8 Ways to See an ROI from your CRM Investment

Leveraging CRM as a Revenue Generating Tool

A majority of individuals assume that customer relationship management systems can't generate profits and are just a drain on corporate budgets. It doesn’t help that over the last 5 years the media and research community has reported quite a few companies that have invested millions of dollars with no evident returns. Failure rates for CRM are quoted anywhere from 60%-80% depending which study you read. So can a CRM (Customer Relationship Management) system really generate profits for a company? Like most tools, if a CRM is adopted by the organization it will pay for itself many times over – here are eight examples:

Eight Ways to Generate Revenue From Your CRM Solution

Improving Sales Efficiency

Missing out on Old Quotes and Proposals: Susan, who runs a $50 million a year electrical parts distributorship, had a big problem. Only one of out of every ten quotes his salesmen sent to customers were being followed up on more than once after being delivered. Some of these opportunities may have been lost to competitors, but Susan wondered just how many of these quotes could’ve turned into sales if someone would’ve just called the customer a second time. The problem was that there was no system or process to track his quotes and ensure multiple follow-up contacts. Susan changed the process and leveraged a new CRM system called SalesLogix to support these changes. Susan set up a process to ensure that each quote had a follow-up call automatically scheduled and alerts generated via email to the sales staff when the call was due. He also built in alerts for his sales managers in case a salesperson was ignoring his follow up calls. Within a few weeks Susan could see a major positive impact. Every quote delivered was now pursued with either a phone call or email. Old quotes that would have slipped through the cracks were now addressed. The result: Sales increased 20% over the last 3 quarters since SalesLogix has been in place.

Learn from your mistakes and lost deals: Matt, a sales manager at a multimillion, 100 employee help-desk software firm believes there’s a bright side to a lost sale. Sometimes a competing product beat them but more often the customer decided to do nothing. Whatever the reason for losing the deal, Matt’s firm tracks the history in their CRM – Salesforce.com and every month runs a Lost Sales Report and does a post mortem. For Matt’s team the results are never pretty and oftentimes frustrating. However, they all admit it’s always an educational experience. Armed with the knowledge of where they went wrong, the team can adjust their sales strategy and win back more dollars going forward or win a deal where the customer did nothing. Matt wouldn’t be able to do it without Salesforce.com and since it was put in place their opportunity to close ratio has improved almost 10% over the last 6 months.

Focusing on the right prospects: Sean, a manager who works at training company with 5 locations across the Southwest was being asked by his sales people for higher base salaries and commission percentages. Sean always turns to his Microsoft Dynamics CRM system and looks at their activity level and conversion ratios. Within CRM, Sean can see how many quotes a salesperson presents vs. what is actually closed. Once reviewed Sean sits down with his reps and reviews their calls and appointments and looks at their productivity. During a normal one-on-one session he might ask why more time was spent with a small prospect than a much larger one. A good CRM system helps sales managers make sure their sales people are spending time with the right kind of prospects and making more money for themselves by making more and larger sales. Since Sean put Microsoft CRM in place the average rep made $10,000 more in 2006 than they did in 2005.


Optimize Marketing Budget

Measuring your Marketing spend – is it really working: How many times did you attend a trade show, or send a direct mail piece, or even pay for a telemarketing campaign without measuring the results and wondering ‘Was it worth it’? For Jake, a marketing manager at a Fortune 1000 company, marketing seemed to be this black hole of spending which he knew was necessary for new business yet increasingly difficult to quantify. He decided to invest in SAP CRM to help him plan and launch each marketing campaign. By having a CRM system in place Jake can associate new contacts and opportunities with the campaigns where they showed interest or a sale was made. Once he could measure effectiveness of each campaign, Jake was able to reduce his marketing budget by about 15% but yield greater results by investing in the right campaigns.

Staying in Touch – Drip Marketing: Stephanie owns a beauty supply company that sells to retail stores and salons. She knew that the more customers she could reach the more opportunities she could create, and more money she could make. So she developed several marketing tracks depending on the type of customer using mail merge templates in her ACT contact manager. With very little effort she configured her ACT system to send out automatic emails to customers who hadn’t ordered in the last 6 months and to customers who ordered products in the past who may be interested in an add-on or similar product. She used her CRM to produce direct mail pieces every week announcing specials. To educate her customers and not always solicit business Stephanie created a monthly newsletter to keep her customers informed about new developments in the marketplace. By leveraging her CRM technology Stephanie doubled her sales from the year previous and actually had more free time to spend enjoying her increased income stream.

Improving Customer Satisfaction

Customer Service – is it impacting your bottom line without you knowing: Brittany, a customer service manager at a $80 million automation control company, knew that customer service calls were coming in at a high volume each day, but had no way to manage how much time her people were spending with issues. She also didn’t have a good feel on how long it took to close out an issue other than talking to her reps or doing informal customer surveys. Brittany decided to invest in a RightNow, an online CRM solution which tracked each individual issue and allowed her to measure the effectiveness of her reps. She was also able to identify quickly which customers were taking the most time to deal with and interestingly these were some of the most unprofitable customers for her company. Some of the best customers actually were the most self sufficient, only calling for the most difficult issues. With the new RIghtNow CRM in place Brittany reduced the average ticket turnaround time from 2-3 days to 4 hours and you can bet her customers can tell the difference.

