Techssocial | Whenever you make any business investments, you want to know what type of value it will bring you. And the ROI — return on investment — metric is often used for such purposes. For instance, in terms of marketing, ROI can be used to judge how effective a specific advertising budget was.
In most cases, calculating your ROI for a particular investment is not a complex process. All you need to do is to take your net profit, divide it by the sum of the investment, and then proceed to multiply that by 100. After this, you’ve got your ROI.
However, this basic formula becomes more muddled when you have to perform an estimate for a CRM, or other business systems. After all, both the expenses and the gains are more complex than a simple bottom line. Because of this, we’ll explore how to find your CRM ROI right here!
Table of Contents
Some Perspective
When you have to switch from having no expenses for this kind of system to an annual or monthly cost for a CRM, your business will definitely have to adjust. However, if you want to grow a small business, your relationship with your consumer base will be of immense importance, which is why this sort of system will prove to be invaluable. If you utilize the CRM correctly, it will:
- Help you raise your revenue
- Lower your average operational expenses
- Increase the level of productivity and collaboration
Revenue Effects
This is one of the segments where it becomes difficult to find your CRM ROI. After all, regardless of the type of CRM you invest in, it can’t perform cold calls and track down new leads on its own. And it’s not capable of closing deals or hiring new talent. So, how does it actually contribute to your growth in practice?
Firstly, it will allow your sales representatives to be more efficient. They won’t lose as much time arguing over assignments or dealing with dozens of disparate spreadsheets. A proper CRM software provides the necessary workflow automation and leads management to allow your staff to focus on the important things rather than logistics.
Furthermore, a CRM contributes value by helping you evaluate the effectiveness of your team and its individual members more easily. Such a system does that by tracking every single action and customer interaction that a sales rep undertakes.
That way, everyone is more accountable for their work, increasing the transparency of the operation. Many CRM systems even offer automatic performance reports for your sales reps, creating a data-driven environment for success measurements.
Also, a CRM will affect your revenue by creating a better bond between the marketing and sales teams. With CRM, marketers will realize what kind of specific leads are more prone to becoming paying customers using certain marketing automation features. Conversely, sales reps can see marketing initiatives more transparently and track the lead flow in its entirety. The enhanced level of communication between the sales and marketing departments is sure to increase revenue.
Finally, CRM systems also increase your revenue by directly increasing the value of your company’s data. When it is organized in a satisfactory manner, consumer data can be an immensely valuable resource. And when a CRM system unites it under a single digital environment, compared to heaps of different disintegrated systems, spreadsheets, and inboxes, it definitely increases the value of data with its stable structure.
Reducing Expenses
Apart from helping you grow revenue, a CRM can also increase your profits by providing you opportunities to save money as well. One of the most significant ways CRMs decrease costs is by simplifying the tech environment in which various companies work. Indeed, by integrating the numerous tools that a niche company needs to provide its products or services, CRM systems can reduce the costs of disparate overlapping software suites the company would otherwise use.
Furthermore, the company’s workflow becomes more automated, allowing you to reallocate or reduce the expenses that would otherwise go into workflow management. For example, a CRM suite can complete automated record management in its entirety, reducing the need for hiring freelance or part-time workers to do the same. On the other hand, you could also increase value by assigning those workers to other, more productive duties.
Also, CRM systems are known to quickly eliminate procedural bottlenecks and other expensive inefficiencies in the working of your business. The amount of manual data entry that will have to be performed is lowered, and so is the margin of human error.
Cost-Benefit Analysis
At the end of the day, does a CRM system provide enough ROI? This can only be determined by examining the costs and benefits of implementing such a system. And when you implement a CRM properly, you will find that the benefits outweigh the expenses, even if the latter is an ongoing subscription.
That being said, you need to consider all of the expenses that a CRM system will accrue before settling on a particular vendor. There are subscription expenses that you will pay to a specific CRM provider, but there are also consultancy fees for the people that will perform the data migration from your old system, for example.
Also, you will need to spend some time and money onboarding your staff and getting them used to the new system. This can cost you in both man-hours and potential courses that your team may need to go through.
In the end, finding your CRM ROI is not the matter of inputting two metrics into a single calculation formula. You will need to take all of the different facets of CRM’s impact on your productivity, expenses, and revenue into account. After that, you will be able to truly see what kind of cost-benefit situation you’re looking at.
Arthur Reeves is a former sales rep, currently working as a freelance writer and consultant for moverstech.com and other companies that deal with CRM software. When he’s not obsessing over productivity improvements and workflow management, he enjoys swimming and partaking in all kinds of water sports.