This blog post will be a quick look at ROI and will hopefully help you know the role ROI in a CRM implementation.
ROI, or return on investment, is the concept of how much money will be saved or made based on making a change. Here are a three quick examples of ROI that we have seen from customers over the last couple of weeks:
- Gross Sales: It is estimated that if all quotes were captured in a systematic manner and followed up on in a like manner, with follow up information captured for future visibility and consideration for subsequent quotation opportunities, sales would increase between 10-20% at absolute minimum.
- Sales Time: It is estimated that sales spends a tremendous amount of time “chasing” ad copy. Potentially as much as 50% of their day can be “chasing” information needed to hit a deadline. Ideally, automatic reminders should go to clients advising them of an approaching deadline, freeing up the sales people to sell. If sales does spend 50% of their time at this task, and it could be reduced, even by half, annual sales could potentially be increased by an additional $325,000 a year if that time was dedicated to achieving new sales.
- Customer Communication: ABC Company anticipates that systematic improved customer communication all the way through the manufacturing process to shipping and delivery of the finished good could dramatically impact profitability. They believe that improved logistical processes and practices could impact the company with combined cost savings and increased sales due to customer satisfaction by nearly $150,000 annually.
These are all great ROI points and each can be achieved with CRM software playing a role. However, CRM software is a tool to help provide accurate, up-to-date information, but software alone will not achieve the ROI required. Changes will need to be made to current processes and culture as well.
Usually ROI is used as a means to prioritize your CRM implementation. We recommend implementing the areas of CRM that will best help you achieve your greatest points of ROI in your first couple of phases of the CRM implementation.
Which brings me to the final part of this post, can ROI be achieved and when can you expect results?
The answer to the question on achieving ROI is a resounding “YES it can be achieved, but …” you can only measure ROI where you have initial data to compare to. For example, if your ROI point is to increase quote conversion by 20% through automated follow-up, you can only measure the results of a strategic CRM implementation if you have solid quote conversion numbers prior to making the change. Not knowing your data prior will only result in a gut-feeling as to whether it was actually achieved. One thing that can help is to monitor Sales prior to and after your strategic implementation of CRM.
The answer to the question of when to expect ROI is a little easier to answer. Implemented properly, with technology, culture and process in line, you should expect to see ROI after the six months. Why six months? Because a strategic implementation requires not only technology, but changes to process and culture. That takes time and training. It also takes more training. Changing habits takes time.