Customer service is often the people with the most knowledge about your customers. If you leverage a CRM solution to track their productivity as well as capture their knowledge of your customer base – you’ll save a lot of money in the long run.

Does the right hand know what the left is doing?: The other day Roy, a sales rep for a $150 million business software company, called one of his customers to tell them all about the great features coming in the software’s up and coming release. Roy wasn’t prepared for the response he got. The customer responded negatively as the current version was not even working at had at least 10 open tickets with the support department. Because Roy’s company didn’t have an integrated CRM system he had no idea that his service group was working on a number of issues with this customer. Roy’s call just upset the customer, rather than creating good will. More stupid moments like that and Roy could watch this customer disappear. A good CRM system ensures that everyone in the company knows everything that’s going on with your customers at any given time. After this experience Roy invested in a fully integrated Sage CRM with both sales and service to ensure this issue didn’t happen again.


Create Operational Efficiencies

Eliminating multiple points of data entry: Ask yourself right now – how many places do you keep the same information? Casey, a CFO at a $30 million manufacturing and distribution company, kept asking himself this question. Casey hated the fact that customer information was entered in his website, his accounting system, his email system, as well as Excel spreadsheets and other databases. Enough was enough – Casey invested in an Oracle CRM system. He designed one web form to capture the customer data and feed it directly into the CRM system. Through some single systems integration same data was sent automatically to several of these other systems. Accounting and inventory information stayed in his ERP system, but his CRM system was able to be configured to view that data. Enter data once; make it available elsewhere eliminating the cost of wasted time and incorrect entry. Casey was able to redeploy 2 full-time staff that was bored to tears with their data entry work. The time savings can be quantified, but the headaches eliminated are priceless.

Invest in your CRM solution today

Do you know how many proposals are delivered and never followed up on? How do you know your sales people are spending time with the right prospects? Are they staying in touch even when the sale won’t be made for 12-18 months? Are you learning from the deals you lose and changing your sales strategy accordingly? How many instances do you have of customer data and is it integrated? Do you know how much time your employees spend servicing each customer? How often is your customer service on the phone with a customer who hasn’t placed a new order in 18 months? Can you track the return on your marketing spend? Does sales and service know what each other is doing with customers?

If you can’t answer these questions with confidence, it may be time to dust off that CRM system you’ve invested in and begin using it to impact revenue. If you don’t have one, they are less expensive than ever to implement and you should begin defining your requirements for one immediately.

What CRM is right for me?

A friend asked me a very good question this past week about what CRM (Customer Relationship Management) solution is right for a small business. However, before recommending tools, I'd like to introduce a thought process that each organization should go through prior to even calling a software vendor or hitting the shelves at Best Buy depending on your size.

Step 1: Begin by defining the problem statement. You should be able to clearly articulate why you need to change the way you are doing things, what is the return you expect from your investment either hard or soft cost or both, and what would be the impact of not changing. Once you've sure that the problem is big enough to warrant your time to investigate a solution and worth the investment begin to write down what the critical success factors are for the purchase.
Step 2: Define the critical success factors: A critical success factor should be SMART (Specific, Measurable, Attainable, Measurable, and Time Bound). An example of a critical success factor could be as simple as 'We'd like to increase the lead to opportunity conversion ratio by 5% in the next 6 months' or 'We'd like to increase the number of service tickets handled by customer support by 25% without adding headcount in the next 12 months'. Once you understand the problem you are trying to fix and the metrics by which you'll know whether your initiative was successful it's time to move on to the next step.

Step 3: Ensure adoption with WIIFMs: What's in it for Me. There are three important constituents you need to take into consideration when it comes to any CRM solution - customers, employees, and management. For the customer you should clearly understand how this investment will make their experience with your organization more special. One example is tracking lots of personal data like Harvey Mackay and the Mackay 66 questions he answered about every customer. Another example could be exceeding service level agreement when it comes to resolving customer issues by having a superior process to within your support group. Next is your employees - nothing will make a CRM fail faster than lack of user adoption. I'll cover this topic in much more detail in an upcoming article but for purposes of this discussion, users must feel bought into the system. In some way, shape, or form it should make their lives a little easier. Last is the needs of management. Typically these revolve around reporting and metrics and most tools have good engines for extracting this data. The hard part is making sure the data gets in the system which is why it's so important to get your end users bought in and making sure your customers are impacted in a positive way.

Step 4: Now once you truly understand what you are trying to accomplish, go out and begin speaking with CRM consultants and software vendors to decide which one is right for you. For a small business, I would recommend looking at ACT, Salesforce.com, Sage CRM, and Microsoft CRM. Goldmine and OnContact are also decent packages but have a lot less marketshare and their future is a little unclear. Depending on your needs you can spend as little as $200 per user to $1500 per user for licensing in the first year. On average, consulting or the time it takes you to set up your CRM if you are a do-it-yourself type of person will be one to two times the cost of the first year software investment.