A popular variation of a quote is “the average ROI for CRM is $5.60 for every dollar spent!” But if getting your money back is all you care about then you’ll never build a sustainable business case for change.
The truth is that every business should approach CRM ROI from many different angles. The price paid for the solution and a likely payback time may only be measured by finance. Every customer-facing department should have their own agenda because, unlike many other solutions, CRM does not need cost savings and efficiency gains from one set of users to deliver an ROI – the golden nuggets are always varied and plentiful so ROI is often much higher than imagined.
The first question to ask is ‘why are you doing this?’ Unless your business is a start-up, the chances are you have some very specific reasons or drivers for replacing your CRM system because CRM is a mature market. Whether you have outgrown your contact management system (Goldmine etc.) or your business sees CRM as a business platform to unite sales, marketing and service and increase engagement to grow and retain its customer base, there will be a plethora of tactical and strategic objectives that can be achieved.
Additionally, many organizations are now extending the platform to other departments, allowing finance, for example, access to approved sales quotes for rapid invoicing or integrating with ERP so supply and production units have a view on buyer behavior to support more agile manufacturing processes, such as JIT. For finance this could simply reduce DSO (daily sales outstanding) from 70 to 60 days to deliver a ten-day improvement in cashflow every two months. For production, the ability to move to just-in-time manufacturing could dramatically rationalize raw material/component purchases and stocks.
Some, such as Element6 (a division of De Beers), needed tighter integration with ERP but also needed to replace Salesforce because user adoption rates were so low, no one liked the interface, sales productivity failed to improve and the license costs, as a consequence, became prohibitive.
As you move into a different audited state for improvement, it becomes cross-functional so statistics such as these below should really conclude your ROI calculation as the business case should reside elsewhere:
- Half of solutions never get fully adopted – CRM gets used for contact management and forecasts are still produced in excel
- 75 percent of users would give up all the extra features just to get a CRM that’s easier to use
- 40 percent of customers use fewer than half the features they have on their CRM
Enterprise CRM platforms are designed for many departments and should be used to transform a business, consequently ROI calculations need to take into account the tactical (individual/team productivity, 360° view of customer status and increased and relevant engagement scheduling) to the strategic drivers (predictive supply and demand modelling, accurate forecasting and contingency planning).
CRM is not exclusively about how well sales uses the solution, although increased revenue should be a contributor, ROI will be derived from many different quarters. More than anything, it is about the customers’ complete relationship with your organization. From marketing’s ability to find new customers, sales’ ability to engage in a timely focused manner, service’s ability to proactively support, to all other business functions’ ability make informed decisions about products, advocacy and business services.
Oh, and we didn’t even mention the potential cost advantages of Cloud, SaaS or PaaS.