Typical Returns on Investment in CRM

Customer Relationship Management (CRM) represents a fundamentally sound and obvious idea. Sales and Marketing are both incredibly data and information sensitive activities core to the success or failure of any line of business.  Obviously, driving better Customer Experiences will drive better Customer Loyalty, retention, and their association with your brand will improve. As a result, a solid and well thought out strategy will directly affect the performance of any business.

CRM is however not just technology. Implemeting a CRM system based purely on a systems or Information Technology approach is not going to make any difference. A company must be ready to adapt, change, and incorporate the essentials of sound relationship management AND use the appropriate tools effectively to realize the fullest benefits or Return on Investment (ROI).

A very typical scenario for IT and Systems Approach to Customer Relationship Management is in the form of the software and infrastructure that is used by "Call Centers" as this capability allows the agent or call center resources direct access to all pertinent customer centric information which leads to greater 'first call resolution'. In practice though these systems only work well if both the customer and the agent have detailed knowledge of the services and products available currently, and historically!

There are times when you may have personally really enjoyed the huge impact that a solid CRM strategy can offer. For example you may have been really impressed when an engineer appears at your home to repear your TV and the engineer knows exactly what the problem is that you reported originally when you phoned in.  Even better if they have the necessary parts and spares on their vehicle to fix your TV on the spot!  CRM carries a huge potential for returns when its available across the business, extending from front office to the back office and the remote or field work-force, or even contractors and sub-contractors.

CRM offers huge range of benefits across contact management (address books), productivity tools like email, group-calendaring etc.  Most companies have separate email systems, a different CRM system, privately held contact and account information with each employees Office productivity suite etc.  Obviously, bringing all these elements to bare in a single holistic solution increases knowledge, accuracy and validity of data.

Marketing automation tools for campaigns, email, postal or even telephone based are well proven constituents of most CRM systems.  The tools match a companies current market activities to the information and knowledge it holds about its consumers and clients; and brings (when correctly used) the right sales information and content to the right elements of the client base, at the right time; resulting in higher sales and more volume in sales.  Increased visibility into what type of marketing campaigns are working, and those which are not provide a real-time sales management tool that helps business decide where to spend and where not to spend valuable marketing and sales stimulation money.  Do you get better returns from attending trade-shows or by buying databases of contacts for a mail-shot?  Should you spend that $15,000 on a premium Yellow Pages advertizement, or spend it on a radio or TV campaign.  What percentage of our clients actually responded to our last TV ad? How many sales did it drive?  How does it compare to the value of the tradeshow we spent money on April last?  Being able to measure these questions directly, and quantify and qualify them is key.

An area where CRM may fail more easily is with the remote workforce. Your field sales teams. They can be resistive to the time needed to update CRM records with their daily activities. Making the CRM solution accessible from any internet connected device, including smart mobile phones can easily tackle this issue.  Most of the nation is now covered by good quality high-speed internet connections based on WIFI access points or even 3G based cellular data-modems and aggressively priced packages that allow any remote sales person to internet connect their IT equipment from any location.  A secret for success in applying CRM methodologies to these resistive elements of your business is to ensure that they are measured against the content of the CRM system. Commissions or variable income associated with the sales teams activity should be drawn from CRM order bookings, and not from their sales managers Excel spreadsheet of orders booked!  A simple change in process can yield significant and instant benefits!

CRM is not an automation tool. It will and does require significant manual intervention. The more a company is welling to embrace CRM, the more quickly it will realize its fullest potential.

Industry Highlights - Publically available Return on Investment Figures for a CRM implementation

Adidas - 26% internal rate of Return. It enjoyed a net operating benefit (cost savings) of over $120,000 dollars in a single year, from the automation of manual processes, and the new abilities of sales agents to recommend new or alternative products to clients.  This cross selling capability returned over $250,000 in a single year in new sales driven by CRM recommendations that were driven by the data held in the system about each client and their buying history and preferences

AMD - the popular computer chip manufacturer realized at 32% Internal Return on Investment. This offered a net operating benefit of $4,490,000 in a single year!

Audi - the popular vehicle manufacturer realized at 22% Internal Return on Investment. This resulted in measurable increase in $2,300,000 in one year! Audi also claimed over $10,000,000 in internal cost savings due to more efficient interactions and quality improvements in their dealings with customers.  Audio measured an increase in dealer loyalty an additional $3,400,000 in revenue contributions in the same year!

Schwan's Food Service - realized a 100% Rate of Return from CRM, by targetted marketing (up 15% in one year), increasing the closure rates on leads (by 10% in one year) and increasing web traffic. Schwans stated that they enjoyed greater brand awareness and much higher measurement in customer satisfaction

These are just a few examples of the types of measurable returns. Now, these were figures from big brand companies, and a quick search on Google on mainstream CRM software sites will provide many more examples. Central Florida CRM solutions actually see's regular Returns of Investments that are routinely higher than these for small and medium business' who would dream of returns of these types. Actually, the smaller, my dynamic, nimble, and aggressive companies are most able to lever the returns quickly because they can do so rapidly.  As a typical rule of thumb, it would be safe to assume, if done correctly, that a well applied CRM Solution can deliver as much as a 25% increase in same year yield on your normal performance.  So if you small business does $200k in business, then a well applied process should allow you to easily achieve $250k in business the year following application.  This however is a heavily caveated rule of thumb that is dependant on your business type, client-base, and the extent to which you are ready to embrace the real philosophies of Customer Relationship Management.