How to Measure the ROI of CRM in 2024?

Rohit Rajpal

Senior Writer

How to Measure the ROI of CRM in 2024?

Key Takeaways:

    1. CRM ROI refers to the financial return from investments in customer relationship management activities and technologies. Studies show returns averaging $5 to $30 per dollar spent.
    2. Calculate CRM ROI by quantifying costs, identifying benefits, connecting them to key metrics like revenue growth and retention, and comparing over time. Include qualitative factors, too.
    3. Cloud-based CRMs that integrate with other systems enable mobile access, automate tasks, and provide actionable customer insights to deliver the highest returns.

Customer loyalty and service underpin business profits. Retaining existing customers costs far less than acquiring new ones, with studies showing customer acquisition costs four to five times retention costs. Therefore, customer relationship management (CRM) systems are critical investments. However, simply purchasing CRM software is insufficient – companies must regularly measure their CRM return on investment (ROI) to ensure they result in a positive bottom-line impact.

 
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In this blog, we will understand what CRM ROI is, how much you should expect, and the best ways to calculate the return on investment. We’ll also discuss how to maximize your ROI, along with some real-world examples. Let’s get started!

What Is CRM ROI?

CRM ROI refers to the return on investment from customer relationship management initiatives and technologies. It provides a quantitative measurement of the financial benefit businesses obtain from their spending on customer service and loyalty programs, software, analytics, and other CRM activities. 

CRM ROI links spending directly to metrics like customer lifetime value, customer equity, retention and churn rates, growth in share of wallet, cost reductions in services, and profitability growth. This enables companies to track factors impacted by CRM that boost revenue and decrease costs over both the short and long term.

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Pro-tip

Navigating the landscape of CRM ROI in 2024 demands a nuanced approach. Beyond the conventional metrics, delve into understanding the qualitative impact on customer satisfaction and team collaboration. Tailor your measurement strategy to align with evolving customer expectations, ensuring that every data point serves as a compass guiding you toward not just financial gains but meaningful customer relationships.

While not all CRM benefits can be directly measured, calculating CRM ROI helps justify investments, identify successful initiatives to expand, spot programs failing to add value, optimize spending, and communicate CRM’s monetary contributions to key stakeholders.

How Much ROI Should You Expect From Your CRM?

When it comes to CRM investments, the returns can be substantial. According to several studies over the past decade, CRM consistently provides a strong ROI across industries. 

Estimated ROI on your CRM By SoftwareSuggest

While individual returns depend on factors like business size and CRM integration, the systems have proven financial upside based on metrics like conversion rates, revenue, and sales productivity. 

On average, CRMs can increase conversion rates by up to 300%, lift revenue by 29%, and boost sales team productivity by 34%, delivering rapid payback on platform costs and optimizations. 

With the next generation of analytics and customization tools now emerging, returns on CRM investments show no signs of slowing. However, the key is leveraging available data and features to maximize value.

How Do You Practically Calculate the ROI of CRM?

Calculating CRM ROI involves quantifying CRM costs, revenues, and savings over a specified time period and comparing that to a benchmark metric, often revenue or profits. Here are key things to keep in mind when calculating CRM ROI. 

1. Define Objectives and Metrics

Begin with articulating the objectives of implementing a CRM system. Whether it’s aimed at increasing sales, improving customer satisfaction, or streamlining processes, having a well-defined goal is crucial. Additionally, identify specific key performance indicators (KPIs) that align with these objectives, such as sales revenue, customer retention rates, or customer satisfaction scores.

CRM ROI metrics to consider By SoftwareSuggest

2. Calculate Costs

To determine the ROI accurately, account for all costs associated with the CRM implementation. This includes the initial investment, encompassing software licensing fees, implementation costs, hardware, and any customization expenses. Don’t forget ongoing costs like subscription fees, maintenance, training costs, and support expenses. Also, factor in the time and resources spent on implementation and maintenance to provide a comprehensive cost overview.

3. Identify Benefits

Identifying and quantifying the benefits derived from the CRM solution is crucial for calculating ROI. Evaluate how the CRM system contributes to increased sales, improved customer satisfaction, and overall productivity gains. Assess the impact on marketing effectiveness, including lead generation, campaign success, and enhanced customer engagement.

