Quantify CRM Benefits

CRM Strategy

To quantify CRM benefits (Customer Relationship Management) to your company you need to discover something very important. CRM planning and implementation is not about finding the cheapest consultant, or the cheapest software.

It is for most, because they have no plan and believe the software is the solution. Since it's the solution it makes sense to get it as cheaply as possible! WRONG!

Let's focus on the real goal here. When you quantify CRM benefits what you're doing is specifically stating how much economic impact (money) your past mistakes are having on your business. For instance....

• Your revenues have been flat for the past five years while the industry is growing.
  
  It's very simple to determine how much revenue you've lost each year. If you had kept up with the industry (or exceeded it!) how much annual revenue have you left on the table. Let's say it's $2 million a year.
  
  
• You keep losing good salespeople to your competitors because it's hard for them to make money with your company.
  
  You may need to sit down with your accountants to figure out how much money you spend each year ramping up new sales people (or other employees). Not only are there real costs, there are opportunities lost during the time it takes. Let's say this is costing you $250,000 a year.

These are just two simple examples of where you could be losing money...and they also quantify CRM benefits. Your product mix could have an impact with high cost items sitting in inventory due to a lack of demand in a certain region (while it sells like hotcakes in another). I don't know, it's your business and these are the types of things you need to understand before you determine how to attack the entire problem.

Do you know what it costs you to replace a lost customer?

When you quantify CRM benefits you're going to find your answers in the following general areas. You'll then build your case within these four walls, so make sure the numbers are solid:

1. Incremental Revenue
   
   
2. Cost Reduction
   
   
3. Improved Profitability
   
   
4. Lost Opportunity Costs
   

In order to measure the return on your investment, you'll need to have baseline data for these areas. Otherwise, it won't be possible to quantify your gains. Most of you should have this data (if you dig) but if you don't you can always find industry data that will help.

Once you understand what you're going to gain (annually) then you can place reasonable value on the money you will need to invest. If you'll be saving $2,250,000 annually does it really make sense to worry about making a single expenditure $40,000 on software?

Obsess on this and you won't achieve your $2,250,000 annual economic gain.

I'm not telling you to spend like a drunken sailor! Just be realistic. For example, I would gladly donate my services and software to your cause if you let me have half of your annual economic benefit. So, would you rather do that, or spend a few hundred thousand dollars once to put your business back on track.

It's not a trick question....

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