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CRM Software – Measuring Return on Investment (ROI)
The cost of ownership and return on investment of your CRM software depends on your requirements initially and over time. As your business changes, so do your CRM requirements. A well planned CRM software strategy can save you time and money now, yet allow you to scale your solution as your organisation grows.
For many companies, a cost of ownership model over a 3-5 year period will give a better return on investment with an in-house system. To justify this however, you need to think out your strategy carefully. One of the key decision points is whether you will need to integrate CRM software into your accounting system or a specialised customer service or ERP system. In this case, although the initial cost of ownership can be quite substantial your return will justify such an upfront investment. The initial costs for example will involve license fees, consulting fees and deployment costs.
Quantifying your ROI can be broken into tangible and intangible factors.
Tangible factors are easier to quantify. For example, if your sales team can identify new sales and cross-sell opportunities faster and close transactions 20 percent quicker than you can easily measure your productivity increases along with your revenue increase.
Another example, your CRM will allow you to run specific marketing campaigns. Segmenting your database and recording client and prospect interests will allow you to target your campaigns more effectively. A specific campaign run from your CRM allows ROI per lead to be calculated. Your return based on actual sales as a result of your marketing campaign can be measured specifically.
The intangible factors can be more difficult to quantify. CRM software enables you to automate your sales and marketing processes. To substantiate productivity gains you need to have a clear understanding of your manual processes. For example, many sales people have to develop their own quotations and work on spreadsheets. Others have a sales administrator to assist them. These are all time consuming tasks leading to a decrease in productivity and an increase in costs.
Initially you should set up the goals and objectives on intangible benefits prior to the CRM project starting. If your goal is to make your sales team 20 percent more productive, then you will need to determine what CRM processes you will develop to give sales 20 percent more time to generate and close more opportunities. Similarly, if automating your sales processes reduces sales closure rates from 6 to 5 months then your goal is to increase sales by 15 percent.
Customer service modules too can be measured if your incidents can be reduced through better handling, escalation and knowledge. Reducing customer complaints and increasing your customer satisfaction will have a positive effect on your revenue and profit.
Automation in sales, marketing and customer service can make a significant difference to your bottom line. You can then use your CRM system to automate a variety of processes to increase efficiency across your organisation.
In considering your CRM software investment you need to understand your requirements first. This will determine what system, in-house or a web based CRM software solution is right for you. It will also help you determine what CRM products and services are suitable. Your initial cost of ownership depends on this. Secondly, develop your goals and objectives to justify your return on investment. To do this, you will need to be clear on your current sales, marketing and customer service processes and then set the benchmarks you will need to reach to achieve a solid return.
About the Author
Antony Dutton is CEO of Aaromba Technologies, CRM software & service management software specialists. Aaromba uses best of breed technology and methodologies, designing solutions to improve sales and marketing for CRM software including Microsoft CRM Software, Goldmine CRM Software and web based CRM software.
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Hands down, Apple’s app store wins by a mile. It’s a huge selection of all sorts of apps vs a rather sad selection of a handful for Zune. Microsoft has plans, especially in the realm of games, but I’m not sure I’d want to bet on the future if this aspect is important to you. The iPod is a much better choice in that case.
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