Whether you are a new entrepreneur or run an established business, you probably know the significance of nurturing relationships with the customers. Without any doubt, the connections with your loyal customers that get stronger in the long-term are the driving force for any business. And consolidating them is more challenging than ever, considering the daunting competition that every business has to beat these days for staying ahead. Investing in an automated customer relationship management (CRM) software, therefore, is the smartest decision that you can take for your business.
In fact, implementing one for your organization does not remain a choice if you want to resolve the complexities of sifting through countless files or a long spreadsheet as your business grows over a period of time. But before you buy or build one, you need to be aware about its cost so that you can understand how much to budget for CRM software and plan smartly. Moreover, it is important to decide amongst the options available in the market. Here is what you need to know before going ahead with the choice of a best CRM software solution.
Why do you need a CRM in the first place?
Before you start planning and budgeting for any business expense or investment, you need to justify its acquisition in the first place. A CRM software application is no exception to this rule and you absolutely need good reasons for buying or building one. Here are the extensive benefits that it can bring for your business:
- Essentially, a CRM fetches data from the employees who have direct contact with the customers. This serves the advantage of accessibility of information to everyone within the setup rather than being confined at one or just a few touchpoints.
- The entire data is stored at one location and shared amongst all the authorized employees and departments for the sake of quick and easy accessibility.
- With the shared information and scheduling functionality, the collaboration between teams and departments is improved.
- CRM implementation automates the process, freeing up the time of the workforce so that they can interact better with prospects and customers.
- Another excellent benefit of CRM is that the data it renders offers useful insights into customer behavior and performance of the sales team.
What are the essential capabilities that a CRM software must have?
Once you are clear about the value proposition of CRM system, the next feasible step is to list out the capabilities of the one you choose. Typically, you should look for a software that offers the following capabilities:
Contact Management: A CRM system that acts as a comprehensive database of leads, prospects, and customers is an asset for any organization. Beyond consolidating the vital contact information, it should monitor each interaction with the contacts, whether it is an automated email or a call from a sales representative. This feature is mandatory as it keeps the communication history in one place instead of dispersed spreadsheets that are hard to maintain, access, and use.
Lead Management: Another capability that every CRM software must have is lead management. This is possible with a system that makes the information about the entire leads available at one place. Besides the contact details and demographics of the potential leads, the information in a good CRM includes the history of the interactions with the agents, including the source and the intent of the lead. This information is vital because it empowers other team members to pick the leads contextually rather them connect out of the blue. Further, it facilitates consistent lead nurturing when the objective is to eventually strengthen the trust to the point of short-term conversion and long-term loyalty.
Task Automation: Sales automation is another key function that you should look for in a CRM. While you can leave the more creative tasks to the human reps, the routine ones can be taken care of by the CRM itself. These include ones like sending reminder emails, changing deal status, and anything that can be based on pre-configured business rules. With this capability, you can actually enhance the productivity of your workforce.
Deal Management: A CRM system should ideally serve as a one-stop solution for tracking and managing all the deals that are in process at any point in time. It should present the history of the deals per sales representatives as well as keeps track of the deals in progress. Typically, this is portrayed as a sales pipeline to give a bigger picture of the deals. Sales managers can easily get alerts related to longer-than-usual sales cycles, intervene with the right action, and take positive actions to amend the issue.
Marketing Campaigns: Thesoftware should actually help your business craft compelling marketing campaigns with the rich information it stores. At the granular level, CRM can be used to design personalized emails by providing specific lead-applicable subtleties and following them on social media. Such personalized campaigns are harder hitting and have better chances of driving conversions and loyalty from the leads.
Reports & Analytics: ACRM system should function as an outstanding analytical tool, a capability that every business would want to capitalize on. The analytical capabilities of the software can be leveraged to fetch significant insights on missed and accomplished targets, correspondence gaps and openings, holistic and rep-wise sales performance, and a lot more business-critical metrics.
How much does a typical CRM software cost?
