Calculating the ROI on your CRM: Is your investment generating returns

According to Baseline, the ROI on CRM is close to $5 for every $1 invested. Even as the CRM industry continues to flourish, do companies really know how to determine the effectiveness of their CRM systems and how to accurately calculate return on investment (ROI)?

 

Before you calculate the ROI on your CRM, define business goals. Moreover, remember that ROI is not just limited to financial factors. Once you have an understanding of the goals driving your investment, it will be easy to calculate ROI.

The good news is that CRM offers so many advantages that your investment will start starts paying for itself almost immediately after implementation. There are some numbers each business must closely monitor to evaluate if their CRM investment is generating returns after all.

Customer Value:

While calculating the cost of customer acquisition and the lifetime value of a customer is tough without implementing a CRM solution like Salesforce. An organization must implement certain practices to be able to calculate this even after a CRM implementation.


To understand the value each customer brings becomes important in guiding crucial decisions about incentives and discounts. Moreover, the management needs to know the value of the average new customer to calculate acquisition costs and make short and long-term profit projections. If an organization is not able to identify and quickly reach out to new customer’s post-CRM Deployment, then the investment that an organization in making to deploy a solution like Salesforce CRM is going in wain. To come to the value of a customer and make key decisions, they must aggregate various online and offline customer acquisition spend and revenue per customer.

Sales Cycle Duration:

Unless businesses know how long their sales cycles are, they cannot project future revenue. Each company will have a unique sales cycle i.e. how long it takes to close a deal from initial contact. It must leverage its CRM system to track this metric for each customer and give management the information it needs to make business decisions. Using this feature of CRM is important to make time-sensitive decisions and recognize new sales patterns. If companies aren’t proactively tracking this metric, their CRM investment may be going waste.

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Sales Calls Per Sale:

Simply tracking the number of sales calls can be done by a number of tools including a simple excel sheet and getting into an agents call history using dialer dashboard, but this information in a silo isn’t much use by itself. An effective CRM implementation leverages the CRM system to track this metric for understanding how much time a seller spends with each prospect. However, this needs to be measured in terms of how many sales calls must be made to acquire a new customer. Once this is known, companies can use this to predict the future i.e. how much new business will come and how much it’ll cost to do so.

Targeted Prospecting and Nurturing:

Companies routinely waste marketing dollars on people who don’t want or need their products. But once you’ve invested in a CRM system, this should no longer be the case. Use your CRM to shift from a “big net” approach to a more targeted approach to reach ideal buyer personas. By targeting such specific groups, you’ll generate a higher percentage of qualified prospects. Ultimately, this translates to more ROI.


Upon identifying qualified prospects, use the CRM to tailor sales calls and marketing emails. With an efficient CRM system like Salesforce, companies can gather an immense amount of information about prospects and thus nurture them with precision.

Cross and Up-Selling:

Companies must use their CRM systems like Salesforce to evaluate if their sales team is successfully cross-selling and up-selling existing customers. Today’s customers engage with brands across devices and channels, imagine a retailer’s customer browsing through a store and comparing product prices online if the retailer is unable to engage with its customer across channels it results in lost revenue. Effective utilization of a CRM solution especially platforms like Salesforce Marketing cloud helps corporations achieve, as a corporation if an organization is not leveraging some of these features then it puts a question mark in its CRM implementation.

Conclusion:

The increasing popularity of CRM can be attributed to the high ROI it offers in terms of increased sales, decreased marketing costs, and enhanced operational efficiency. Capitalizing on its benefits needs businesses to mine them for key metrics crucial to growing their business.

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