Written By David Learned

How to Interpret the ROI of CRM

January 20, 2012 | omniprise / business

The question of Return on Investment (ROI) using Customer Relationship Management (CRM) software can be so confusing that it is often dizzying, even for an experienced CRM expert.

In fact, the entire discussion is one big grey area – there are no “absolutes” that can be applied across the board. There is no accurate ROI forecasting model or standard expectation of results. CRM is a very unique investment, and as a result, the outcomes are unique to each business.

As responsible businesspeople, however, you need to know how to invest in your core profit centers – your sales and marketing departments. You need to make sustainable strategic decisions, the backbone of which is maintaining an acceptable ROI.

So, what is the ROI of using a CRM solution? What’s a “decent” return on investment?

One documented case by Microsoft Dynamics boasts a return of 243% over a 3-year period for one of their clients. Another source claims it is entirely possible to attain an ROI of 1000%. Other studies may state that 50-70% of CRM initiatives fail, meaning potentially negative ROI.

That’s a LOT of variance. What can your company expect?

Short answer: It depends.

On what does it depend? EVERYTHING.

There are countless variables in play. The good news, though, is that you are in complete control of your own destiny! CRM is more about your dedication to the implementation and process surrounding it than it is about the software itself. CRM is about relationships, and it all starts with your CRM vendor:

• Does the vendor understand your sales process and know how you will use the software?

• Did you choose a system that addresses your most pressing needs first, instead of the system with the most “add-ons” and “nice to haves”?

• Is the system on par with modern standards of software development and technology?

• Has your company taken the right strategic steps to prepare for CRM internally? (Are you confident you know what these steps are?)

• Is the system being implemented correctly, or are shortcuts being taken to reduce budget?

Refer back to the Microsoft Dynamics study demonstrating 243% ROI. That company spent an estimated $90,000 on just setup and implementation in the first year alone, triple their annual license fee cost. BUT … they also received 243% ROI on those implementation costs. Worth it? Definitely, especially considering that $90,000 was absolutely necessary to achieving such a high ROI.

Granted, not everyone can expect to write a $90,000 implementation check. It often comes to a fraction of that cost. It just depends on how prepared the company is to utilize a CRM solution.

As stated before, the most important part of CRM is having the right business strategy, processes, and support behind the system. So, first-time adopters will have to spend more time and money aligning their business to an effective CRM strategy in order to see a significant ROI. Businesses on their second or third CRM implementation can expect to spend significantly less, but only if the right frameworks have already been established.

Our Advice: Be realistic, and do your due diligence. The more you invest in CRM, the higher your ROI will be. Or, to be more precise, the more time and money you invest in committing to CRM and executing your strategy, the more you will maximize the investment. The concept of “what you put in is what you get out” is the #1 cardinal rule of CRM. There is no “easy road.”

In my next blog, I’ll discuss more recent developments in CRM that can help you realize even greater CRM return on investment.

Want to know more about how to maximize your ROI with Omniprise? Ask about our OmniWorks plan, the exclusive Omniprise Implementation strategy specifically designed to maximize CRM success.

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