Contact Management Software (CRM), An Expense or Investment?

The ripple effect from today’s tough economic times has forced virtually every business to re-evaluate how they are doing business.  When top line revenues decline it’s important to evaluate your expenses to cut back where you can.  The challenge is to tighten the belt while maintaining the level of service your existing customers have come to expect.

To successfully navigate these tough waters, it’s important to correctly distinguish between an expense and an investment when making decisions that affect the future growth of your business.

It could be argued, and the numbers show, that Contact Management Software (CRM) fits squarely in the investment category.  So what questions show you ask when approaching this technology investment?

• How much more money can my organization make?

• What is the return on my investment (ROI)?

There are two ways to justify this investment in your company

• Increase revenues or

• Reduce costs
   

Costs can only be reduced so much, but that is generally where of the attention is focused because it is easier to quantify. The real payback in CRM can be realized by increasing the revenues of the organization (top-line growth). This increase in revenue is driven from three primary areas:

• Enhanced customer service/ retention

• More targeted selling efforts 

• Improved Productivity
  

You may be saying to yourself, “This is great, but what does this really mean for my bottom line?”  There are a number of studies that have been conducted on this subject and the numbers are very appealing.  Below are the findings from industry veteran, Barton J. Goldenberg, author of the book CRM in Real Time: Empowering Customer Relationships. This books draws on Barton Goldenberg’s 20+ years of experience guiding firms to a successful implementation of CRM solutions and techniques. Goldenberg demonstrates how the right mix of people, process, and technology can help firms achieve a superior level of customer satisfaction, loyalty, and new business.

The ROI

• 10% per year increase in the gross sales revenues per sales rep during the first three years.

• 5 % decrease in general and administrative cost of sales during the first three years.

• 5% increase in win rates for forecasted sales during the first three years.

• 1% margin improvement in the value of a deal over the system’s lifetime.

• 5% improvement in customer satisfaction among customers

When you look at these numbers and apply them to any business, they can translate into some meaningful results. 

The bottom line is businesses that take care of their customers and consistently find new ones will be successful.  The people most responsible for finding new customers and maintaining satisfied, profitable relationships with existing ones are sales people. Many CRM platforms try to be everything to everyone, offering everything from  Accounting, Project Management, to Ticketing  Systems.  The most successful CRM solutions are those specifically designed to help manage the sales process.  And no matter what measure we look at, when a focus is established and maintained in these key areas, the positive results to both the top and bottom lines cannot be denied.