A CRM (customer relationship management software) has become essential in today’s business world. According to research by SuperOffice, over 90% of companies with more than ten employees have a CRM, and about 50% of companies with less than ten employees have one.
Yet, a study by the Gartner Group found that 55% of all CRM software projects fail to produce results. In fact, customer relationships are negatively affected in nearly 20% of cases.
It’s clear that simply having a CRM is not enough.
So, how do you get the most ROI out of your CRM? This article provides tips you can use to optimize your CRM initiative for success.
The ROI formula
When discussing the ROI of an investment, it is expressed as a ‘dollar earned per dollar spent’ equation.
There are several methods for calculating ROI, but the most basic formula is:
(Net Profit/Cost of Investment) x 100 = ROI
This calculation works well for investments that produce easily measurable results.
For example, if a pizza shop decides to lease a soft ice cream machine for a month, they can calculate their ROI by:
- Calculating their net profits from their ice cream sales (e.g., $2500/month)
- Calculating their cost of investment in the ice cream machine (e.g., $500/month)
- Plugging the numbers into the ROI formula:
($2500/$500) x 100 = 500%
In the above example, the pizza shop saw a 500% ROI for the ice cream machine.
To express that as a dollar amount, we could say the pizza shop earns $5 for every $1 spent on the ice cream machine. Now that’s a good investment.
When calculating the ROI of a CRM solution, things can get a bit more complicated.
The challenges of calculating ROI for CRM
Analysis by Nucleus Research measured the average CRM ROI to be $8.71 earned/$1 spent.
But calculating the return of your CRM investment can be tricky because a CRM can support so many functions.
It can improve the customer experience, enable your marketing strategy, support your product/development and sales process, and grow revenue.
This means when calculating the net profits, you need to factor in:
- Hours saved inputting/accessing customer data
- Efficiencies gained in your process cycles (sales cycle, marketing campaign)
- Reductions in your customer acquisition cost
CRM costs are also difficult to calculate because they are based on the unique needs of your business and can change dramatically over time.
How much does a CRM cost?
Most CRMs have a subscription pricing model based on the features/tool used, the number of users required, and the number of contacts/accounts managed.
(At FreeAgent CRM, we charge based on usage, not users.)
There are also additional costs that don’t show up on the initial quote sheet, such as:
- Administration: The cost of your CRM administration can be hard to calculate because the efficiency gains of the CRM can offset some of the burdens, especially with modern CRM platforms.
However, with older CRMs, the administration cost can be pretty high. If you have to hire a professional CRM admin with experience, you are likely looking at adding a 6 figure salary to the books.
- Third-party support: Older CRMs require third-party engineers to support implementations, integrations, and customizations. These services can cost more than the annual subscription fee of the whole CRM system and are generally slow and time-consuming to use.
- Training: The time spent training your team to use your new CRM tool should be factored into the overall cost.
Most modern CRMs are easy to use, so training is relatively simple.
For an older CRM solution, training may take more time and effort and require the services of third-party consultants.
The challenges with realizing your ROI
Several challenges can make realizing the ROI of your CRM difficult. The following are the most common:
- Failed/delayed/expensive implementation: Many CRM projects never even get off the ground and those that do often experience costly delays.
The biggest cause of these issues is the complexity of implementing many of the older (and most popular) CRMs on the market.
That said, poor planning, lack of investment, and limited experience can all contribute to a CRM implementation that costs more than it should, hurting your ROI in the short term.
- Poor/inconsistent user adoption: To get the most out of your CRM, you need your team to use it. Operational efficiency is a significant component of the ROI a CRM provides. If your team isn’t taking advantage of these gains, you’ll have a harder time realizing that payoff.
If you fail to invest enough in training, especially early on, it can be difficult to get buy-in later. Complexity and redundancy also contribute to poor adoption. People generally resent tools that make their job harder and are slower to adopt systems that don’t add noticeable value to their day.
- Redundancy/lack of integration with other tools: If your team has to jump from one program to another to perform common tasks, or if they are required to enter the same data again and again, you are losing time and money.
- Lack of buy-in from leadership: When adopting any new toolset or business process, support must come from the top. With a CRM, this can be challenging because many of the C-suite executives in your company won’t be using your CRM every day.