4. Quantify Metrics

Utilize measurable data to quantify the identified benefits. For example, calculate the percentage increase in revenue, the reduction in customer churn, or the time saved in manual processes. Establish a baseline before implementing the CRM system, allowing for a clear comparison between pre-implementation and post-implementation metrics.

5. Calculate ROI

The fundamental formula for ROI is to divide the net benefits by the total costs and multiply by 100. The result is expressed as a percentage, providing a clear understanding of the CRM return on investment.

ROI = (Net return on investment/cost of investment)/100

CRM ROI formula By SoftwareSuggest

Note: While some benefits may be challenging to quantify, such as improved customer relationships or enhanced brand reputation, they should not be overlooked. Acknowledge these qualitative factors and incorporate them into your assessment of the CRM system’s overall impact.

You May Also Read: CRM In Service Industry

How Can Businesses Maximize CRM ROI?

Maximizing the CRM return on investment involves strategic planning, effective implementation, and continuous optimization. Here are key strategies to help businesses maximize CRM ROI.

1. Pick a Cloud-Based CRM

Choose a cloud-based CRM system for flexibility, scalability, and easy access. Cloud-based solutions make updates hassle-free, support real-time collaboration, and let you work from anywhere.

2. Customize For Business Processes

Tailor the CRM system to align with the unique processes and workflows of the business. This customization ensures that the CRM integrates seamlessly into existing operations, maximizing efficiency and user satisfaction. 

3. Keep Data Clean

Regularly clean and update data in the CRM system. Good quality and up-to-date data help with better decision-making and avoid mistakes. Follow data governance rules to keep things consistent and accurate.

4. Train Users Well

Make sure employees know how to use the CRM system with thorough training. Encourage everyone to use it by highlighting its benefits and how it makes daily tasks easier.

5. Integrate with Other Systems

Make sure the CRM system connects well with other business systems like ERP or marketing tools. This makes work smoother, reduces manual data entry, and gives a full view of customer interactions.

6. Ensure Mobile Accessibility

Enable mobile use so that people can access CRM data wherever they are. This is especially good for sales teams who can update things in real time and respond quickly to customers.

7. Automate Repetitive Tasks

Leverage automation features within the CRM system to handle repetitive and time-consuming tasks. This allows employees to focus on more strategic and value-added activities, increasing overall productivity.

8. Know Your Customers

Use CRM data to group customers based on what they like and how they act. This helps with targeted marketing and talking to customers in a way that they like, making them happier and increasing conversion rates.

9. Check How Well CRM is Doing

Conduct regular reviews of CRM performance against established KPIs. Identify areas of improvement, analyze user feedback, and adjust strategies accordingly. Continuous monitoring ensures that the CRM system evolves with changing business needs.

10. Ask for Feedback

Foster a culture of feedback and involve end-users in the decision-making process. Their insights can help identify pain points, areas of improvement, and new functionalities that can enhance the CRM system’s effectiveness.

CRM ROI Case Studies 

Now that you know what CRM ROI is and how to calculate and maximize it, let’s look at how these businesses are successfully leveraging their CRM. 

1. Salesforce CRM + Private Research University

A private research university on the United States Eastern seaboard with an undergraduate enrollment of approximately 10,000 students witnessed an ROI of 507% in just 2.4 months of CRM implementation. The university wanted to better serve modern students through streamlined, personalized advising and career support.

Challenges Faced

The university faced challenges with a cumbersome third-party financial system, leading to error-prone and time-consuming gift processing. Additionally, evolving student expectations prompted the institution to proactively establish itself as a leader by providing an easily accessible, cloud-based system for streamlined student advising, scholarship considerations, and job recommendations.

Why Salesforce CRM?

The decision-making process in 2016 involved evaluating major CRM vendors, with Salesforce emerging as the preferred choice due to its broad capabilities, ease of integration, scalability, and alignment with the university’s ethos of philanthropy and commitment to social justice.

Implementation and Rollout

Working with implementation consultants, the university went live with Salesforce solutions, including Lightning Communities, Sales Cloud, and Marketing Cloud, in Spring 2017. Anticipating future growth, the institution purchased 6000 licenses to accommodate an increasing user count as more functionality and departments joined the Salesforce platform.

