Customer Relationship Management software is an important investment for most businesses. Regardless of whether it’s an on-premise or cloud CRM solution, the investment can seem overwhelming and perhaps, unnecessary if you simply look at the costs and time needed upfront.
To justify a CRM investment, you must look at the additional value it brings your business year after year. So, what does that value look like? And how can a business budget for the investment?
Justifying the Investment
Investing in CRM software is not a short-term deal, but rather a long-term play for greater efficiency that leads to increased sales and improved operations.
CRM platforms can handle everything from sales scheduling to customer service assistance and marketing automation, but some high-level benefits include:
- A centralizing of contacts and information for sales management and marketing
- improving communication with customers and prospects
- Leveraging sales data reports to improve strategy
- A historical, easy to reference database for new hires that eliminates data loss when turnover occurs
When looking at a CRM investment, it is important to leverage all of the benefits the tool can bring. Modern CRM is not just for sales anymore; many different departments can benefit individually from CRM features, and the company as a whole can benefit through its interconnectivity.
Budgeting for CRM
Establishing a budget first can be a huge help in narrowing down vendors and making a final decision. Once you’ve established a budget, you can easily narrow down solutions to the ones you can afford which will help expedite the vetting process.
Here are some other things to keep in mind:
1. On Premise is cheaper in the long run
On premise CRM is a significantly larger cost upfront, but the long-term savings are more than worth it if your company can afford to host the software and have a dedicated staff to handle it. It usually only takes a couple years to get to the ‘break even’ point.
2. Cloud CRM is more affordable upfront
Paying month to month at a much smaller cost can be easier for smaller businesses as opposed to the large on premise upfront fee. Also, with the cloud, all you need is internet access and a web browser to use the software.
3. On Premise comes with annual maintenance costs
In addition to the upfront cost, on premise does have annual maintenance, which will generally include training, support, updates, and upgrades. These are valuable services that should not be overlooked so include maintenance costs in your budget.
4. Cloud customizations will cost extra
Any major customizations will have to be performed by the CRM vendor and are at a cost to you. Always set aside extra budget for customizations to help your company and the CRM work better together.
Hidden Costs to be Aware Of
- Importing Data. Unless you’re a start-up company, it’s very likely you have contact data you’d like to import into your new contact management software or CRM system. But you’re probably not expecting to spend time manually importing all these contacts. Having a vendor or consultant do that for you will likely be an added cost.
- Support. Many standard CRM subscriptions include only limited or basic support. If you want a Premium Support package, you’ll have to pay for it. Premium support upgrades can really add up, tacking on an additional $150 or more per user each year. When comparing vendors, it is critical to ask about support costs ahead of time.
- Customization. The more complex or customized you need your CRM system to be, the more it’s going to cost. It’s in your best interest to limit the number of customizations and find a CRM or contact center software that meets most of your needs right out of the box. This may mean sitting through more product demos, but will result in a cost savings.
- Contract Terms. Many CRM vendors make you commit to one year without a refund if you back out early. Instead, you may want to consider a vendor who can offer shorter trial periods or (better yet) free trials.
Understanding CRM ROI
Return on a CRM software investment can be difficult to quantify initially, but the increased productivity over the long run will undoubtedly be worth the cost.
Since your team will need to actually use the tools for them to show a return, training and motivating your staff to leverage CRM in their everyday workflows is vital to the success of program.
It is also key to properly integrate your CRM software with other tools your team uses to prevent a fragmented workflow and duplicating any job functions.
Some returns of a fully functioning CRM include:
1. No leads will fall through the cracks and become dead.
The CRM will allow you to save and store every lead. You can assign a rep, task, or category to any lead so nothing will fall through the cracks and no more leads on index cards, business cards, etc. will fail to be contacted. This will lead to more business, further improving company revenue.
2. Storing orders and tracking them for opportunities is far easier.
Many times, when you get a lead, they are not quite ready to be sold. This is normal and to be expected at times, but the important thing is you can stick with them until they are ready to buy. With automated tasks, the ability to label a prospect under any stage, and assigning a rep to them, the ability to track opportunities is simple compared to other methods. Centralizing all this data for easy visibility is also important for managers checking up on employees.
3. More leads are generated for your company to sell.
Through email marketing and other promotional advertising, the CRM can generate leads for you if you can maximize your data within the solution. Now, you do have to create the campaigns and design templates yourself, but the tool makes it far easier than manually doing these processes. You can track who opened emails, who clicked links and automatically take back data from any forms filled into the CRM itself. These extra leads can pay off for a big ROI.