1000 Percent ROI For CRM!

By Geoffrey James

According to a recently completed study from the high-tech research firm IDC, successful implementations of CRM applications have yielded returns on investment (ROI) ranging from 16% to more than 1,000%. IDC also found that technology-related savings account for only 7% of the average ROI, while benefits accrued from business process enhancements account for as much as half of the ROI.

Titled, “The Financial Impact of CRM,” the study examines how CRM applications contribute to an organization’s success. IDC conducted more than 30 in-person interviews with organizations in North America and Europe that implemented CRM applications to determine success factors and to identify motivations and drivers for CRM. IDC then calculated the financial impact of the implementation on the organization. Key findings include:

  • Size of ROI:
    A fifth of the companies that participated in the study experienced an ROI of 50% or less.
    Half of the companies experienced an ROI between 50% and 500%.
    A third of the companies experienced an ROI in excess of 500%.
  • ROI Timeframe:
    A little more than half of the companies achieved payback in one year or less.
    A third of the companies achieved payback in one to three years.
    A little less than a tenth of the companies achieved payback in three years or more.
  • CRM Investment
    The median initial investment in a CRM application is approximately $426,000, which includes 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.
  • The companies that experienced the highest and fastest ROI sought to create a transparency that masks internal divisions and complexities thereby enabling customers to feel they are dealing with one organization. IDC notes the way to achieve that transparency is to pay particular attention to the data infrastructure, specifically the rationalizing and centralizing of customer information for use throughout an organization, and then to extend that data structure to create integrated customer processes.

    Henry Morris, IDC’s group vice president of Applications and Information Access, suggests that companies evaluating CRM ROI need to look beyond purely technological measures. The best results, he says, are achieved by focusing on a pressing business problem.