By Chris Bucholtz
Yesterday, Nucleus Research issued a paper (read it for yourself here) that made a fairly encouraging claim: for every dollar spent on CRM, companies were seeing a return of $5.60 in benefits.
That’s a very interesting number, although it’s a number in an area of research that can be very hard to gauge correctly. Companies that make immense investments in CRM and then squander it through poor planning, shifting goals and adoption failures and unlikely to talk about it much, for career security reasons.
The sample group of 70 companies included businesses that had worked on case studies with Nucleus Research; “the ROI they saw varied from a few percentage points to triple digits,” said Rebecca Wettemann, vice president of research at Nucleus. “We saw there was a lot of opportunity and variability in the results.”
The study suggested several possible reasons for the $5.60 number. The cost of deploying CRM in the era of SaaS has driven down costs; the emphasis has moved away from simple automation and toward worker productivity; and CRM is being used by more people within the organization, who can take advantage of the ability to “push” data to them as needed.
Those are three important reasons, but I think there’s one reason that’s omitted, and it’s inherent in this study. Rebecca says the people in the case studies “sit down with us wanting help with streamlining processes, improving what they already have, and understanding what they’ve already achieved.” That kind of information is great in making the case for CRM internally, she said, which helps keep momentum for CRM efforts going. Then, “they want to track ROI going forward.”
This may be the hidden lesson in this study. The $5.60 number is interesting, but what’s more interesting is that the businesses who reap this reward are the ones who remain engaged with their CRM initiatives throughout the entire cycle – they plan, implement, and deploy, but then they keep evaluating what they’re doing through activities like talking to outside agencies like Nucleus Research. And they make changes accordingly.
These are not businesses that viewed CRM as an IT project, or a fire-and-forget point solution. They understand it to be an ongoing process, and one that at times can benefit from the perspective of outsiders. If you’re willing to make that investment in energy, attention and money, you’re far more likely to get the ROI you’re hoping for.
And, said Rebecca, in a number of cases the businesses examined had initially deployed CRM in pilot projects within small groups in the organization to understand how processes worked and how to best employ CRM. Businesses that lay the groundwork this way (and which have the resources to do so) are more likely to find success and a positive ROI.
That’s not intended to devalue what Nucleus has done – studies like this are exceptionally useful, and the next such survey’s likely to be even more helpful and enlightening now that a baseline has been set. This was the first such survey of Nucleus’ customers, and Rebecca said she “strongly suspects we’ll continue this in the future.” That’s a great idea, especially since many of those examined were experiencing growth as they introduced new iterations of CRM technology. Tracking how these companies benefitted from lessons learned would be very interesting indeed.
In the meantime, just having a number to throw out there as an ROI average – even qualified as an ROI average for companies who are actively engaged in ongoing CRM strategic planning – is a great place to start. “You might see CIOs ask, will a CRM investment pass the $5.60 test,” postulated Rebecca. “If it doesn’t look like it will, it might be best to re-work the project timeline.” Will that go-no go number go up or down with time? Only another study will tell.