Although the sales team resides within the CRM, a lot of selling data still exists untouched in the ERP system next door. This blog discusses how disconnected ERP and CRM systems generate revenue-loss blind spots, and how ERP can help you discover opportunities that your sales teams may not have had access to.
Introducton
Most businesses consider their CRM as the ultimate repository of all their customer relationships; all deals, all conversations, all opportunities reside there. In the meantime, the ERP system runs in the background, taking care of inventory data, order history, invoicing, and fulfillment. Communication between the two systems is rare, and that omission comes with a high cost for businesses that are not fully aware.
The Blind Spot Between Sales and Operations
A CRM is great for keeping track of intent, who is interested, who is in the pipeline, who hasn’t responded in a while. But it cannot see what’s going on on the operational side of the business, such as the products that are running low, customers who are ordering fewer products than they did before, outstanding invoices, or even customers who just placed their biggest order ever.
That information is stored in the ERP, and when there isn’t a link between the two systems, sales teams are operating with half the picture. While a rep may be on a cold call, an existing customer’s order volume may subconsciously be down 40% for the past quarter, which would have started a retention discussion if the salesperson noticed.
How much Hidden Revenue that is sitting there, it is where it is sitting.
Upselling and cross-selling opportunities. Patterns that are not discovered by a CRM, but are seen in the ERP purchase history: If a customer keeps buying the same product category, they may need to look at a different product within that category.
At-risk accounts: One of the earliest indicators of customer churn is a decrease in order frequency or order size, which will appear in ERP before it will appear in the CRM as it becomes a lost sale.
Inventory-driven timing: Sales teams can schedule outreach based on real product availability, rather than speculation or promises that are unlikely to be fulfilled, with the knowledge of what items are coming back into stock or have returned in its inventory.
Payment and credit history: ERP can monitor the behaviour of payments and invoicing that can provide an indicator of whether an account is financially healthy enough to have an upsell discussion with, or if they would be better suited to a different approach altogether.
Why This Gap Persists
One issue is organizational – CRM is often in the hands of sales and marketing, while ERP is in the hands of finance and operations. Unless someone decides to push for it, there is not much incentive for the two departments to integrate systems. Partly, it’s technical: integration of two systems that weren’t designed to work together can be more time-consuming than it’s worth.
The consequences of ignoring that gap, however, start to add up just over time: untaken upsells, unflagged churn, and sales calls without the context that could make them more effective and timely.
Making a small difference without a huge change
This is no reason to tear up either of the systems. Some practical suggestions are:
- When integration tools or middleware are used to synchronize key ERP data (order history, inventory, payment status) into the CRM system automatically
- Developing joint dashboards that bring together sales pipeline data and operational data to give a comprehensive overview.
- Not only does this help you get alerts when something truly significant happens in the ERP, but it also makes it automatic, making your life so much easier.
- Bringing sales and finance together on a shared understanding of data that counts to surface
The Bigger Picture
Not all of the best customer information can be found where you’re looking for it. There are opportunities for revenue and churn warnings that are available in operational data but not in a sales conversation because there was never an expectation that the systems tracking them would be able to communicate with each other. You don’t need to install a new system — just link together the existing ones.
FAQs
1. Why can't a CRM access revenue signals that are stored in the ERP?
CRMs are designed to handle the tracking of the sales pipeline and customer interactions, while ERPs handle operational information such as inventory management, orders, invoicing, and so on, which are not necessarily integrated with the CRM unless done explicitly.
2. How to overcome these challenges, and more, with ERP-CRM integration?
Common opportunities for upsell and cross-sell that are overlooked include purchase history, early churn (in terms of order volume), and improved timely outreach based on inventory availability.
3. Major technical project to integrate ERP and CRM systems.
Not necessarily. There are lots of integration tools or middleware available which can be used to transfer essential data points between various systems without having to rework either system.
4. The disconnect between ERP and CRM is usually owned by?
It may not be a technical issue, but an organizational one – sales and finance may be on different systems, and not have a specific reason to be using them together without a push from them.
5. What is the easiest initial step to take to close this gap?
First, determine a few critical ERP signals (such as changes in order volume or payment history), and determine how to bring them to the sales team’s attention, even before the full ERP system integration.