According to a 2014 study by Nucleus Research, every dollar spent on CRM implementation returns as much as $8.71 in sales revenue.
Let’s face it...you can’t make it through a networking breakfast or an after-work mixer without hitting on the topic of customer relationship management, or CRM as we call it. (And if that’s not the case, you go to way cooler after-work mixers than I do).
You’re drawn to the enthusiastic feedback of a successful business owner. She implemented a CRM system last year, and it’s paid off. Transformative she promises. But just as you find yourself poised to commit to a CRM yourself, you take a step back, deflated by the pessimistic naysayer who sunk weeks into a similar system. He says it’s a big waste of time and no one uses it.
So what’s the bottom line on CRMs? Is it possible to predict their return on investment (ROI)? How can you be sure the time and money you spend on a CRM tool is well spent?
Knocking it out of the park, strictly by the numbers
The CRM market may have been shaky in its early days, but its recent rise demands attention. Gartner valued the CRM market at $27.5B worldwide in 2015. What’s the forecast? Add another ten billion by 2017.
The market continues to ramp up its game, promising greater usability, functionality, and a fine-tuned user experience. In a best-case scenario, Nucleus Research finds that for every dollar spent on CRM implementation, returns can peak at a stellar $8.71 (2014). That’s a $3.11 jump from three years ago when the strongest returns topped out at $5.60.
Translate online ROI predictors into success
Calculating an accurate ROI for a CRM investment can be tricky. It’s easy enough to run numbers through an online ROI predictor such as Forrester’s Total Economic Impact (TEI), but the calculation is only as reliable as your data. If you’re looking to predict anticipated ROI, these calculations will assume good usage from your CRM, something that rarely happens in the real world. Oh, and they cost a lot of money.
Of course, improved productivity is a prime benefit of CRMs, especially in key departments such as sales. Return predictors make assumptions about optimal CRM adoption. But just like diet plans promising to shape mush into muscle won’t pan out if you don’t follow the rules, online ROI predictors won’t sync with your numbers if you don’t take a hard look at your patterns and commit to use your CRM to its full potential.
Set up for success: Get your own house in order
As you may have already guessed, CRM is not a magic wand. It won’t turn your business into a unicorn overnight. Take a hard look at your organization’s strengths and weakness.
Here are factors that can make or break your CRM:
- Slow-death from silos: If you don’t address your existing information silos, the mere implementation of a CRM won’t eradicate this issue. Identify and then take steps to actively knock down the silos.
- Opposing forces: Much as you may hate to admit it, sometimes you’re not all on the same page. Division and divergent goals won’t magically disappear with a CRM. For example, though sales and marketing are key predictors of ROI, they may not always see eye to eye. No CRM will get your teams on the same page if they don’t already have some common ground.
- Wasted potential: CRM software offers a host of options for accessing and presenting the data it manages. It analyzes approaches and reveals trends and evaluates progress, tidying up each data set (and overlay and corollary and projection…) into an eye-catching presentation. But presentation can’t be the last stop. Neglect of meaningful analysis and concrete application renders a CRM practically impotent.
- A “Yes, but I know better” attitude: Sometimes it’s hard to admit that your best practices are no longer the best. The data and analysis capability of your CRM may point to new paradigms for your business. Take these as as “growth opportunities.” Change means work, negotiation, and discomfort. If your business culture tends to see change less as an opportunity and more as a grumble-fest, your CRM will under-perform. And so will your business.
- Face your reflection: CRM can hold up a powerful mirror, reflecting what does and doesn’t work in your business. Can your team see straight? Are you willing to use the tools a CRM puts at your disposal and think outside of the box? It’s not CRM that dictates the ROI. It’s wise use of CRM tools!
- Get everyone on board: Train, troubleshoot, and explore. Then do a little more. Take advantage of the support and training provided during and after CRM implementation. Cultivate a culture in which questions and uncertainty are okay. The more confidence your team feels in the CRM, the greater the return.
- Look at the big picture: Strive for organizational understanding. As you grow, you can no longer assume everyone is on the same page. The more each person understands and buys into your business processes, the better your chances of fostering creative use of CRM functions and information. You’ve surrounded yourself with smart, creative people. Now that your CRM automates their administrative and other time-consuming tasks, find ways to encourage those people to use their extra time to innovate!