Do you remember that little post we shared about the 10 deadly sins in CRM Adoption?
It was really just a quick translation to English of the key points in Pablo Peralta’s original in Spanish.
Well, that article was our top content for November. It brought us tons of visitors, many of whom downloaded CRMGamified’s free beta. So, when we saw that Pablo (you know he’s the MVP behind CRMGamified® so it’s safe to say we are on first name terms, right?) shared another bit of his wisdom on his MS Dynamics blog we thought it would be a good idea to let you know about it. Let’s take a look…
This time Pablo’s post is about CRM and Return On Investment. It is, of course, a usual subject. Whenever an organization decides to spend money on something, it expects to get back the same amount plus a revenue gain.
The article begins with data from Forrester’s Total Economic Impact of Microsoft® Dynamics CRM 2011. The research states that a 2,000-employee diversified professional services composite organization, based on nine organizations interviewed by Forrester, would see a ROI of 245% as a result of the implementation of MS Dynamics CRM for 50 of its users. The return, according to the data, would turn positive (meaning the CRM “would pay for itself”) after 4 months .
Peralta chooses to highlight a few indicators that contributed to the success of the CRM:
- Acceleration of sales conversion cycle by 50% (teams worked better together across different business systems, processes, and geographies.)
- Increased sales productivity of 5 percent
- 10% reduction in consultant time spent in proposal preparation
- 2% revenue increase due to improved deal conversion
- 40% labor cost saving in customer service
- Saved hiring an additional 1.2 FTEs even as the division grew 20 % each year
- Real-time insight into the ROI of marketing campaigns allowed the composite organization to cancel three underperforming campaigns (cost of $25,000 each)
These are a few examples of how the right CRM implementation will definitely help you increase performance that will result in a higher revenue. But Pablo Peralta’s article is not really about how much more you would make if you jumped on the CRM wagon; it’s about calculating how much you are losing now that you don’t have a CRM system. It’s a clever way of reframing the problem in order to show just how important CRM is for you even before you get it.
Pablo Peralta set to the task of building a CRM ROI calculator, but for a “before CRM” scenario.
The fields on the original Excel spreadsheet are in Spanish, so we took the liberty of making a few little changes and uploaded our version here. Let’s quickly go through the spreadsheet:
There’s a top row which allows you to enter your employees’ average annual salary (default is USD $60,000) and calculates salary per month and per hour.
Then there’s a column that shows the three tasks that would most benefit from CRM. In each field you need to enter how many employees have such tasks and the average time each employee spends on them.
These are the three tasks:
- Time spent gathering customer information
- Time spent entering and linking data across different systems and processes
- Time spent on reporting ( Preparation and analysis of weekly, monthly and trimestral reports, etc.) This one is calculated based on Forrester data (16 hours per month is an average spent on reporting). It doesn’t apply to all users of the CRM.
And there’s a final field that’s not possible to quantify with just man-hour data so it’s left open by Peralta to let you answer how much do you think it’s worth.
- Cost of missed opportunities and unsatisfied customers for not having the right data in place.
So, according to Pablo Peralta’s CRM ROI calculator, an organization that implements CRM for 50 users with an average annual salary of $60,000, in which half an hour per day per employee is spent on gathering information, 15 minutes on entering and linking data across systems, and 10 employes have reporting tasks, will be missing out on $1,116 per day, $27,083 per month, and $325.000 per year. In three years the organization will have missed $975,000 for not having implemented a CRM solution. That’s right, almost one million dollars!
If you can read Spanish, please go check the original article , and as always feel free to leave us your comments. 🙂