Key Benefits Realized

The transformative impact of Salesforce CRM for Private Research Industry  was evident across various facets of university operations:

  • Increased Pledges: The streamlined gift processing, documenting, and approval protocols enabled an 189% increase in annual pledges since implementation.
  • Cost Savings: By digitizing student records, the university eliminated paper and binder costs, enhancing efficiency and saving valuable time.
  • Efficient Gift Processing: A redeployed full-time equivalent gift processor and a more connected documentation and approval process resulted in a significant net increase in gifts processed annually.
  • Time Savings and Increased Productivity: Various teams, including gift processing, records, and reporting, experienced substantial time savings, contributing to improved overall productivity.

2. Nethunt + Recom

Recom, a leading B2B commercial prospecting company based in Lyon, France, has witnessed a fivefold increase in customers through the strategic implementation of NetHunt CRM. Specializing in generating clients for their clients, Recom faced challenges as their growth surged, making manual communication with potential customers cumbersome and time-consuming.

Nethunt + Recom CRM ROI By SoftwareSuggest

Challenges Faced

  • Growing Pains: Recom’s steady growth posed challenges for their prospecting team, hindering effective communication with potential customers.
  • Manual Reproduction of Processes: Duplicating and reproducing successful processes for each client became a time-consuming endeavor.
  • Lack of Client Access to CRM Data: There was no system in place to provide reports or stats to clients without direct access to the CRM system.

Why NetHunt CRM?

Recom found NetHunt CRM to be a game-changer, primarily due to its ability to adapt to their workflow. The selection was driven by the need for workflows to automate processes, prioritize tasks, and create a visually appealing reporting system. 

Implementation and Rollout

Recom strategically implemented NetHunt CRM, leveraging its integration with Gmail for immediate team adoption. With an intuitive system that prioritizes ease of use and efficient workflows, Recom’s business developers seamlessly generate leads. NetHunt CRM’s adaptability allowed Recom to centralize data from multiple channels, ensuring clean and structured information for their business developers.

Results Achieved

The results of Recom’s strategic implementation are impressive:

  • 20-25 new qualified sales leads per month
  • 5 times more clients
  • 2 hours saved per employee weekly with automations
  • 3 times faster onboarding

3. Ceros + HubSpot

Ceros + HubSpot By SoftwareSuggest

Ceros, a visionary in interactive content design tools, underwent a substantial transformation from a single-product entity to a multi-product suite. However, this expansion brought forth a critical challenge – the shift from a ‘quantity-centric’ strategy to one centered on quality. To tackle this, Ceros recognized the need for refined prospecting.

Challenges Faced

The journey of growth for Ceros was marked by the hurdles of the conventional ‘more, more, more’ approach. As layers of technology increased, productivity dwindled, and the abundance of leads lacked the necessary depth. The sales team found themselves drowning in manual data entry, leading to a dire need for a smarter approach to prospecting. Ceros needed a solution that would not only consolidate their data but also provide deeper audience insights to fuel their growth intelligently.

Why HubSpot CRM?

Ceros turned to HubSpot to address the prospecting roadblocks. HubSpot’s Business Units played a pivotal role in unifying the customer journey, allowing Ceros to manage multiple brands seamlessly. The platform’s flexibility and ease of use enabled Ceros to act swiftly, addressing leads’ needs more promptly and effectively. By choosing HubSpot, Ceros sought to create better connections with prospects, diagnose pain points, and provide timely assistance.

Implementation and Rollout

HubSpot’s Sales Hub became the cornerstone of Ceros’ prospecting strategy. The platform provided a centralized dashboard for lead management, streamlining outreach, and data collection. Customizations, such as integrating deal information into contact and company records, ensured a more efficient process. Real-time alerts for prospect engagement and a unified contact record equipped Ceros with the tools needed for intelligent prospecting. Native and custom integrations, including Slack, Zoom, and Gong, further enhanced collaboration within the sales team, ensuring a consistent and contextualized experience for the customer.

Results

By consolidating onto HubSpot, Ceros not only addressed immediate prospecting challenges but also set the stage for sustainable growth. 

