Does CRM Have a Positive ROI?

My philosophy is that technology is getting easier and better, and so the places to focus are strategy, value and people.

With that all said, I am a technologist and there is a category I tend to see come up again and again when I look at customer needs: Customer Relationship Management (CRM).

I'm not a hammer looking for a nail: I'm very much vendor-independent and technology-agnostic.

But over my career I've seen the CRM category emerge, mature and become, in my view, indispensable. I've gone from developing issue management systems with my bare hands through to implementing out-of-the-box global CRM platforms for huge companies. The category has moved from being Contacts-with-a-notes-field to being a strategic platform choice for organizations of all sizes.

But CRM can be contentious, especially in the Sales area. Value can be elusive. People don't always like CRM so there can be a degree of organizational upset.

Let's dive into what CRM is, how to think about ROI and why it is the inevitable foundation for your customer operating system.

What is CRM?

One popular vendor, Salesforce, has this to say:

"This technology allows you to manage relationships with your customers and prospects and track data related to all of your interactions. It also helps teams collaborate, both internally and externally, gather insights from social media, track important metrics, and communicate via email, phone, social, and other channels"

If you think about it, any organization, whether a business, an NGO, not-for-profit, community club, charity, government department, school, cathedral (yes, really) has to do many of those things.

It is possible that the organization may not be used to thinking of its customers as "customers". They might call them "members", or "students", "patients" or "citizens".

It's also common that the organization might not have centralized these activities into one set of connected processes running through one platform. It is typical to have some systems, some spreadsheets, some gaps.

I think of CRM in a platform-independent way. Across every organization, CRM activity clusters into three domains:

I would argue that most organizations have to do the things in the Three Domains one way or another. How they do them today is their de facto CRM system. 

When we think of it that way, do we like what we see in our organization? Or is it disjointed? Fragmented? Legacy? Gaps? Friction points? Siloes? Data all over the place so you can't get insight? Don't worry - most organizations are the same in one way or another.

Can we think of better ways of doing those things with our customers?

And another thing: AI doesn't deal well with all that fragmentation. If you want to introduce AI it will work better if you bring your processes and data together under one roof. That way it has better context and can create meaningful insights and even take action. But not if you are keeping it in the dark.

How should I think about ROI?

In simple terms, you have a positive ROI if you have more Value than Cost over time.

A CRM approach will incur costs for business process design, system implementation and integration, ongoing software licensing and business change.

Value comes from a number of different sources. To make ROI tangible, it helps to break Value into distinct categories.

How you work out the Value and Costs of your CRM introduction proposal is therefore extremely unique to your situation and how you go to market/interact with your customers.

Many CRM vendors assume the classic approach where we have products and services to sell, so we have to find customers to sell them to, support those customers and deepen the ongoing relationship.

If you have that classic model then HubSpot have a gorgeous ROI calculator here: HubSpot Sales ROI Calculator

You can easily extend it to the other platforms you might be considering and generate some numbers based on the tweakable assumptions. It is very helpful for starting the thought process. The numbers are debatable but it helps you to identify initial sources of value.

Vendors might be tempted to understate the effort required to update your organization's processes to fully embrace the ethos of CRM, and the platform that powers it. You must assess this for yourself, or get someone in to help. You do not release the value simply by purchasing the system. You must drive adoption, which comes from activities such as 

• Moving processes to the platform

• Improving processes to be more collaborative, cross-functional and customer-oriented as you do so

• Lowering barriers to adoption, through things like email integration

• Increasing benefits to adoption, such as Automation, Pipeline Inspection and KPI Dashboards

I caution against customizing too early, without thinking through fundamental transformations that would improve your organization.

Is CRM the inevitable foundation for your customer operating model?

ROI calculation gives you some numbers, but I would like to pose another, more fundamental question:

What else are you going to do?

Do you need a CRM system? You already have one. It just may not be intentional or as effective as it could be.

