The Hidden Cost of a CRM

1. Customization

A critical piece is any required customization. Starting with a one size fits all CRM might work initially, but as needs are accessed and functionality limited, for many organizations this is not a long-term solution to achieve all of their desired goals. In many cases, the software must facilitate the exchange of data between departments through existing internal systems. While it is possible for an in-house IT team to handle these customizations, it’s likely that IT resources are already stretched thin on other projects.

Outside experts have the experience to work with internal IT teams and other departments to review core processes and make the necessary recommendations. The challenge with any new CRM is integration across all departments. This process requires the expertise of CRM experts. Estimate 40 hours of internal manpower and at least $4000-$5000 in consulting fees.

2. Implementation

Once the CRM is selected, the first step in the process is putting the CRM to work. As much as CRM vendors would have you believe, the process is not as simple as “plug & play”. Depending on the existing infrastructure and legacy systems, it’s important to consider what will work best for your organization. As talented as an IT department might be, working with a CRM may be more work than they are staffed to handle. With their other day-to-day duties, releasing a fully functional CRM is a full-time job.

The most successful implementations of a new CRM are often spearheaded by the use of a consultant to prepare, plan, and execute the rollout. Plan on spending at least $1 in consulting for every $1 spent on annual subscription for cloud-based systems. Consultants can average between 1x and 10x the cost of the annual subscription price with the 3.5x as the average. While this is a significant investment, experts agree it is well worth the price.

3. User Adoption

Customization, implementation, and integration make up just half the battle with launching a new CRM system. The other half, and one of the biggest challenges, is getting various departments to actually use the new system. User adoption is crucial in the success of the CRM. According to the Merkle Group, CRM initiatives fail at a rate of 63%. User adoption is a large contributor to the failures experienced by most companies.

Cigna’s well documented CRM failure is a cautionary tale for companies and a blueprint for what not to do when implementing a new CRM. The health insurer spent $1 billion in IT and CRM initiatives. The 3.5 million members and 15 legacy systems were switched over in a matter of minutes. It did not go smoothly.

Those companies that have had success with CRM engagement have “buy-in” from leadership. A recent presentation by Cornerstone OnDemand highlighted how quality leadership impacts employee engagement through all areas of a business. It states, “Only 29% of North American employees are emotionally engaged. That leaves 71% of employees who are not engaged or actively disengaged.” When employees don’t use the new CRM, the business foots the bill. In many cases, companies that go through the CRM implementation process with only in-house talent and decide against a third-party consultant, fall short of user adoption goals.

4. Opportunity Costs

The cost of lost opportunity is tough to quantify but is an important consideration nonetheless. What if a company chooses the wrong CRM system which could lead to CRM failure. As highlighted in a recent article, “The High Cost of Selecting the Wrong CRM System“, a few of the cost components are:

1. Paying for unused Licenses
2. Diverting people from their primary jobs
3. Paying for outside experts
4. Missed financial benefits of a successful implementation
5. Employee attitude
6. Cost of doing it all over again

On top of CRM selection failure, another consideration is the lost opportunity for revenue if a company is paying for a CRM but not using it. How much additional business is sales team leaving on the table? Are there cross-selling opportunities missed because departments aren’t sharing data effectively? Too many organizations overlook these opportunity costs.

5. Additional Services

The cost of the subscription per user is just the starting point for CRM implementation. Most CRM’s allow customization with third-party add-ons, and the price tag for these can be considerable. While these are small add-ons per user, for an enterprise client with tens of thousands of users, they add up.

The top CRM platforms have a healthy marketplace of software creators, who build and sell applications which integrate with products to fill in gaps and enhance the CRM functionality. Both Microsoft Dynamics and Salesforce have a marketplace to be incorporated into their respected CRM systems.

The one size fits all solution of out of the box CRM systems is generally not enough for most enterprise CRM integration. Here are 9 CRM Integrations that most companies find they need:

1. Cloud
2. Email
3. Phone
4. Calendar
5. Marketing Automation
6. Social Media
7. Enterprise Resource Planning (ERP)
8. Helpdesk
9. Mobile Integration

There is not one CRM platform that can accomplish all of these with their basic packages. The cost for each element must be factored in by proper planning at the beginning of the process.

Conclusion

In many cases, CRM vendors do not provide the resources or support to help a business with proper implementation of their software. With the variety and complexity of CRM platforms and the extensive cost considerations, hiring a third-party consultant is must for most companies. Having a technology partner that understands an organization’s needs, diagnose potential problems, and offer solutions is undoubtedly a cost worth considering up-front, to avoid headaches down the road. For any support please contact us.