Topics: Expert Knowledge

Today, we feature a guest blog from Bob Sullivan of InfoGrow Corp. InfoGrow works with companies to accelerate sales and marketing effectiveness by helping to integrate customer relationship management (CRM) and marketing automation systems.

How Does One Best Evaluate and/or Justify a CRM System Investment?

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Most software ROI calculations are based on two tenets: sell more or cut cost. The problem that most organizations run into is that they have no solid numbers to address either viewpoint. “Sell how much more” or “save how much time” are elusive concepts.

I suggest that there are three fundamental business objectives that sales, marketing and service must all focus on. These include: find more customers similar to our best ones, keep the customers we want, and increase profitable transactions. The way to justify a CRM system is to start by asking – What is the cost of inaction in effectively supporting and measuring progress associated with these three fundamental business objectives?

Taking each of these three areas and starting with the above question will lead to the insight we need to answer the questions the CRM should resolve.

For example:

  • Do our sales reps know where to find more customers like our best ones?
  • Are our sales reps maintaining relationships with key accounts? How often should they be communicating with or visiting the customer?
  • Can we measure what lead sources translate into our best sales?
  • Have there been times over the past year when customer service issues have dropped through the cracks and we lost a customer?  How often does this happen? What was the value of that lost customer relationship(s)?
  • Do we know our quote-to-proposal-to-sales ratios?
  • How long does it take us to determine if a sales rep is not going to work out? What is the cost of waiting too long to cut them loose?
  • Can we communicate our sales process to the sales force and show the value of measurable points at each stage of the process?

There are plenty more questions that can be asked, all tied back to the fundamental business objectives of finding and keeping customers while growing revenue. Each question can be quantified to address the most important question, what is the cost if we do not do anything?

How Do You Convince an Organization and/or Leadership Team That a CRM is Worth the Effort and Investment When They Don’t Believe in its Value?

You can start by taking just one value aspect of a CRM system, for example, Sales Process Management. This is the managing and monitoring of the sales process to keep it running successfully. While a sale process is not a CRM, there are very few organizations that can effectively manage their processes without a CRM system.

You can tell if you don’t have an effective sales process in place if every sales rep does their own thing, their own way. Even if you expose your salespeople to sales process and insist that they use it, the lack of monitoring and/or measuring a prospect’s progress suggests that you don’t have a sales process.

Often I hear that the “right” salesperson will do the right things anyway. It is interesting that when you dig deeper into the behavior of these “right” sales reps, they use tools to benchmark their performance and effectively organize each and every day. These “right” salespersons consistently stay in front of more customers and prospects than their counterparts.

A CRM system gives you the opportunity to clone the “right” salesperson. Yes the “right” ones don’t need your help, but out of your sales team how many “right” ones do you have? How many more can you hire?  What happens to your sales revenue if you are able to help the reps at the level below the “right” ones move up into the “right” category? What happens if you can know sooner that some reps are never going to make the cut?  

Remember, behaviors that are monitored and measured will change. CSO Insights reports that 82% of companies report improved performance with a formal sales process in place.

How do you increase your sales team efficiency and effectiveness without a CRM system? It is very difficult to do so and the results will be lacking at best.

How did implementing a CRM system into your organization help determine and improve your sales process and results? We’d love to hear from you in the comments.

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Image courtesy of PinkBlue via FreeDigitalPhotos.net
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