How to quantify the value of CRMby
CRM initiatives must not only be technically sound but must also be accountable in helping businesses understand exactly what they’re getting in return for their money.
Forrester analyst Bill Band explains in his new report, Quantify The Business Value Of CRM, explains that if those professionals who lead CRM projects do not build businesses cases correctly they are likely to see their initiatives fail.
Using Forrester’s Total Economic Impact (TEI) methodology to calculate the ROI of CRM projects, Band outlines, in a new blog post, the steps businesses must take.
First, organisations must estimate how investing in a CRM solution will help grow revenues, cut operating costs, and boost IT efficiencies. Defining the objectives associated with increasing revenue may mean asking if your initiative will help capture more of your current customers' spending on your product category, improve product mix value and be able to able to attract profitable new customers, as well as a number of other considerations.
To cut the cost of generating and servicing revenues, organisations must estimate expenditures to capture and service revenue will decrease, he says. They must consider customer profitability - can you reduce your direct selling costs, for example, by reducing unproductive administrative time spent by salespeople? Is there an opportunity to cut back on marketing expenditures?
In terms of IT efficiencies, Band says that there are several areas in which to look for efficiencies when replacing an old IT tool with a modern one. Organisations must examine whether they can achieve efficiencies on your vendor contracts to lower software license costs or if they can reduce ongoing CRM application customization, support and maintenance costs, as well as evaluating easiness of use and training times for end users.
On the cost side of the equation, firms must estimate the costs of software, deployment, maintenance and support, he adds. Dig into hardware, software, and subscription costs because whilst these costs are often the most visible to decision-makers they are only the tip of the iceberg. Organisations must consider initial purchase price, hardware required, ongoing subscription costs, extra data storage fees required and so on.
Additionally, dissect deployment costs, he says. “The biggest costs associated with CRM, or any software-centric business improvement initiative, are often the expenditures associated with selecting, configuring, and deploying the new technology.”
Organisations must ask: What are the costs for internal and external staff to deploy the software? How many integration points require consideration? Can integration work be staggered or delayed? What are the costs to maintain and support users during the initial evaluation period?
Also factor in ongoing maintenance costs which can be overlooked and don’t get blindsided by administrative and infrastructure cost, Band adds. Implementing technologies and solutions into an existing IT infrastructure can spawn hidden costs you should account for.
To read the full post, click here.