What's the Real ROI on CRM?

First ask yourself the question - what's the goal of my company?  Is it to make a profit?  Yes, I'm sure that's one of your goals.  But is it the true purpose of your company?  Is this what your vision or mission statement says?  Could the real purpose of your company be to delight your customers? (For reps - this includes both your Principals and their customers.) If that's the case, what is the real gain from a CRM system?  

Return on investment (ROI), in very simple terms, can be said to be a measure of cost to gain.  So what's the path to a positive ROI on CRM systems?  It's reducing your costs by increasing your efficiencies, increasing your profitability by improving your productivity, both of which lead to enhancing your customers' satisfaction.

So how do you determine the costs or the gains in implementing a CRM system?  There are hard and soft costs as well as hard and soft gains.  I suggest that while the hard costs and gains are the easiest to calculate, it's the soft costs or gains that make the difference in evaluating the returns on the implementation of a CRM system.

---

The hard costs and gains are the easiest to measure.

Costs:

• the software itself
• the hardware required
• subscription or licensing fees
• add-on costs for optional software applications
• upgrades
• maintenance costs for both software and hardware
• support
• training

These are just a few of the costs of setting up a system.

The soft costs and gains are more difficult to quantify.

Gains:

• number of leads resulting in closed deals
• number of new lines purchased
• number of new products purchased
• number of sales per customer
• changes in the number of orders per customer
• higher commission percentage rate per customer
• total revenue per customer
• customer retention percentage

These are just a few of the gains from a CRM system.

Costs:

1. time to set up the system

• deployment
• basic customization 

2. time to set up one master database

• time to migrate all employees data to the central system
• time to remove duplicates
• time to bring company and contact profiles up-to-date

3. time for training

• time to learn new system
• time to learn new processes and skill sets
  

Gains:

1. increased efficiency

• streamlined business processes through using, sharing, managing information from a single location
• combining customer profiles and activities with customer sales and commissions in a single software application
• providing your sales people with more timely and relevant information for planning and making sales calls

2. increased productivity

• more sales calls made due to improved knowledge of customers' preferences, buying patterns, needs
• more cross-selling and up-selling due to better and more relevant analytics
• better returns from more targeted marketing

3. enhanced customer satisfaction

• improved collaboration between inside and outside sales, service, and support teams due to shared information
• improved service and support on follow-up, schedules, and activities due to shared information in a single system

Obviously the soft costs of implementing a CRM system are all about time.  It's the time it takes for your people to set up, adopt and learn the new system, learn new business processes, and even new skill sets.  Once the time is spent to set up and learn the CRM system, all of the soft gains will come into play - improved efficiencies, increased productivity, and enhanced customer satisfaction.  

As you can see the real ROI on CRM is found in the soft gains, the intangibles that will help your company achieve it's main purpose - delighting your customers.