How to Evaluate the ROI of CRM implementation
Evaluating the ROI of CRM implementation can be a tricky proposition. When you consider the costs of implementing a CRM solution, it’s easy to see why some businesses struggle to make the return on their investment.
Despite this, CRM is such a useful tool for businesses of all sizes and industries that it’s worth making the effort. After all, if your company isn’t using customer data to its full potential, who else will? With that in mind, it’s important to understand how you can evaluate the ROI of a CRM implementation.
But how do you know when you’ve got your implementation right? Keep reading to find out more about evaluating the ROI of CRM implementation, as well as other considerations that you should take into account before investing in a CRM solution.
Figure Out Why You’re Investing in CRM
Before you start looking at the numbers behind your business’ CRM solution, it’s important to understand why you’re investing in CRM in the first place. CRM is designed to help your business achieve three main goals.
First, CRM is designed to help you gain insight into your customers’ behavior so that you can tailor the right products and services to each individual.
Next, CRM is designed to help you build strong relationships with your customers so that they trust you and feel comfortable talking to you. Finally, CRM is designed to help you consistently track and act on the data that you’ve gathered from your customers’ interactions so that you can create a loyal, dedicated following around your brand.
Start by clearly defining your key objectives and goals for implementation of CRM system for your company. Some of these objectives might include improving quality of leads, enhancing customer satisfaction, increasing sales revenue, reducing customer churn, streamlining sales operations, or marketing campaigns.
Make sure your objectives are specific, measurable, achievable, relevant, and time-bound (SMART), tracking these can help you effectively gauge the returns from your CRM.
Evaluate Cost-Benefit Analysis
If cost-benefit analysis is one of the first steps that you take when deciding whether or not to invest in a CRM solution, you’re on the right track. CRM allows businesses to create a comprehensive picture of their customers’ behavior that allows them to predict customer behavior and tailor products and services to specific customers, as well as create a loyal following around their brand.
To help you evaluate costs and the benefits of a CRM implementation, you’ll need to create a spreadsheet that tracks the following costs and benefits: The initial cost of implementation, annual implementation costs, value per customer, cost of acquiring a new customer, cost of retaining a current customer, cost of losing a customer, cost of servicing a customer, sales revenue, costs for maintenance and support etc.
By using a CRM system, you can determine the benefits for above metrics tangibly before and after implementation for a given timeframe. Once the baseline metrics before the CRM implementation are established, it is easier to measure the changes after the CRM implementation.
Determining ROI of CRM implementation
Now that you know a little bit about the costs and benefits behind a CRM implementation, you can turn your attention to determining the ROICR for your CRM implementation. What you need to do is take the information from your cost-benefit analysis spreadsheet and use it to calculate the cost of acquisition, retention, and the value of each customer.
Then, you’ll need to add up the costs of acquiring, retaining, and losing customers, as well as the costs of lost leads and potential revenue. After that, you’ll need to take that data and apply it to the numbers from your CRM implementation spreadsheet.
To calculate the ROI, subtract the total costs of the CRM implementation from the total benefits, and divide the result by the total costs. For example, if the total cost of the CRM implementation was $200,000, and the total benefits were $300,000, the ROI would be 50%.
Intangible Benefits & Results
Apart from the quantifiable benefits, there may be other intangible benefits of CRM implementation that are difficult to measure yet valuable. These could include improved employee productivity, ease of doing business, employee morale, improved customer experiences, enhanced customer perception & increased brand loyalty.
Finally, evaluate the results of CRM implementation & assess whether you have achieved your key objectives and outcomes. If you have not achieved your desired objectives, identify the reasons why & continue tweaking your CRM to achieve a continuously evolving organization.
Conclusion
In the end, the best way to evaluate the ROICR of a CRM implementation is to take a critical look at your business and determine which goals your CRM solution will help you achieve. After doing this, you can use your cost-benefit analysis spreadsheet to help you determine the cost of each goal and the benefits that CRM can provide.
A good CRM implementation will impact and improve the bottom line of an organisation by improving its business and sales efficiency. You can make sure that your implementation is worth the time and effort by proactive involvement, feedback and progressive improvements.
Kreyon Systems offers CRM development services for clients as per industry demands. If you need any help with customizations & development of CRM software for your business needs, please reach out to us.