What Are the Costs of ‘Free’ CRM Solutions?

What Are the Costs of ‘Free’ CRM Solutions?

What Are the Costs of ‘Free’ CRM Solutions?

CRM software has changed the game when it comes to lead generation and customer acquisition. It is no longer about how good your product or service may be, but also about how satisfied your customers are with the service they receive.

In this article, we will be exploring how CRM software has changed the landscape of marketing and the true costs associated with implementing a CRM system for your business.

What is a CRM and How Does It Work?

Customer Relationship Management (CRM) software offers centralized tools for storing, organizing, and analyzing important customer data. While worthwhile, keeping excellent data records can be time-consuming and prone to error when done manually. CRM software helps to convert leads, retain existing customers, and improve internal processes. 

CRM systems can be beneficial across departments, from marketing and sales to customer experience and support. Centralizing all of your customer, lead, and sales data into one powerful CRM platform can streamline processes, improve lead conversions, drive sales, and help shape companywide decisions regarding the new or existing business.  
Customer experience is another key business objective that is supported by CRM software. The term “customer experience” has cropped up recently as businesses shifted their focus from reactionary customer service to a more proactive approach of enhancing the entire journey a customer has with their business and brand. CRM tools are essential for businesses focused on customer experience and offer a plethora of customizable tools and features that help you track every step of your customers’ journeys so you can constantly improve their experience. 

There are many free or open-sourced CRM solutions available currently that are great for SMEs with limited finances. However, there are other factors to consider when looking to implement a free solution that may end up costing you more than you assumed. 

The price of free CRM solutions includes costs that generally apply to any CRM solution. The purpose of outlining these costs isn't to indict or downplay free CRM -they are simply here to illustrate some of the costs you might encounter regardless of the license price of a particular system.

How much should I budget for a CRM?

  1. Cost to implement: As CRM consultants have (correctly) asserted, "CRM is not a technology strategy, it's a business strategy." Implicit with that statement is the suggestion that CRM rarely if ever works "out of the box" (or perhaps "off the site" is a better term for the many Web-based solutions these days).

    CRM almost always needs to be customized for the unique business requirements of your organization, and that customization can bring substantial costs whether done through internal or external means. Your internal IT resources may be able to handle the customization and implementation process, but this requires significant man-hour investment as well as any additional costs incurred during the consultations for any customizations.

  2. Cost of data migration: CRM systems are only as good as the data that resides in them, thus regardless of what the CRM "container" looks like, there are absolute costs in migrating, integrating, and maintaining the data in the system. For a company with no CRM at all (often, although not always, a very small enterprise) these costs may be minimal but are still real. However, for larger entities for which the benefits of CRM are more apparent, these costs can be very large as the migration from whatever the current system(s) of the record is for customer data can be high.

  3. Cost of support: In terms of free CRM, an analogy can be drawn to the case of Linux: Free Linux operating systems have been available for many years, yet many (although certainly not all) customers continue to pay for Windows and other desktop alternatives.

    While there might not be a license cost, there is an absolute support cost with any system, in particular an enterprise-focused system like CRM. In addition, many (although not all) free CRM vendors do charge maintenance.

    If the vendor doesn’t provide adequate support, outsourcing any queries to third parties will end up costing the company money that you may not have budgeted for. It is important to keep in mind that even if a service is free, it’s essential that they are able to provide the right type of support needed even if it is at an additional cost to your business.

  4. Opportunity costs: A less-considered yet very important corollary to the above costs is the cost of your time in implementing a free solution. This could involve you and your team spending a large amount of time and energy implementing, integrating, and customizing the solution. What else could your people do with their time if they weren't tied up in this CRM implementation? How much more quickly and cost-effectively could a pre-packaged solution deliver value, even if it were not free?

    And are the different departments sharing the information efficiently? If they are not, you are leaving the benefits of a CRM system without using it to its fullest potential. Doing your research and selecting the perfect CRM software vendor for your business is essential to reap the benefits of a CRM system.

  5. Cost of failure: Although this may depend on several uncontrollable factors, it's worth considering the financial stability of your CRM vendor. Vendors with a free model may not be doing their customers as big a favor as they think. If your CRM vendor goes belly-up, the above costs are multiplied and the disruption to your business will cause even higher expenses.

You will have to resort to an alternative CRM software solution while having already borne the cost of the initial CRM implementation. It is important to consider how well a company is doing as well as its reputation when considering a free solution.  

Still wondering what CRM solution is right for your business? Consult with our CRM buyer’s guide prior to selecting a CRM system to ensure that you take all the right factors into consideration and avoid the unassumed costs we have listed above in the long run. While doing that, you can also compare the top CRM vendors on the market currently to make your decision even easier.