How does a good CRM provide a positive ROI?

You've heard other business leaders talking about their customer relationship management (CRM) system – they say it's brought more money than it cost them, that they'd never look back. Or perhaps the opposite. Maybe you know someone whose CRM failed to deliver results.

A good CRM provides your sales team with detailed data around customer experience, staff performance and the sales journey. Armed with this information, you can adjust your sales tactics and marketing efforts to make more effective use of staff time and boost sales numbers – maximising your return on investment (ROI).

ROI is the often biggest concern for decision makers when committing to new software packages. If you're investing in a software or restructuring the way your sales team works, you need to be confident you can expect positive results and know how to measure them.

Let's take a look at the average return on investment for CRM systems and what you can do to measure and maximise ROI.

What is the average ROI of a CRM system?

On average, CRM systems have historically provided excellent ROI. Studies by Nucleus Research found that the mean returns of CRM in 2014 were $8.71 per dollar spent – that's an ROI of 771 per cent! Furthermore, this shows growth from 2011, when Nucleus reported a return of $5.60 per dollar spent.

With returns growing by over 50 per cent in just three years – it's clear there's potential for significant ROI now and even greater ROI in the future.

To ensure your returns match expectations, you need to be carefully measuring key performance indicators (KPIs) and calculating ROI accordingly.

Achieving a great return on investment is easy with the right CRM system.Achieving a great return on investment is easy with the right CRM system.

How to measure ROI of a CRM system

To put it simply, the ROI can be calculated by deducting the cost of the investment from its total gains, and then dividing the result by the total cost.

(Gains from investment – Cost of investment)
Cost of investment

The key challenge comes in determining what constitutes a gain, and what should be considered part of the cost.

You'll generally need historical performance data to properly understand the gains from your investment. Comparing pre-CRM performance with post-CRM performance allows you to generate a dollar figure to describe investment gains.

Key performance indicators to measure CRM ROI

These KPIs can help you see the value in your CRM system:

  1. Overall revenue: A successful CRM system will have great positive impact on the total revenue of your sales team.
  2. Customer value: Looking at the value of each of your customers can be a positive indicator of more successful upsells and improved customer relationships. When your relationships are improved, that fosters loyalty and better deals that strengthen your business.
  3. Calls per team member: An effective CRM should enable each member of your sales team to perform above and beyond their current level. Your team will be better able to handle a busy call schedule to maximise customer communications. Look at the productivity of each sales person and you should expect to see higher call rates and better quality calls, thereby greater use of your payroll.

Factors contributing to CRM costs

Cost can be measured in the following ways:

  1. Software acquisition costs: This is the straightforward ticket price of your CRM system.
  2. Training and setup costs: Your software provider will offer training for your staff to equip them with the know-how to use the system to its full capability. You'll also need help with setup – tailoring the software to your business, integrating the software with your existing systems and migrating data.
  3. Productivity impacts: When introducing new tools and processes, some staff may struggle with buy-in and need some time to adjust. During this transitionary period, phasing in the software's functionality can help with buy in and productivity will follow..
Achieve great things with a powerful CRM on your side.Achieve great things with a powerful CRM on your side.

How to maximise ROI of your CRM system

It's important to continually measure the returns of your CRM system and take every step possible to ensure it's delivering results. Pay attention to how your business is performing and look critically at your processes to see where you can improve your CRM.

Here are a few ways you can ensure better returns from your CRM system:

1. Adopt an easy-to-use CRM

Ease of use can be a major barrier to CRM adoption. Remember that your CRM system is supposed to be a tool that enables and enhances your staff's performance. It needs to be straightforward, with a simple user interface and great reliability. If not, it's likely your sales people will reject the system and you'll struggle to see positive results.

2. Focus on the people

Even with a great CRM, you need to pay attention to your staff during periods of change. Keep an eye on staff attitudes and consider implementing a comprehensive change management strategy to avoid stalling ROI.

3. Listen to your CRM data

Finally, don't think you know better than your CRM. Especially while processes in your business are changing, you might find "best practice" is no longer what you thought you knew. It's important to stay open to challenges and not deny what the numbers tell you. Listen to your CRM data and make changes to your processes accordingly.

For a CRM system that enables your sales people to perform without anything getting in their way, reach out for a free demo of Rhino by ForteIS today.