Magazine article CRM Magazine

Demystifying the ROI of CRM: Know Your Biggest Pain Points and Determine How Damaging They Can Be to Your Business If Left Untreated

Magazine article CRM Magazine

Demystifying the ROI of CRM: Know Your Biggest Pain Points and Determine How Damaging They Can Be to Your Business If Left Untreated

Article excerpt

UNDOUBTEDLY, the most common question I hear from companies is "How do I cost justify my CRM investment?" While project costs have come down over the past 12 to 18 months, this remains a key issue. What surprises me now, however, is that this matter frequently arises for the first time in earnest near the end of the evaluation--sometimes right before the project plan is presented to management for approval.

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By this time the project team has the expense side of the equation nailed down: software license fees, maintenance, consulting support, hardware, administrative support, training, help desk, etc. The team can recite the dollars-out half of equation in its sleep, but what about the dollars back?

Often what the team wants to hear from me is how other companies have dealt with ROI. CSO Insights has surveyed several thousand CRM projects over the years, and has compiled a wealth of case studies. For example, a manufacturing company reduced its order error rate from 23 percent to less than 0.5 percent; a distribution firm cut the time it took to get new salespeople fully productive from nine months to four; and a financial services group increased the number of leads generated per day, per telemarketing rep, from 1.5 to seven.

These are all impressive numbers, but I caution the executive sponsors of a CRM initiative that the numbers only have meaning to the company that achieved them. In no way should sponsors infer that they will duplicate that level of performance improvement simply by buying a similar technology framework. CRM ROI is a personal experience--no two companies market to, sell to, or service customers exactly the same. So how do you go about finding ROI truth? Here's a simple framework: Start by calculating what it is costing your company to not implement CRM.

CRM technology is a tool set designed to fix problems. …

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