The Real Cost of CRM Programs
It's not difficult to see the value of a well-defined and implemented Customer Relationship Management (CRM) program. An essential part of any business operation, an effective CRM program will increase the company's revenue by enabling its marketing department to focus on the customer through a variety of means - finding new customers, building customer loyalty through increased customer satisfaction, and growing business from existing customers. The end result of an effective CRM program is increased revenue, a loyal customer base, and lowered costs.
While this all sounds great in theory, is a CRM program really cost effective, and is the return worth the investment?
How Much Does a CRM Program Really Cost?
The cost of a customer relationship management program is dependant on a number of things, including:
Whether the program is purchased from an outside company, or whether it is established in-house. The costs vary between purchasing a program to developing one in-house. In-house approaches require costly software, additional staff, and a larger marketing budget. In some cases, it may be more cost-effective to purchase a program and call on existing staff to run it. However, this can also be more expensive when you take in a number of factors, including whether or not the program is customizable, and if it is, is the price reasonable? Will requiring existing employees to run the CRM program take them away from their other duties, resulting in decreased productivity and increased overtime pay? Do your existing employees have the expertise required to make the program work? These are all things to take into consideration when deciding your budget and the real costs of a CRM program.
The return on investment. (ROI). There are many factors to consider when determining if implementing a customer relationship management program will lead to a guaranteed ROI. Some things to consider include estimates of the revenue and profit earned from the customer without a CRM program in place as well as potential profit earned from the customer with a CRM program. In addition, you may want to take into consideration the costs of losing that customer and replacing it with another one. It's also important to take into consideration the time frame for the expected return on investment.
Technology. Most CRM programs spend at least half of their budget on communications. This can include internet connections, licensing fees, email, voice recognition, and a whole host of other instruments and software. The real cost of your CRM program can be greatly affected by the technology you decide to use. It is also the first place to look when trying to cut costs.
Staff. Some companies opt to have an entire CRM team or at least a leader; others opt to make their CRM program a team effort. Others still hire a customer relationship management consultant to help them get their efforts off the ground. This is an especially effective method for smaller companies or those who don't have a large budget for a customer relationship management program.
A customer relationship program can result in increased revenue, more customers, and the introduction of new products. However, it can also result in a loss of money and draining of resources. In order to establish a cost effective CRM program, a company must research the company's needs and budget and from there, determine which route is the best.