Kornilov Pavel «Economics» CRM

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[1].

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[2].

What time period should we measure?

CRM is a long-term play: time gap between investment and first return might be a few years, and not every company can tolerate it.

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?


Sources:

[1]Ang, L. and Buttle, F.A., 2002, December. ROI on CRM: a customer-journey approach. In Conference Proceedings of IMP Conference, Perth, Australia.

[2]Buttle F., Maklan S. Customer Relationship Management: Concepts and Technologies. — 3 изд. Routledge, 2015. — С. 341-344.

Аманах Ювилиати: «7 Success factor of introduction CRM»

Does CRM bring benefit to company? And the certain answer Yes he does! In the digital age, CRM has become a useful way to market effectively, to increase sales and to improve customer service, increase customer loyalty and profitability. CRM as a long term business strategy that focuses on collecting customer information, treating and providing service excellent for various customers, and using these to increase customer loyalty and profitability. Over the past decades, it has been argued that businesses across all sectors should move toward interactions, relationships, and networks.

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