January 13, 2010

IDC Studies CRM ROI Stats

By Heather Baldwin

You’ve just calculated that your CRM system has yielded a 120% return on investment in seven months and you’re about to break out the champagne when it hits you – what if most other companies are seeing even greater ROI faster? Sure, 120% is a great number, but should it be better? How do other organizations measure up on the ROI scale?

A recently completed study from IDC has the answers. The study, “The Financial Impact of CRM,” finds successful CRM application implementations have yielded returns from 16% to 1000% and that more than half the study participants experienced payback in one year or less. It also found that technology-related savings account for only 7% of the average return, while benefits accrued from increased productivity and business process enhancements account for 51% and 42% of the return respectively.

Mary Wardley, vice president for IDC’s customer relationship management applications research, points out that cost savings and productivity enhancements can be found when a salesperson saves 20 minutes per week writing activity reports or answers four times more Web-based service requests in the same amount of time. The best results are achieved, says IDC, when companies look beyond purely technology measures and focus on a pressing business problem when evaluating ROI.

As its title suggests, the study examines the financial impact of CRM applications on the core processes that contribute to an organization’s success. IDC conducted more than 30 in-person interviews with organizations in North America and Europe that have implemented CRM applications to determine success factors, identify motivations and drivers for CRM and calculate the financial impact of the implementation on the organization. Its other key findings include:

  • 19% of the companies that participated in the study generated an ROI of 50% or less, 52% generated an ROI between 51% and 500% and 30% reported returns of 501% or more.
  • 58% of participants experienced payback in one year or less, 35% experienced payback between one and three years and 8% experienced payback in three years or more.
  • The median initial investment in a CRM application was approximately $426,000, which included the accumulation of all costs incurred before the CRM implementation entered production at a site. The median total cost over the first five years is estimated at $1.2 million.
  • For more information, visit www.idc.com