How to carry out a CRM cost benefit analysis in three steps
So, you have done the deed. Your new CRM system is now in place but you really need to know if it is paying its way. Carrying out a traditional cost-benefit analysis would be a great idea but how do you do this? How can it be applied to a CRM system?
Help is at hand. Here we take a look at how to carry out a CRM cost benefit analysis in three steps:
1. Estimate a value for each improvement idea
- Process time savings: look at the amount of data-entries per day, multiplied by a time saving for each multiplied by working days in a year and then finally multiply by a cost per hour for entering data. Additionally, you may wish to look at the number of reports per month and the time saving for each one.
- A value for faster processing: you may be faster but are things better? Has your customer service improved? Are the responses timely enough? If you have accrued advantages in your market due to this, work out a value for it.
- The costs of mistakes: think about errors to do with data entry and the time it takes to correct. What value can be given to this? Could this even lead to lost customers? Are there fewer mistakes or more? Minimizing the amount of data entry required can reduce mistakes and costs.
- Value due to improved management decisions: if you believe that 80% of problems can be due to poor management decisions, then this could be a huge saving. Because the CRM is providing higher visibility and the provision of accurate and essential information, then decisions should be made faster and more accurately. Working out a sum may be hard but it is worth doing. Try looking at the hours that may have been wasted resolving customer complaints, multiplying by a managerial hourly rate.
- Value due to improved functionality: has your competitive advantage increased? Are your communications with clients more timely and efficient, saving you money? Try and quantify this in terms of value. Look at time saved when dealing with customer queries and improved speed of processes. This can then be equated to an hours x hourly rate cost ratio.
2. Weigh benefits against costs
Look at the many benefits that the CRM has provided you with (you may already have these listed from your initial research and wish list). It should be relatively easy to show an approximate cost for each, whether the new tasks are being carried out in-house or by a consultant.
3. Divide cost by value
Take the approximate cost of each benefit provided by the CRM and divide by the value produced; you can do this on an annual basis.
If you find this CBA too simple, then ask your accountant or financial manager to assist. They should be able to provide either net present value analysis or even internal rate of return computations to help.
Your CRM software brings with it many advantages and sophistications but it is still an investment and should therefore always be evaluated.
The three different types of CRM and what they offer
Before you go ahead and implement a CRM for your business it pays to understand the options
CRM and blockchain: what does the future hold?
Exploring 'blockchain' as a new concept and looking into its future in the market
Three ongoing CRM costs you forgot during budget calculations
Calculating your CRM budget can seem relatively simple until ongoing costs rear their head.