How to maximize your ROI in CRM investment?
According to Derek Gilmore, in 2014 Gartner predicted businesses to spend almost 24 billion dollars on CRM software in the upcoming years. And today in 2016, the investment has touched the landmark figure set by Gartner.
According to CSO Insights, within the last ten years frame, CRM use has increased to 82.9 percent from just an ordinary 50 percent.
If you are not surprised reading these metrics, it's likely because you are a CRM loyalist who has already invested in the software. And you are definitely not alone in this category. CEOs and entrepreneurs around the world view CRM systems as a strategic and essential investment in the business. And why shouldn't they?
CRM functions as a ONE-STOP solution where it performs a bunch of crucial activities:
- It streamlines organization-wide sales, marketing and customer support functions in a single system. Marketing, Sales and Customer Support teams work together on one unified platform to grow leads, identify opportunities, close deals and support customers.
- It empowers businesses to track and optimize customers behaviors and transactions and deliver proactive customer service on all touchpoints. CRM is the wing beneath many small businesses' success who are now able to meet customer expectations in even the most minor of transactions.
- It helps businesses identify the most fruitful lead generation channels and frame marketing campaigns focused on those specific mediums.
- It provides evaluation tools to identify top-quality performers in sales, marketing and customer service departments. This enables businesses to appreciate the best talents at work and build robust practices around these professionals.
- It automates a major chunk of sales, marketing and customer support activities and frees up professionals from tedious, repetitive behind-the-scenes work. They are enabled to do what they are best at – hardcore selling. This results in increased deal closure by 30 percent, reduced sales cycle by 18 percent and reduced administrative time by 14 percent.
Forrester reports that Customer Experience (CX) is the new competitive battlefield. Hence, all leading businesses have implemented CRM as the foundation to their customer experience strategy. But, while the underlying intention is the same, all businesses are not able to accomplish their objective.
According to research bodies like Forrester and Gartner, CRM systems typically have a failure rate between 50 and 60 percent. That means in close to 50 and 60 percent cases, businesses are not getting the maximum ROI out of the investment done in the CRM system.
So what is it that makes one section of businesses easily gain benefit out of CRM while the other half struggle with obtaining real value out of CRM projects?
Forrester, in collaboration with Customer Think surveyed 414 business and technology decision makers who had been recently involved in CRM projects. Based upon the insights gathered from the survey, they have concluded that any business can maximize their ROI in CRM investment, provided they focus on four critical areas: strategy, process, technology and people.
1. Choose the right Technology
Technology deficiency is one of the most common factors that prevents a business to extract optimum gains out of the CRM investment. And this is precisely why it is advisable to do exhaustive research while choosing a CRM solution.
Quoting the words of Kate Leggett - ''Making an investment in a customer relationship management (CRM) product or suite shouldn't be overwhelming, but it does require research...you should have a clear understanding of your objectives and the issues you hope to solve as well as the must-have features you need in a CRM product. The next step is evaluating the various tools, weighing their strengths and weaknesses, to help you determine the best CRM software for your company.''
Businesses who follow the above-suggested procedure do not have to experience hassles of system performance shortfalls. The CRM system supports their end-to-end processes, is usable and deployed in an agile manner. Most importantly, data migration, acquisition, quality and governance happens smoothly.
2. Focus on the People
The onboarding process for CRM is always the most challenging. In the survey conducted by Forrester and Customer Think, 38% of respondents cited problems such as slow user adoption and difficulties in aligning the organizational culture with new ways of working.
The problem of user adoption crops up because most businesses do not provide adequate attention to change management and training. They underestimate the change that CRM brings in business processes, work practices, roles and responsibilities.
Moreover, they expect 100 percent adoption rates for CRM processes and technologies, right at the beginning. This is unfair as it takes some time to learn and accept new business processes and supporting technologies.
The best way out is to introduce CRM gradually in the process. Sessions should be held highlighting the benefits that both the business and employees will get from the CRM. Adoption rates for CRM will automatically soar up, once the employees have a clear idea of the benefits.
To further make the situation favorable, businesses can implement reward schemes for those who provide better customer engagement and service, using the CRM.
3. Define the Strategy
CRM is not magic, Period. Its ROI is equally determined by the strength of the technology you choose and the strategization you do in relation to it.
Quoting the words of Eric Felipe-Barkin - ''Enterprises often have unreasonable expectations. Perhaps fueled by the siren call of vendors who tout sales cycles that have dropped from 80 days to 60 days and increased customer support capacity to the tune of 60 percent, they go into a roll-out thinking that a CRM solution is going to take care of itself. That it will just automatically whisper the right words to salespeople to close sales and divine the best outreach campaigns for marketing teams.''
This attitude costs really high. Since businesses only do the implementation and walk away, they get to use not more than 30-40 percent of what the tool is actually capable of. In other words, businesses themselves cancel out the 100 percent efficiency gains CRM can provide to them.
Hence, it is very important that businesses take time to define objectives before proceeding with implementing a CRM solution. Once the objectives are well-documented, the next step should be on creating a fundamental strategy i.e. - how will CRM be used to accomplish the said goals?
Having a clear set of objectives and goals ensure that the business uses the CRM in the right direction and get the most from the technology investment.
4. Set the right Process
The survey conducted by Forrester and Customer Think reports that 33% of respondents faced problems grounded in poor or insufficient definition of business requirements, inadequate business process designs, and the need to customize solutions to fit unique organizational requirements.
This emphasizes upon the importance of setting right process designs before applying technology. Similar to defining the CRM objectives and strategies, businesses need to invest time and effort to make subtle adjustments in the operations as well, which ensure that CRM smoothly fits into the work process.
In addition to these four crucial areas, two more pointers lay the groundwork for optimum ROI out of CRM investment. These include:
5. Start with small CRM goals
It is observed that many businesses fall short of realizing full benefit out of their CRM investment, because they aim for the bullseye at the start itself. Their first goals are shockingly overwhelming and over-complicate what they are trying to achieve through the CRM.
This puts unnecessary pressure on the end-users who are already tackling the challenge of learning a new technology. Collectively, both these factors lead to the doom of the CRM investment.
So businesses should focus on small successes at first. Initially they should keep CRM goals and objectives relatively modest, which with time should be increased in size and matter. This approach also fosters better user adoption as employees become more comfortable to try the CRM with smaller goals to accomplish.
6. Act on the CRM insights
CRM is not a robot or a triggered bullet that improves customer relationships, minus any human effort. Instead, it's a tool to define and implement a customer-focused business strategy. So once businesses have the CRM by their side, they should not consider it as the end but rather the start of a journey. Throughout this journey, it is their onus to analyze the CRM data, extract insights out of it and act accordingly.
So if CRM shows that one of the most profitable customers has a pattern of purchasing in the holiday season – that should set off alarm bells and whistles to the sales team to proactively contact the customer and cross sell products that he might be interested in.
Patricia is a full time CRM consultant at ConvergeHub and part-time blogger. She has earned herself quite a fame as a specialist and market expert in CRM software. In the last five year she has worked with various companies as CRM consultant to help them move their businesses to cloud. Her expertise lies in offering cloud CRM consultation, CRM customization and integration solutions to small enterprises. For last one she is engaged in building ConvergeHub, cloud-based CRM solution for SMBs, as a consultant.Follow her at Twitter: @jones_converge