Strategies for Maximizing ROI

By Geoffrey James

ROI for CRM is a common topic of conversation, but nobody does anything about it. If you’re going to have a successful CRM implementation, however, you must focus on ROI.

Let’s talk basics. For CRM the return in ROI means saving as much money as possible while simultaneously increasing revenue, thereby generating more sales and more profitability per sale. The investment in ROI is the money that’s spent on the CRM implementation, including software licenses, training costs, support costs and lost opportunity costs that are the result of pulling sales reps out of the field for training. The goal of every CRM implementation should be to get the maximum positive financial return for each dollar that’s spent on the investment.

This doesn’t mean you should try to succeed on the cheap. While cutting corners on implementation reduces the investment and thus the amount of return required to justify it, there’s a danger of being penny wise and pound foolish, as the saying goes. After all, a CRM system that doesn’t do what’s needed isn’t going to produce much return, even if the investment seems like a bargain.

Similarly, handing your CRM vendor a blank check is unwise. There’s a point that’s often reached quickly where new features and functions – read investment – produce diminishing returns. In the worst case, a bloated CRM system with all its associated complexity could easily make sales reps less productive, resulting in a negative return.

The goal is to find the level of investment that produces the maximum return. To do this you must research and identify elements of your company’s interaction with customers that are both ineffective and capable of being improved via CRM. The latter criterion is important because there are numerous sales problems that CRM is powerless to change, such as surly support personnel or poorly targeted advertising. Instead, it’s the sweet spots that will achieve the highest ROI.

To find the sweet spots, form a working group with representatives of all the organizations in your firm who are involved in customer-facing activities. Map out the basic elements of your firm’s sales processes and create a list of specific, quantifiable objectives. For example: Reduce the time it takes to confirm an order from 10 minutes to 10 seconds, thereby freeing 450 hours of sales time each quarter, resulting in $2 million of additional revenue.

As your working group defines these objectives, individual members should keep their assorted organizations involved and committed to the eventual implementation. Ideally every group that will benefit from the CRM implementation should be so convinced there will be a positive ROI that they’ll fund it. This isn’t just budgetary politics. If everybody in the sales process has skin in the game, as they say, a CRM system is more likely to achieve a positive ROI.

Staying focused on ROI can have enormous benefits. For example, by seeking out the sweet spots one sales Fortune 500 organization achieved a whopping 1,000% ROI in one year, according to a market study from IDC, a research firm headquartered in Framingham, MA. Think about that. For every dollar spent on CRM, they made $1,000 in profit. Not too shabby, eh?

The above is based on a conversation with Denis Pombriant, managing principal at Beagle Research Group, a CRM consultancy and research group based in Massachusetts.