6 Ways to Measure Web Based CRM ROI

by | Aug 26, 2010

Cost of Ownership

Web based CRM software offers a vast improvement on overall cost of ownership. You don’t need to buy and maintain database servers or upgrade end user hardware and online CRM vendors typically provide better online training and support resources which minimizes the requirement for your staff to spend time supporting end users. Enhancements and updates are typically included so, the subscription fees are consistent over time and as you grow. You can ramp up and down quickly because it’s just a matter of adding a new user, not buying, installing and configuring software, etc. Plus, with web based CRM software, you’re better able to fit required capabilities to the varying roles within your staff, helping to control costs.

How much is this worth? When you factor in all the hard and soft costs of locally installed CRM systems vs. web based CRM software, the Total Cost of Ownership of online CRMs is typically 40% less.

How difficult is this to achieve? Most of the cost benefit of web based CRM comes from the subscription model accessing the system via the web. This means the benefits really start on day one.

Increased Lead Generation and Nurturing

Even if you’re prospecting through cold calling, a good web based CRM solution should organize each rep so that they can make contact with more leads and keep them on top of follow ups so they’re better at turning leads into customers. Many online CRMs offer some email marketing capability which can enhance your ability to create leads and nurture them.

How much is this worth? How many leads does it take to get a customer today? What’s a customer worth? Estimating a conservative 10% increase in the quantity of leads is very safe and that’s not even factoring in the increase in close rate you should see through more consistent follow up and better nurturing of customers and prospects.

How difficult is this to achieve? It’s simply a matter of training your sales team to use the CRM solution to be more efficient and possibly creating a few email templates. Tip: If you’ve never created marketing emails before, don’t go spend a bunch of money on a consultant. First try it yourself by just speaking from the heart about the challenges you know your customers are dealing with. Keep it short and to the point. See what happens. Then decide about outside help.

Increase Marketing Effectiveness

By tracking the source of each lead and the final results, most effective advertising mediums are easily identified so that ad investment can be targeted to those that are most effective.

How much is this worth? A conservative rule of thumb is 10% of your current marketing and advertising budget. What’s most common is that hard data will show you that some of your most prized and expensive methods of marketing are your least profitable.

How difficult is this to achieve? Not at all! Some CRM solutions have out-of-the-box capabilities to analyze lead quantity and quality by source so just by learning to update prospect records with a couple of fields you’ll start to see what marketing is working best.

Sales Management

Reality vs. Anecdote – web based CRMs enable a real time view of hard data about sales activities. Managers are not limited to basing decisions about sales forecasts, training needs, bonuses and firing solely on stories told by the sales person.

How much is this worth? Quantifying the value of more data driven management of your sales team varies greatly from company to company. However, at a simplistic level, you’ll quickly be able to contrast each sales person against the rest of the team and identify best practices. By establishing the best practices as the norm and managing for that, you should easily be able to add or save one deal per rep per buying cycle. So, if your average deal is $10k, it typically takes a new prospect 3 months to buy and you have 10 reps, then this alone should be worth at least $400k within a year!

How difficult is this to achieve? Not as hard as you think. Most sales managers are unfamiliar with managing the metrics of the sales process because they’ve never been able to measure them. Its easy to start by running simple reports on number of calls, meetings or proposals by rep. Then you’ll want to “qualify” these events and count only those involving a good prospect and real forward movement in the buying cycle. If that’s all you do, you should begin to see major improvements in the quality of your sales pipeline and the accuracy of your forecast.

Competitive Edge

Immediate access to up to date information about client status enables everyone on the staff to serve customers proactively. Instead of saying “Your sales person is out of the office, I’ll have him call back”, the receptionist says “I see that Bob sent you a proposal yesterday, what can I do for you?”. When customers can’t get what they want from you when they want it, your competitors are only a quick Google search away.

How much is this worth? Priceless! This type of proactive response to customers’ needs is so rare that when you’re able to really “wow” a customer like this, then they are going to be highly loyal. Assume that once a month you’ll be able to really hit it out of the park with a customer. So, what’s it worth to make a customer for life once a month? What is a customer typically worth to you over the lifetime of their relationship with you?

How difficult is this to achieve? It’s a no brainer. All you have to do is get all your prospects and customers into the CRM solution and be sure that any time your staff communicates with a customer they log it into the CRM with enough specifics as to be meaningful to another staff member including attaching proposals, etc. Tip: Some staff members will complain about the time required to enter this information. First, explain to them how this will yield a strategic competitive edge. Second, choose a web based CRM that makes this easy and fast for them.

Risk Management Sales leads

Customer information is stored on the web based CRM provider’s servers so sales people can’t copy it and go to work for the competition or lose it by leaving a notebook in an airport. Shared services around redundancy, backups, infrastructure security, policies and procedures provide higher level of risk protection and compliance at a lower per user cost. Subscription based pricing of web based CRMs control costs compared to incremental costs of scaling up internal systems that often include unexpected needs to significantly increase hardware and software costs to meet increased demand. Online CRM keeps this incremental cost constant and relatively minor.

How much is this worth? Well, it’s really peace of mind isn’t it? But, if you imagine the scenario of a sales person copying your customer list before he goes to work for the competition, what’s it worth to be able to limit the information that rep has access to and have a highly skilled partner in protecting your customer information? If a worst case scenario like this ever happens to your company, the value of your web based CRM will be at least the total value of that rep’s book of business.

How difficult is this to achieve? Easy. These benefits are really “part of the deal” with most web based CRM vendors.