Are you really going to run on spreadsheets forever? That might be ok for a very small organization with very limited interactions, but things are going to get out of hand quickly as you grow.

For Service and Support, you simply require some sort of system to keep things organized and provide closed-loop customer experience.

For Sales, where CRM is often seen as an intrusive overhead that is detested by sellers, I'd ask

• Do you know what Deals you have in flight?

• Do you know when you Win and when you Lose?

• Do you have enough in your Pipeline to meet your goals?

• Are you engaging the right customers enough?

• Are you engaging on the right topics? Important for strategic shifts.

• Do your Sellers have a way to get sales content and support?

If you know the answers to those questions, you have a Sales CRM system of some sort.

If you don't, you are not optimized. That might be ok if you don't have competitors or are satisficing. Just know that you are doing that.

For your overall organization, can you easily perform an annual review to answer these questions:

• Who are your top customers? From this you can develop profiles and tune Acquisition to them, giving more effective Sales and Marketing spend. You can also assess risks of losing concentrated customers.

• Where do I Win and Lose? What are my Conversion rates against activities? Which activities work? Which don't? Where should you focus more and where less?
• What does customer feedback say? It is easy to aggregate with AI. What changes can you make to better serve your customers?
• What does your team think? Oh, yes, they are your customers too... just in a different way.
  
  

Modern customer-facing capabilities like AI, automation, analytics and personalization all depend on unified customer data. CRM is a practical way to achieve that.

Not everything that is CRM comes in a box labelled "CRM"

For example, I recently helped a small not-for-profit community group set up their EPOS system. EPOS systems have Customer records. Some have rather sophisticated Membership, Promotion and Marketing capabilities. They tick quite a few boxes on the Three Domains.

Increasingly, other platforms are adding CRM-ish capabilities. For example, my bookkeeping software allows me to record Companies, Contacts and Projects (a bit like Opportunities).

Your ERP might be the closest thing to a CRM you have. There might even be a CRM module you don't really use.

You may be able to do more with what you already have.

What to do

I believe that no organization can do without CRM, if we consider the Three Domains. The CRM today might be some spreadsheets with gaps, or siloed legacy systems or even a modern-but-underutilized platform.

However, given the choice of powerful CRM platforms available today, with varied pricing models, I would argue that it is often better to invest in an out-of-the-box platform designed for the job.

As ever, it all comes back to Value and your strategic business goals. Look at your business plan. Think about where you might need to add value or remove friction across the Three Domains. Make a Business Capabilities Map and a Target Operating Model. Do them on the back of a napkin if you like, but scratch something out. I can help you with that.

Then, the gap between where you are today and where you want to be defines your potential projects.

Prioritize what you want to do, then execute.

The right platform is much easier to pick then.

To reiterate, start with the business value you intend to generate and define how you want your business to run in the future. Only start choosing the platform then. Feel free to window-shop beforehand to get an idea of the potential value, but don't start a tool bake-off until you are clear on the intended benefits.

It's like this: If I asked you "What is the best car?", you would ask me what I intended to use it for. See what I mean?

In Conclusion

For all its benefits, CRM can be tricky to get right. The approach challenges us to look at our existing business processes and consider how we might modernize them to leverage automation and a consistent, central view. This is uncomfortable, as it drives Transformational Change. This is the reality of serious CRM introductions.

That said, the Customer First paradigm that is embodied by most CRM platforms is a powerful driver of positive customer benefits and organizational efficacy. Lastly, done right, you are empowering your employees and reducing their busy work: important employee satisfaction drivers.

If you need help doing any of this, then get in touch via the form below, LinkedIn or the Contact form on the Home Page. I can offer the whole program life cycle, or simply a second pair of eyes on what you are doing. The Home Page describes my services and approach.

If you are starting or have started a major CRM program then consider my Transformation Readiness Assessment, which will provide you with an objective assessment compared to best practice and an action plan.