How to Measure ROI on a CRM System

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, improve internal processes, and power a CX strategy for offering excellent customer experience. 

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 new or existing business.  

If any of the concerns below are experienced by your company, you should consider implementing a CRM software solution. 

1. Customer service may be poor - customer problems going unsolved and issues escalating all the way up to the CEO level.
2. The sales process and CRM pipeline may be disconnected from the business - selling products that are not in stock, or not cross-selling/up-selling services.
3. Marketing may be "loose" - meaning that no strong metrics are in place in return for marketing spending and CRM ROI. Leads are accused of being the wrong type of leads without any track back to actual marketing spend and comparison.
4. No real emphasis on an analytical approach, either due to outdated marketing software, or siloed databases.

While real, these issues cannot easily be measured in either revenue or cost terms. They therefore cannot easily contribute to a solid CRM ROI case, for investing in a CRM solution. Different metrics for CRM ROI are therefore needed. We can broadly break these down into two very simple categories:

• A decrease in cost to the business.
• An increase in revenue or margin for the business.

On the cost side of the CRM ROI equation, we have measurable costs of people, technology, and infrastructure. While from a revenue perspective we are looking for opportunities for additional sales of products and/or services. These break down through the study of business processes into the following areas:

1. Productivity: measured in terms of salary savings and perceived time savings as a percentage. Although difficult for measuring CRM ROI, we have to come to a view on how efficient current employees are in performing customer-related tasks. Then a view on what improvements could be made through the adoption of CRM.
2. Business process: time spent managing and monitoring current business processes, what materials and information are used, and all the expenditure of common CRM management tactics. This comes in many forms - email, print, phone time, or customer touches and time expended on and off-site.
3. Technology: How is the business currently managing customers and what technologies and platforms are deployed that CRM might replace? What savings could be made if these solutions were switched off? Software, support, hardware, and people savings. Adopting a single and centralized console in itself can significantly impact CRM ROI in a positive manner.
4. Revenue: CRM ROI should account for accurate business forecasting and sales force automation, but what impact should this have on revenue? What additional products or services could the company sell to its existing client base? What would the impact of cross and up-selling have on revenues? How many more customer visits could be made or additional services provided?

The final big piece of the CRM ROI jigsaw must be the accurate cost of implementing CRM in the organization. This exercise should look at all associated direct and indirect costs broadly categorized as follows:

1. Software licensing: upfront or pay as you go through Software as a Service (SaaS).
2. Required hardware: onsite or hosted are the options here with the former option being more cost-bearing.
3. Consulting and implementation costs: there will be significant groundwork to be laid out to customize the product before deployment, so that CRM ROI can be eventually achieved by configuring the right features into the system.
4. Ongoing support and maintenance: software updates and solution services may bear a cost per usage or a yearly fee.
5. Development and integration costs: integrating CRM to accounting and invoicing tools, or database management systems to ensure a continuous feedback loop between multiple departments within the organization.
6. Data migration and cleansing: crucial for business intelligence tools and reporting capabilities, so CRM ROI can be maximized by obtaining insights from your data.
7. Internal staff and project time: how much internal time will need to be devoted to getting it right, and what executive involvement is required to sponsor.
8. Training and user adoption: training of users on a Role Based Access Level (RBAC) to ensure full adoption and success of the solution. May require a significant number of man-hours depending on how user-friendly your chosen option may be, ultimately determining how long it takes to achieve maximum CRM ROI. 

Without a comprehensive look at all of the above, a compelling CRM ROI case cannot be built.

CRM ROI modeling tools do exist that attempt to break the above into complex spreadsheets and science, thereby enabling your teams to adopt the best qualities of customer service, while also capitalizing on your business’s bottom line. Alternatively, the use of an external CRM consultancy should be able to provide an impartial and external view to any organization.

Do you still believe a CRM software solution is the answer to all of your customer service-related queries? 

A CRM system can help streamline customer acquisition and customer retention to help your business continue to convert leads. If that kind of product interests you, focus on maximizing CRM ROI, so your CRM system will end up being a worthy commitment for years to come.