A growing number of businesses nowadays find that customer relationship management (CRM) software and services are worthy investments. This finding is substantiated by Nucleus Research’s report stating companies make back a little under $9 on average for every dollar they spend on CRM.
That's a pretty good return on investment (ROI), which many people forget should be a numerical value that represents the efficiency of an investment’s returns against its costs. It is a common metric in the world of finance, and is computed as such:
ROI = (Current value of the investment - cost of the investment) / Cost of the investment
The current value of the investment can be acquired through appraisal, especially if the investment is a hard asset such as land, property, and equipment. For services and/or software, the current value of the investment is often computed as follows:
Current value of the investment = cost of the investment + income generated by investment
Current value of the investment = cost of the investment + savings brought by the investment
CRMs are largely seen as value-adders. Here are additional tips on measuring and improving ROI.
Identify what to track
After measuring the general ROI of your CRM, it is often a good idea to further refine the value assessment, particularly by tracking business processes directly affected by the investment. For CRM, it is vital to track outbound and inbound calls, sales cycle durations, and client retention. Overall, improvements across these four metrics are good indicators that your investment is paying off, as it is generating more activity, adding customer-side value to your business, all while making your revenue streams more efficient.
Related article: CRM: Your Company’s Most Valuable Sales Asset
Make a baseline vs. output analysis
Once you have identified the markers you will be tracking, you have a basis for measuring ROI. The first step is to establish the baseline. Ideally, the baseline should be represented by numerical figures gathered before the deployment of your current CRM solution. Two years’ worth of data (twelve months pre-deployment and twelve months of active use) should be a good place to start.
Now you can take a look at whether or not the metrics mentioned above have improved. Comparisons can be made per month (e.g. July 2018 vs. July 2017), or aggregated (e.g. total figures for July-December 2018 vs. total figures for July-December 2017). By comparing your baseline with your latest figures, you should be able to tell whether your CRM solution is leaving a positive or negative effect on your key metrics.
Adjust and implement improvements
ROI is often a powerful decision-making tool because it can be used at any time to give a snapshot of how well an investment is performing. The ROI from a CRM solution is dependent on what data is put into it, and not solely on how it organically interacts with a business system. As such, improving your investment’s ROI can be as simple as converting an analogue process into an automated one.
Related article: Is It Time to Implement CRM in Your Business?
Leveraging your CRM solution’s fullest capabilities is often the best way to achieve peak ROI, as most CRM systems nowadays are designed to be one-stop-shops. Another excellent way to improve ROI is by ensuring that your employees are well-trained and well-equipped to maximize the use of your CRM. Lastly, consider hiring a provider that not only offers a CRM solution, but also ensures that it is integrated seamlessly into your existing business system while providing a robust and comprehensive service plan.
WhiteOwl’s CRM solution is designed to extend the value of the Dynamics 365 CRM platform to accommodate relationship management activities beyond traditional sales and marketing. Call today for a quote!