Let me briefly remind you what is ROI in context of CRM:the extent in which it is necessary to implement CRM for business: how much will a company earn because of it.
But when we start to dive deeper into the topic, some difficult questions appear. In this post I`d like to show you, why this formula is quite difficult to apply when we think about ROI on CRM.
What are CRM Investments exactly?
Experts distinguish three major categories:
- IT costs: investments in IT infrastructure, database development, software
- People costs: during CRM implementation company desperately needs to have lots of narrow specialists: statisticians, analysts, and so on. After integration of a system business still need their expertise, besides, current workers, like sales persons, support, need to be trained.
- Process costs: changes in process also might be expensive and long, since CRM involves nearly all of company`s segments.
What is Return on the Investments?
Usually we think about success or fail of any initiative`s realization in terms of NPV: did we add value? But in case of CRM implementation it`s way more complex.
- CRM has a lot of requirements to the company itself. So, even if the idea to implement CRM was justified, and a plan was well thought out, it`s realization might fail because of weak company culture, or uncompetitive products. It is also possible that it is too late to do anything – company that fallen behind a market beyond retrieve will never actually getReturn on the Investments.
- This approach doesn`t consider latent benefits from CRM implementation.
What time period should we measure?
CRM is not about getting information about customers and putting it in order – it`s the simplest stage. Of course, we will see some Return, while operational performance will increase – but to really benefit from it, we need to work with new information, new customers, create new offers – and it requires an upgrade to Strategic CRM – which is not easy for a company that just began to care about CRM at all.
With all these limitations, how can we ‘sell’ top-management an idea to spend lots of money on such unpredictable matter? One of the possible solutions is ‘step-by-step’: we don`t invest this much right away but build limited infrastructures –to see how it works, what data can we mine. This way we won`t cause disruption among executives and will get an opportunity to introduce customer-driven company.
Step-by-step approach may be suitable for some cases, but I`d like to get your opinion on this matter – when it`s not?
Ang, L. and Buttle, F.A., 2002, December. ROI on CRM: a customer-journey approach. In Conference Proceedings of IMP Conference, Perth, Australia.
Buttle F., Maklan S. Customer Relationship Management: Concepts and Technologies. — 3 изд. Routledge, 2015. — С. 341-344.