
  • quote information

You'll have others. These are just examples.

Information Normally Found in CRM That Also Belongs in ERP

It works the other way too. When a maintenance contact visits your website and fills out a form to download an operator's manual, or engages with a chatbot to reach the tech support team, that person's contact details will be captured in the CRM but should be in the ERP too to improve their experience later.

Unfortunately, that rarely happens. So the customer either has to duplicate their effort, or at least regurgitate it to a customer service person who may make data entry errors or only capture some of the info degrading the value of the database for internal and external users.

What System Should be the Single Source of Truth?

Which database should govern customer and prospect engagement and communication? Which system will help you understand the full lifecycle of marketing investment through customer reorders -with attribution for accurate ROI reporting? And which system helps to continuously engage all stakeholders proactively vs. a repository for reference information and a tool for internal customers?

The answer is CRM.

And that means the CRM needs to be the single course of truth for contact and account information - vendors, advisors, bankers, leads, prospects, customers, partners, et al because you should be marketing (appropriately) to them all! At the most basic level, when the email address of a contact is added or updated in one, it should be reflected in the other.

Internal operational details of the ERP needn't be in the CRM. It's OK to have silos when they're designed and recognized, and there's no need for the data elsewhere. But some of the data will need to at least move from ERP to CRM, and it's helpful to have project info (contacts, quotes, etc.) easily accessible in the ERP for the project engineering team.

This means syncing information between systems to avoid double entry, extra software seats, wasted time, and data errors. Some vendors offer standard syncing options. Others open APIs for creating custom integration.

It shouldn't be so difficult. HubSpot's OpsHub solves this with robust uni or bidirectional syncing between systems (e.g. HubSpot Sales Hub and Microsoft Dynamics ERP), including across custom objects. (It also provides powerful data hygiene tools as well.)

Among other benefits, this allows marketing and sales teams to deliver strong buyer, owner, and customer experiences, including customer portals built on information in custom.

Why do Manufacturers Compare CRM vs. ERP?

The discussion to this point assumes that you run separate ERP and CRM. That's common, but not universal. Sometimes manufacturers are seduced by the prospect of implementing a CRM module as part of their ERP deployment.

In some ways, this is understandable. Everyone knows that implementing ERP is a nightmare. They have, or know they will, invest extensively- probably well over budget. Operations will be hamstrung in the meantime. Executive bandwidth will be commandeered. And it will take much longer than planned.

So, they figure, maybe it's better to fully leverage that investment by simply bolting on HR and CRM modules. They must be good enough. And their IT department understands that they'll have to help support them, which means one interface and outside consultant is better than two, not to mention job security for them.

Many companies have tried Salesforce, found it cumbersome, and learned that it required almost as much outside implementation and ongoing support as ERP to really adapt it.

So possibly saving money, likely reducing internal angst, deferring to internal IT, and taking a topic off the table are all reasons why industrial manufacturers may opt for ERP vs purpose-built CRM.

That's short-sighted.

CRM and ERP are Different Business Tools

From the ERP software company's perspective, a CRM bolt-on module is an opportunity to maximize the upsell revenue and to keep out competitors who might try to muscle in on the ERP side of things. It's checking the box for buyers, and vendors must only provide reasonable CRM functionality of contact management and pipeline tracking.

A great CRM, however, is a business optimization tool that helps reps and managers improve effectiveness and efficiency, improves forecasting, facilitates integration between marketing and sales, and helps to track and refine KPIs driving revenue. (See the five reasons above.)

It should dynamically guide and enable sales best practices in a hyperkinetic world - a set of requirements completely divorced from inventory tracking.

CRM vs. ERP, therefore, isn't a serious business question for companies in complex sales like capital equipment sales who therefore need a robust business tool for revenue growth.