Creating the business case for making improvements to your CRM infrastructure can be a complex process, and there are many different methodologies for determining potential ROI to justify moving forward. Every organization also has its own unique decision making process which can be as simple as getting straightforward approval from the CEO if the desired improvement feels “right”, to a full cost/benefit analysis that involves long-range budget planning cycles and board presentations for that final go-ahead. Below are two projects that show some of the parameters to look at as part of an overall cost/benefit analysis:
Project 1: ERP Integration– A recent customer integrated their ERP system in order to break down silos between their sales/customer service/back office teams.
- Save on licensing costs – getting their sales and customer care teams the data they need, without having to provision new user licenses for their ERP system.
- Benefit: Speed with which the information could be made available – Once an order status changed, it would send off an alert in Salesforce apprising the customer care team. Speed enables better efficiency and better customer service which is valuable, but hard to measure quantitatively
- Benefit: End-users no longer needed to “swivel chair” between applications. Data entry between two separate applications was no longer needed, reducing mental context switching and decreasing human error.
- Benefit: Lessened security risk by eliminating need for a wider audience to have access to their ERP system
- Benefit: Planned addition of more value-added interchange has become easier. After order status, order entry, and customer onboarding were completed, next steps are to add payment, shipping status, and more at greatly reduced incremental cost. More notifications and workflow enhancements are also planned, including direct customer notifications, further increasing automation and simultaneously decreasing communication delays and improving customer service responsiveness.
- Cost of project to integrate solutions (one-time cost)
- Ongoing administration costs of maintaining integration (addressing any alerts if integration went down, testing when either system upgraded, etc.)
- If middleware is involved, the need to own and manage an additional piece of software
- Another point of entry that needs to be managed from a security perspective
Project 2: CPQ for Quoting – Customer wants to enable their Salespeople with the means to crunch the quoting process from several days to several hours
- Freed up salespeople to do more selling and relationship building.
- Better morale – sales spent less time bogged down with the “busy work” involved in quoting
- Better accuracy and best practices – rather than each sales person “doing their own thing,” centralization enabled better efficiency, reinforcing best practices and improved speed and accuracy
- Immediate insights – better information earlier in the sales process. By centralizing quote building, more information was available earlier for forecasting and the sales team could swarm more easily on critical proposals
- Better platform for scaling. When pricing changes or new products and services are added, they can be quickly implemented across the entire team with greater ease
- Additional CPQ license cost
- Additional project cost to set up (one time)
- Additional cost to train team on new application (one time)
- Ongoing maintenance and support costs and centralized ownership costs (a part-time staff member to manage it and to field more questions. While useful, it is also another application to manage)
Accurately estimating these benefits can be challenging, but not impossible. For the first example, the less direct benefits include a better customer experience, which leads to better customer satisfaction, which in turn reduces churn and maintains subscription revenue (or may cause it to grow). Adding customer alerts may be part of an overall value-added service that could eventually be included as part of a paid or premium offering. As demonstrated in Project 2, a more efficient quoting process also has many downstream benefits – one of which is the ability to free up salespeople. Presumably, this enables more prospecting and selling which should create additional closed deals. One way to calculate this would be to bottom’s up calculate the hours saved and prorate the amount of additional business that could be closed. It’s a blunt way to calculate it, but at least a starting point.
Measuring the quantitative benefits becomes more challenging as you unpeel the onion of downstream benefits. That being said, eventually it does tie in to being able to grow revenues and reduce costs. When analyzed to this degree, the costs of moving forward are often many orders of magnitude less than the benefits gained from doing it.