This entry was posted on Monday, August 25th, 2008 at 12:05 pm and is filed under General CRM. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Are CRM systems worth the cost?
All companies will have to decide on the following question. “Is CRM worth the Cost to implement in my organization?” If you are a CRM Consultant i am sure that you have heard this as well multiple times.
Many times in a CRM deployment customers find that post-implementation benefit measurements and value added to an organization may be hard to properly evaluate without defining key indicators upfront. This can sometimes seem like a daunting task and goes beyond simply the Cost of Ownership, the one-time and ongoing costs including support.
On the other hand benefits gained have to be weighed from a newly implemented system. These benefits happen in a variety of ways but mainly come in the form of enhancements of revenue, margin, cost reductions, productivity, increased service, customer loyalty, defined business processes or other intangibles. Only by measuring these can an organization truly know the impact that CRM has made in their organization.
The cost of implementing CRM may seem outrageous to a business owner without understanding the benefits the company will achieve. For this discovery should be done in the organization to see how the business currently functions and areas of improvement through the use of a CRM deployment.
Without CRM each rep maintains their own information about their accounts, in multiple different formats as well with no standard structure. Sales reps own this information and not the company. Without a CRM system there is also no opportunity for sharing or leveraging a database of the centralized customer information from the whole organization. Also, what happens typically when a sales rep leaves an organization? Where does this information end up? It is important that information is protected and secured properly.
It is amazing to me that some companies do not consider customer and prospect information as a valuable asset to the organization. Gartner reports that only 10-15% of companies realize the value of their customer base. Most companies never fully utilize the ability for tailored selling to help improve the profitability of unprofitable customers in their organization.
Does the organization also know how many sales they are loosing now? Chances are if you are like the average company it is in the range of 6-8% and even higher depending on the tracking and sales management system in place currently.
So what is 6-8% of the annual sales worth to a company? Finding this out is important as well. If your company is at $25M in sales revenue the average could be as high as $1.5M -$2M.
I know what my answer is! CRM is a must for most organizations and not used for only contact management. To get the best return on investment for CRM you have to dig deeper than the typical installation. If you only use CRM only for it’s contact management features you are not going to see the return on investment that you had hoped for.
Leave a Reply
You must be logged in to post a comment.
