The business result you should achieve by implementing
Which system do I choose? The options available to you are an in-house tailored or a
A software as a service (SaaS) or hosted solution such as that offered by Microsoft Dynamics CRM will give you a quick entry provided you consider a number of key areas:
- You have no interface requirements or very little customisation is necessary. That is, a “vanilla” CRM is suitable.
- Your basic needs are to maintain customer contact management and to manage and report on staff activities such as marketing and leads generation.
- You do not have the technical infrastructure to run and maintain a CRM system
- You are comfortable with data storage and security being held off your premises.
SaaS is able to deliver you a pain free implementation and you get ongoing upgrades. You should also consider your future needs and expected company growth. If there is likelihood that you will bring your CRM in-house, then it would be prudent in your assessment to look at CRM systems that allow you a seamless migration from a web based to in-house customised solution. Microsoft CRM allows that migration. However, knowing your 5 year cost of ownership including a potential migration will provide you an excellent indicator on the direction you should take.
Assessing the return on investment can be difficult. A straightforward way of looking at this is to ask yourself how you want to organize your sales team and make them more productive. Two areas that can be quantified into an ROI are:
- By increasing sales representative selling time
- By decreasing the sales cycle length
By considering the sales person time you need to put together the facts each of your sales representatives and managers activities including:
- The number of leads handled monthly
- Average number of deals closed per month
- Total transactions per year
- Average size of each transaction
- Total hours worked per year
- Average revenue per hour
As an example a salesman might work 40 hours per week, 48 weeks per year resulting in 1,344 hours worked. Their productivity might be that they handled 20 leads and closed 5 transactions each month resulting in 60 transactions per year. At an average of $10,000 per transaction this sales person would yield $600,000 each year and have a productivity rate of $446/hour.
Through your CRM deployment, if each sales representative is 10% more productive by having easy access to all customer related information and reducing the amount of administrative time spent, you can add an additional 135 hours of selling time per year per sales rep. Based on the average revenue this would mean an additional $60,000 per year for each sales resource.
In this example, if the sales cycles can be reduced by 5%, then each sales resource can also potentially generate another 3 transactions annually, or $30,000.
Therefore for this salesperson the uplift in revenue by having a well defined CRM software business system results in additional revenue of $90,000 per year or 15% productivity.
There are other factors that can be included in your return on investment calculations for CRM such as sales management, marketing, customer service and accounting productivity. However, with sales being a direct contributor to revenue you will find that this is a more tangible way to justify the solution you choose.
In summary, your business choices are fairly simple.
- How you will use CRM? Do you need to use Outlook, have access to it on a browser or even on your mobile?
- How will you get the system – as software or as a service?
- Will you buy or rent?
- Can you change as your business needs change?
At the same time, review your current sales productivity and using these facts create a credible justification to the revenue and profit impact deploying a
By Antony Dutton, Aaromba Technologies – Microsoft