The Potential Dangers of Fixed Fee CRM Implementation Offers

You wouldn’t get away with this in any other industry. Homebuilding, landscaping, masonry, anything.

I can’t say, “That’s going to be three grand.” And then come back and say, “No, it’s thirteen grand.” Yet that happens in the IT industry all the time.

That is why so many people like the idea of a “fixed bid” or “fixed fee implementation” for their CRM systems.

I agree. The idea is good in theory. However, in my opinion, there will always be a “gotcha” that you need to watch out for.  Here are a few examples.

Inflated Quotes

Fixed fee quotes are meant to remove the risk from the buyer, but that risk has to go somewhere. For the CRM partner to accept that risk, they will need to overcharge.

So let’s say I think a CRM implementation project is going to take 20 hours for my team. Why would I bid it at 20 hours? If the customer wants a hard number, it’s going to be 30 hours, at least, just in case.

You end up paying more just to avoid the risk, and you need to ask if that is worth it.

High Monthly Fees

Many companies that offer a fixed fee CRM software implementation have a very high monthly reoccurring maintenance fee that is required for an extended period of time. They know that they will lose money upfront, but they will make it back over time with the high fees. It is like buying a printer. The printer could be $400, but the ink is $300. You know the company is making their money on the ink.

At P2 Automation, instead of asking our customers to pay high monthly fees, we try to charge the right implementation fee up front. When we go through a design phase, this gives us an accurate blueprint we can use to predict the cost, even though it is not guaranteed.

We do not think it is wise to just follow someone else’s blueprint for your CRM system, which is what often happens in fixed bid projects. You may think you just “send out quotes,” but every company has a specific process. Sometimes this process needs to be improved, but there is always a process that your team is following.

All companies have certain elements in common. For example, you capture customer information. Name, address, email, phone number. That is standard across all industries. But every business has that “x factor.” Something that you do that doesn’t tie in with anything else. Likely you do not even realize how unique it is until you find out you can’t do it in your new CRM system, and you are told that it is “out of scope”. Time for a change order.

Change Orders

Fixed fee implementations cover what you told the company when you started. Everything else is “out of scope” and requires a “change order.” Trust me when I tell you, change orders are expensive. It is always more expensive to redo a project than to do it right the first time.

Recently I worked with a business owner who told me that they “choose a bin”. Fine, that sounds easy. But the more we talked, he explained that the bins come from all over the country; they have to be categorized, separated, barcoded and cataloged. There is a big difference between red bins and blue bins. And on and on.

If he had just told any software partner, “we just click a bin,” and that was what was included in the fixed bid, he would have been hit with a huge change order later on, requiring a much bigger investment.

Integrations

Fixed fee implementations will hardly ever include integrations, even though they might be critical to the success of your project. A CRM Partner might tell you there is an application programming interface (or API), or bridge between the systems and kind of brush it off and move it to a “phase 2”.

Although two systems will promote that they have an integration or connection, all good IT companies know that integrations are never as straightforward as they sound. So this will be an extra cost on top of the fixed bid. Or if it is included, it is literally the set up only. That does not mean that it will actually work. That will be an added fee.

For example, a Dynamics 365 integration to MailChimp sounds easy, but it is not. There’s an API, but there is no magical connection process. That process takes so much time to figure out. What happens over here when something happens over there? It’s a lot harder than it sounds.

A Better Solution – The Design Phase

In 30+ years and hundreds of CRM implementations, I have never had a project where the customers did not request some kind of change.

When we do an estimate, we generally work in 10%-15% as a “contingency plan” because we don’t like going back and nickel-diming a customer. I know it’s going to be there, and I don’t want to be pointing the finger at them.

I just know the customer is not going to tell us everything they want any more than we are going to be able to deliver a CRM system that is 100% bug-free. It’s just an unrealistic expectation. We’re not going to get it perfect, and you’re not going to get it perfect either. So let’s aim for 90% out of the gate and then fine tune.

The best way to get a truly accurate CRM implementation quote is to go through a design phase in advance.

At P2 Automation, we believe the Design Phase is the most important part of our entire process. This is where we map out system components and workflow processes to ensure your objectives will be met.

When you spend the time and money on the design, everything works out better. It is like anything else, building a car, building a house, building a vacation schedule. If you plan it out, it’s going to cost less.

And if someone offers you a “fixed fee” implementation, make sure that you understand what you are getting and the potential “gotchas” involved.

Do you want to know the real cost of a CRM implementation? P2 Automation can help. Schedule a strategy session with us today.

By P2 Automation, www.p2automation.com

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