How to Determine ROI on CRM for a Business Purchase
Any company considering upgrading or investing in a new Customer Relationship Management (CRM) system can save money, increase CRM ROI, and improve customer satisfaction over time, given proper levels of planning, communication, and coordinated agreement on the specific CRM business goals. When it comes to a CRM tool, there is no single best CRM system. To choose the CRM software that is right for you, you cannot just pick the one with the highest CRM ratings and expect it to work well for you.
Purchasing the right customer relationship management system software that generates increased CRM ROI is a little more complicated than that, but all the effort you put into making the purchasing decision will be well worth your time. For CRM software solutions to give a good CRM ROI, it is important that they serve your business needs as much as possible without being too much of a burden on your finances. Once you are well aware of your business needs, you can compare CRMs against those needs and shortlist the solutions which you think will serve your business needs the best and as a result, give you a good CRM ROI. You can also use a CRM comparison tool to make the whole process easier.
Once you have finalized a software, a good strategy will be to look at the CRM reviews and see what other users think about the software and where they are facing problems. This will further help you understand what you are getting into and will give you the right CRM ROI questions to ask when making the purchase. Further in this article, you will learn what are the different things to consider when you are in the planning stage of purchasing a CRM, what will help you get a good CRM ROI (Return on Investment), and what are some ballpark CRM costs.
Planning for CRM ROI
A carefully planned strategy for realizing a return on investment ROI on CRM purchase is necessary before making any decisions to proceed. Following are some of the reasons that will help you understand why this is so.
Predicting customer responsiveness and employee adoption curves for a new CRM product is difficult and unique, based on enterprise specifics. This is where having a good knowledge of who you are customers are and what your employees prefer can really pay off.
Partnerships between the new CRM product vendors and a company’s operational leadership are critical for getting a decent CRM ROI. It is important that all key stakeholders are fully involved in the decision-making process so that everyone is fully aware of what they are getting themselves into and they can benefit from the expertise and support of each other.
Business objectives, customer metrics, operational cost metrics, and technology release planning goals regarding CRM product investment are all factors that require careful consideration. Buying a CRM solution is therefore not a one-day decision, it requires careful deliberation and the input of all stakeholders regarding various factors such as the ROI of CRM purchase.
Why is some CRM ROI disappointing?
You won’t always get a thriving CRM ROI because some projects fail altogether. This is because some new business leaders purchase a CRM solution without first determining and aligning their unique business requirements with the solution to maximize CRM ROI. Without the correct alignment, they inaccurately forecast their CRM ROI (return on their investment) which proves to be disastrous.
Best CRM ROI
The biggest CRM ROI is increased revenue from better-targeted selling and customer retention, as opposed to cost savings. However, since the cost savings factor is probably the easiest to quantify in terms of CRM ROI, this article explores some ballpark costs and CRM ROI timeframes for them.
CRM ROI needed to implement a highly functional new CRM product vary widely depending on a number of variables, such as
Size of the enterprise determines CRM ROI: number of CRM users on sales and support teams, current customers supported, administrative users, and facilities. When it comes to software solutions like this, the companies usually prefer to give you a quote based on the size of your business and the features you need in a CRM. You have got to make sure that the price you are paying for your CRM solution is a suitable one given the size of your enterprise and you are not being charged for benefits you are not even going to use resulting in a diminished CRM ROI.
Types of products developed, services supported, customer base, and target markets determine your CRM ROI.
In-house CRM ROI versus external consultancy expertise related to legacy systems integration and implementation can be critical to your CRM ROI.
Whether the implementation is an upgrade or a new installation. The upgrades usually cost less than new installations thus, increasing CRM ROI.
Staff skill levels in CRM products in general and the new CRM product specifically. Getting a sophisticated CRM solution that your staff is not trained for, can sometimes be more of a liability than an investment and ultimately result in a disappointing CRM ROI. It is very important to make sure that the staff is trained enough to make the best use of the CRM solution so that you can get the best CRM ROI.
Dedication of staff regarding the new CRM product and related operational process modification. A dedicated staff, even if not trained at first, is always willing to learn the necessary skills, adapt quickly, and get the best out of everything.
Ballpark CRM ROI Costs
General product investment in CRM ROI costs includes software (licenses and support), hardware (laptops, desktops, mobile devices, printers, etc.), customizations, consultancy, legacy systems integration, staff training, telecommunications, and technical support.
In looking across a number of industries, studies, solutions, and other heuristics for estimating, a new CRM product implementation in an enterprise environment can generally cost from $8,000 to $17,000 per user not making the CRM ROI clear. Upgrading from an existing system could result in lower costs, as could the implementation of a new CRM product in a small business to increase CRM ROI.
General Timeframes for a CRM ROI
As with CRM costs, timeframes for a new CRM product ROI are widely varied. Accurately estimating them can be as big a challenge as estimating up-front costs (if not greater). For example, some costs are one-time, and others are ongoing. Some CRM ROI are realized soon, while other CRM ROI are realized over years.
Increased revenue due to an improved CRM product investment is the biggest payback. Factors such as the speed of the sales force’s expertise in the adoption of the new CRM, improved sales numbers, better customer retention, and more up-selling drive the CRM product ROI numbers.
In addition, ROI on an enterprise CRM purchase is not always directly measurable in a dollar-for-dollar payoff. For example, improved efficiencies, competitive advantage, customer satisfaction, and staff morale are CRM ROI factors that are not easily measurable.
Given all these variables, most enterprises see CRM ROI on a new CRM implementation within one to three years.
Estimating your CRM ROI
While there are several online tools that can provide you with an easy and straightforward way to estimate your CRM ROI, they may prove to be a risky shortcut. Therefore, it is essential to do the necessary initial groundwork to ensure you don’t suffer risks that can result in a project failure or deliver insufficient CRM ROI. Some common mistakes while estimating your CRM ROI are:
- The sales and marketing departments have conflicting CRM ROI goals.
- Managers avoid reading CRM ROI reports end-to-end and deriving meaningful and precise insights for the business.
- Business owners assume a CRM solution alone will do its job, and just having it in place is sufficient to get the predicted CRM ROI. Most companies believe that replacing one set of information silos with a newer one will fix the problem.
- Business leaders and managers after having a CRM installed choose to ignore its findings and put them to use, thereby failing to meet customer expectations and ruining the point of purchasing a CRM solution.
Now that the common CRM ROI mistakes have been discussed, it is important to avoid them. To do that, the first and foremost step must always be careful and thorough planning and identification of your CRM requirements. You must figure out your unique business needs and choose a CRM ROI solution that aligns with them, instead of starting off by making assumptive calculations of your CRM ROI. Once you have the right solution fit in place, paying heed to the findings and responding to customer expectations is crucial. Be sure to have your whole CRM ROI plan etched out and follow it thoroughly so that your business projects deliver the forecasted return on investment.