  • 180% Increase in Deals: HubSpot’s Sales Hub propelled Ceros to a phenomenal 180% surge in deal generation over the past five years.
  • 18% Growth in SQLs: The CRM platform contributed to an 18% boost in Sales Qualified Leads (SQLs), emphasizing its role in nurturing higher-quality prospects.
  • Swift Response Time: HubSpot led to an impressive reduction in lead response time, now averaging under five minutes, enhancing customer experience and boosting conversion rates.
  • Improved Predictability: The streamlined prospecting process provided enhanced visibility for sales leadership, resulting in more accurate forecasts and increased confidence in data.
  • Time Savings and Productivity: HubSpot’s intuitive features saved time, improved productivity, and allowed reps to focus on meaningful connections, leading to higher close rates.

On the Flip Side: How to Avoid CRM Failures

Around 33% of CRM projects fall short. This means every one in three CRM systems fails to deliver a positive ROI. 

The top reasons for CRM failures include lack of support from senior management, vendors over-promising, and costs out of control.

Why do CRM projects fail? By SoftwareSuggest

However, you can avoid these CRM failures by following a strategic approach.

  • Define Clear Objectives: Set clear goals and objectives upfront for what you want the CRM system to achieve, such as increasing sales or improving customer service. Having defined goals keeps everyone aligned on what success looks like.
  • Data Quality Matters: Ensure that customer data entered into the CRM system is accurate and up-to-date. Inaccurate or outdated information can undermine trust in the system and impede decision-making. Implement regular data cleaning processes to maintain data integrity.
  • Customization with Caution: Customize the CRM system to fit your specific business needs and processes, but don’t overcomplicate it. Striking the right balance ensures an interface that remains user-friendly and easier to maintain over time.
  • Integration Strategy: Carefully plan your CRM integration strategy. Ensure seamless connectivity exists between the CRM system and your other tools and systems in order to prevent information silos. Integration enhances efficiency and provides a more holistic view of customer interactions across platforms.
  • Emphasize Change Management: Recognize that implementing a CRM system involves a cultural shift in how people work. Communicate openly about the intended benefits of the new system and address any concerns that staff have regarding the changes.
  • Regular System Audits: Conduct regular system audits to evaluate how well the CRM system is performing and to identify areas for improvement. This helps identify issues early and ensures alignment with changing organizational goals.
  • Scalability Planning: When choosing a CRM system, anticipate your organization’s future growth needs and scalability requirements. Scalability ensures that as your customer base and business operations expand over time, your CRM system can continue to meet your needs effectively.

Conclusion

Calculating return on investment is crucial to evaluating CRM system success and guiding strategic decisions. Quantify costs, identify benefits, connect them to key performance indicators, and regularly track metrics over time. While hard numbers matter, don’t ignore qualitative improvements like customer and employee experiences. To maximize your CRM success, carefully evaluate options, set objectives, integrate well, train users thoroughly, and regularly track performance against key indicators.

Frequently Asked Questions

CRM enhances sales revenue by providing a centralized platform for sales pipeline tracking. It also helps monitor customer data, facilitates targeted marketing and personalized sales strategies, and improves customer engagement. By streamlining processes, identifying upsell opportunities, and enabling effective follow-ups, CRM boosts overall sales effectiveness.

CRM contributes to cost savings through the automation of routine tasks, improved efficiency in sales and marketing processes, and better resource utilization. By streamlining workflows, reducing manual data entry, and minimizing errors, CRM enhances operational efficiency, resulting in significant cost savings over time.

CRM improves customer satisfaction by providing a 360-degree view of customer interactions, enabling personalized communication, and addressing customer needs promptly. Satisfied customers are more likely to become repeat buyers and brand advocates, contributing directly to increased revenue and long-term ROI.

Customer retention is crucial for CRM ROI as it costs less to retain existing customers than to acquire new ones. By tracking customer behavior, preferences, and feedback, CRM helps businesses implement targeted retention strategies, reduce churn, and foster long-term relationships, positively impacting overall ROI.

To ensure a positive CRM ROI, businesses should define clear objectives, involve end-users in the implementation process, provide thorough training, prioritize data quality, and regularly assess system performance. Additionally, aligning CRM strategies with overall business goals, emphasizing user adoption, and adapting to evolving customer needs contribute to a successful CRM implementation and positive ROI.

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