CRM platforms are a “boots on the ground” type of tool, meaning specialists on your product, marketing, and sales team will likely use the system more than anyone else.
Your leadership team may feel uncomfortable or unfamiliar with using your CRM, and some might even prefer things to be done “the old way.” This can lead to redundancy and adoption challenges that limit ROI.
Optimizing your ROI
Getting the greatest ROI out of your CRM requires careful consideration. You need to:
- Have an implementation game plan: A lot goes into a CRM implementation. You need to migrate your data, customize your interface, set up your integrations, create your workflows and processes, and train your team.
To do this effectively, you need a plan. Our article, Successful CRM Implementation: A Step-By-Step-Guide, can help you create a game plan to realize your ROI faster.
- Choose the right administrators: Your CRM administrators will greatly impact your CRM’s day-to-day operation. This makes choosing the right people and structure essential.
Our article, Setup for Success: Selecting the Right CRM Administrator Makes All the Difference, provides a comprehensive look at CRM administration and can help you find the right solution for your business.
- Scale slowly: When you know what a CRM can do, it can be tempting to overhaul all your business processes to take advantage of the software’s many benefits. This is rarely a good idea as company-wide upheaval often results in frustration.
Try introducing your CRM one team at a time. This slow roll-out allows you to focus on training and support. Once your first team is onboarded, their results can encourage other teams, and standout employees can serve as resources for further support and training.
You can take the same approach when adding new features or processes. Roll them out over time to limit disruption and increase focus.
- Integrate with key tools: The true power of CRM lies in its ability to centralize your work processes through CRM integration. The more tools you can incorporate into your CRM, the more streamlined and refined your processes will be.
The tools you integrate will vary by department and use case, but communication applications (phone services, email), automation tools, and project management software are all good places to start.
- Drive adoption: After implementation success, adoption will be the most significant determinant of your ROI. Adoption begins with training and empowerment, and so should you.
Create a training schedule that ensures everyone gets ample time to learn your CRM system. Everyone learns differently, so provide training materials in various forms: written guides, audio recordings, and video tutorials.
Identify team members who are learning faster or seem to enjoy using the new tools and designate them as support resources for the rest of the team. This gives those struggling a peer to turn to while also creating a sense of ownership among your stand-outs.
- Track/action data: A CRM is always working in the background to capture data and track activity. What you do with this information goes a long way toward determining your ROI.
You can use your CRM to convert this data and activity into visualized dashboards highlighting key metrics and tracking progress towards a goal. This helps your team stay motivated and on track.
These reports can also help identify bottlenecks or roadblocks in your processes. You can use these insights to restructure workflows, remove obstacles such as redundant approvals and inefficient tools, refine your messaging, improve collaboration, and more.
FreeAgent CRM can help you realize a great ROI
FreeAgent CRM is a work management platform that makes realizing your ROI faster and easier. Here’s why:
- User-configurable/implementable: FreeAgent CRM is user-configurable, requiring no coding knowledge or experience. You are not beholden to expensive third-party engineers for implementation, customization, and support.
You can experiment with new processes, try out new features and tools, expand to more departments, and continuously refine your workflows at your own pace.
- Modern and easy to use: FreeAgent CRM is designed for today’s world of work. Entering a contact or creating an account is fast and easy, and many of our tools are so intuitive you already know how to use them.
Training is faster and easier with FreeAgent. As you add more teams and integrate more of the tools you use every day, our platform becomes the first destination for your employee onboarding.
- High adoption: FreeAgent is a CRM your team will actually want to use. Our platform is highly customizable and intuitive, which helps drive adoption and garner buy-in from even the least tech-savvy members of your team.
- In-house support: All of FreeAgent’s support is handled in-house. No one knows our software like we do, so getting answers to your questions is faster and more accurate, leading to less frustration and downtime.
- Cloud-based/mobile: Today’s workforce is more mobile than ever. FreeAgent knows this, and our cloud-based CRM platform keeps you connected wherever you are, on any device.
- Sales/marketing/project management tools: FreeAgent CRM is more than just a sales tool. The platform has everything you need to support your marketing and product development teams and manage all your projects from start to finish.
Optimize your operational processes, improve customer service, and increase revenue with FreeAgent CRM. Get started today.
