Why invest in CRM? For starters, because you’ll see an average return of $5.60 for every $1 spent.
So says a recent study from Nucleus Research, based on a survey of 223 CRM decisions-makers. Interestingly, the study also found that mobile access to CRM applications increased salespeople’s productivity by 15%, while access to social capabilities improved their productivity by 12%.
“Given the significant ROI opportunity, all organizations should consider mobile and social CRM adoption for salespeople,” according to report author Rebecca Wettemann, vice president of research for Nucleus Research.
I spoke with her to learn more about her findings, and the implications for organizations pursuing cloud CRM projects.
Honig: Getting $5.60 back for every $1 of CRM investment seems like an amazing return.
Wettemann: Interestingly, for a lot of companies, this also isn’t their first CRM project. In terms of the technology change, this isn’t moving from stone tablets to paper, but from one application to another, which tells us two things: First, CRM applications have gotten a lot better at delivering productivity returns for end users. Second, vendors’ software usability improvements have driven a much higher level of return compared to old-school CRM applications.
Are the best CRM gains being seen by businesses moving to modern, cloud-based applications?
Obviously, a lot of folks who are moving to Salesforce had some CRM application before. But really, two things have changed. First, the cost and time to implement have decreased dramatically. Rarely do we see customers who don’t expect at least some return within six months of buying the license — even if they’re doing a phased deployment.
Second, salesforce.com was the first to break the mold of, “I can only sell into sales, marketing, or customer service.” We’re starting to see much broader deployments, which means more users are getting benefits from that same investment.
How has the way that CRM consulting now gets delivered had an impact on ROI?
Earlier generations of CRM projects required a huge consulting — and personnel — investment, spread over a couple of years. Today we see more agile development, more iterative development, and just a much faster time to initial value.
Did you find any correlation between specific CRM software, such as Microsoft CRM Dynamics, and ROI?
There tends to be a solution that is the best fit for a particular organization, and that depends on the way they collaborate, how their sales team works, how dependent they are on Microsoft Office and Outlook, how much they’re willing to invest in change management as part of an overall CRM effort, and increasingly, the average age of the workforce.
Notably, your average younger user has spent a lot of time on Facebook, and really understands the paradigm. Unlike the knowledge management days 15 years ago, today’s Facebook aficionados aren’t afraid to ask a question of a complete stranger, just because they have a similar interest or job title. In a virtual, remote world, that’s a perfectly normal way to collaborate.
The younger workforce tends to understand that better, and even more interestingly, to really leverage those capabilities to their advantage. So pick a social tool to match.
Will social tools increase the CRM productivity gains you’ve been seeing?
What we’ve seen with the initial adoption of social, just looking at salespeople, is increased sales force productivity by 11.8%. That’s based on our survey. Another big finding was that CRM decision-makers think mobile CRM makes their sales force 14.6% more productive, on average. Interestingly, 46% said their most popular mobile device was the iPad, for using it to show sales collateral and demos.
Why the returns for mobile CRM so great?
Salespeople can get immediate alerts, so that when, speaking as a salesperson, I walk into a customer site, I can focus on the relationship, rather than putting out fires. Likewise, if I have free time after a customer visit, I can use mobile CRM tools and geo-locators to identify another prospect who might be near me, and then drop in.
In addition, particularly with pharma, we’re seeing CRM applications where — as I pull up content or book orders, or take a next step in a meeting — that information gets automatically captured, then uploaded to the CRM system. Before, salespeople had to take notes about what got said. Now, companies automatically get much better data, as well as a much higher volume of data, concerning what happens during sales calls.
How does this $5.60 return on every CRM dollar spent compare to other industry areas, such as human capital management?
While $5.60 looks like a big number, other areas can be higher, such as content management ($6.12), workforce management ($7.88), and analytics ($10.66). Remember though that a lot of companies are deploying analytics for the first time, so they’re making a big change, and thus seeing greater returns. Interestingly, however, analytics often relies on customer data, meaning it’s an extension of CRM.
So are you seeing diminishing returns with CRM?
As CRM deployments become more incremental, the returns will become more incremental as well.
Has CRM become less prone to failure over the years, and how does that correlate with ROI?
Anecdotally, we certainly see vastly fewer project implementations getting into trouble. Not that no customer ever has a problem, but overall there’s been a big change. Of course, references can become positively or negatively viral, very quickly. Accordingly, vendors have become much more engaged in customer success and customer outcomes.
We’re also seeing a lot more vertical functionality being built into the tools, such as role-based interfaces, plus other techniques for making deployments more predictable, more prescriptive, easier to adopt, and faster to deploy.
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Post and thumbnail photos courtesy of Flickr user PhotoSteve101.
It remains that a great deal of CRM implementations are completed on time, but that the actual user, the sales rep, marketing manager, person at the desk using the system is left dissatisfied with the outcome. I have for many years ran sales teams and used a plethora of varying brand name CRM systems where the CRM allotted implementation team has completed their tick box of tasks. These including to switch on, give access, train users and deliver screens and reports. Yet I and my teams have been left with systems that create more work, drive workarounds, cause delays on customers and make an old process more complex. I have heard the ‘we didn’t license that module’ , well fix that later, we didn’t plan this for stage 1, etc and yet these things seemingly never come. Increasingly on talking to colleagues in the industry I find the same experiences.
It is time to put the user at the centre of the implementations and look at it from an outside in perspective. What is the outcome and usability that needs to happen to deliver the business success and have less focus on the technical aspects and theories of all the bells and whistles that might be delivered, but usually aren’t.
We focus on our clients in this way and on delivering a more cost effective and successful outcome as the priority and are finding a rich base in customers choosing to more away from prior chosen CRM systems who promised the world and demo’d well, but in delivery lacked the substance.
We have found this particularly true in the SMB space where seemingly many are left as a number to the larger vendors. CRM in the cloud is easy to license, easy to switch on , easy to sell services around, but not so easy to ensure the customers success.
As more customers realise there are a wide range of CRM players, not just the larger brand names, they will find increasingly they are better serviced and we hear of more successful customer outcomes as opposed to successful implementations!
Ian Moyse
Workbooks.com, a Cloud CRM provider