As a business owner, you need to evaluate CRM costs clearly before settling on the best choice amongst the available options in the market or have a custom one built for your business. While costs such as license fees are straightforward, others such as opportunity cost, troubleshooting, and wasted time are hidden costs. Understanding the latter can be tough, particularly if your technical knowledge is pretty limited. The costing aspect requires much attention because companies looking for the best CRM to utilize are often besieged with configurations and slick sales pitches by smart sellers.
Besides the cost aspect, you also need to consider the time as well. Unexpected steps and challenges may waste time, right from the implementation stage to the need for training the workforce for operating the system comfortably. Also, you may have to spend a lot of time for integrating the CRM seamlessly within your existing business ecosystem. Overall, you must add up the cost and implementation and training time to determine the total cost it spells for your business to get up and running. Being aware and gathering extensive knowledge can make all the difference when it comes to choosing a feasible solution right within your budget and ensuring that it is good enough to be used in the long run.
Check out some of the free and open source CRM software solutions too.
Factors to consider while budgeting for a CRM solution
When it comes to budgeting for a CRM solution that you want to buy for your business, there are certain factors that you need to consider so that you can nail the best choice. Here are the factors you should pay attention to:
Identify the key CRM costs
Although you can compare the licensing cost of the CRM options in the market, there is much more than the licensing cost to consider. Further, there will be the subscription cost, service level cost, cost per user, and cost of implementation. Here are the detailed analysis of these costs.
Transparent cost: The initial cost for installing a CRM solution for your business is the transparent cost. Essentially, it depends on the choice between on-premises or cloud software. An on-premise CRM is a software you buy up front (mostly with a massive payment). You own the software and it exists on the servers of your company. At the same time, you are responsible for its maintenance, updates, and uptime. A cloud CRM, on the other hand, is a system which lives online and you pay a subscription fee for getting a license for use. With this option, you have flexibility in terms of customization and payment options. Further, this option is easier to scale up and offers remote-access for your employees and devices.
Service level costs: When you embrace a CRM on a software-as-a-service (SaaS) model, the vendor will offer various levels, each having a specific bundle of features and capabilities. Further, the following factors determine the service level cost of the CRM you plan to buy:
- Plan level –The service package that you buy from the vendor
- Volume –Number of contacts, records, or data points that you can store for a specific price
- Add-ons –Premium features, capabilities, or integrations you can add
Cost per user: Some CRM service levels may allow only for a fixed number of users. Conversely, there are others that enable the addition of individual users if you are willing to pay a specific amount extra per month per user. This number is shared within the description of the plan. Further, there are scenarios where a fee is required to access certain features for a plan.
Implementation fees: Once you decide on a CRM vendor and service plan level, it is time to roll out the CRM. Obviously, you will require professional assistance for CRM implementation. You can get these services from the vendor itself and these include:
- Consulting services
- Building customized dashboards
- Template creation
- Automated workflow creation
- Contact import
- Data migration
- Workflow export/import
The entire package of services may translate into significant expenses, which makes implementation a gray area. Since vendors may not share the details of these costing upfront, you should check with them directly to avoid any surprise of an unknown and unexpected fee.
Further, the actual cost sums up the following to the initial licensing fee or development cost (if you opt for a custom one):
- Training
- Storage
- Migration
- Integration
Primarily, these are the base expenses, which you will have to pay regardless of whether you are using a CRM out-of-the-box or getting one developed as a custom solution. In any case, you will need to set up the fields and align the software with the working conventions for the organization. It is recommended that you include an hourly rate for the time spent in-house on the CRM implementation.
While evaluating and comparing CRM costs, it is important to comprehend the payment models as well. While some providers will have long agreements, others will allow month to month contracts. You need to assess the models and pick the one that matches your requirements and budget. Further, you need to be aware about the shrouded expenses which may elevate the cost to a significant extent and consequently, upset your budget. The ones you should watch out for include:
- Professional consultancy
- Continuous customization
- Continuous training
- Staff overtime during usage
- Merchant support
- Minimum agreement terms
- Opportunity cost
A complete overview, from the vendor selection to the implementation program, is the best way to assess the actual cost while assigning a financial limit for the solution. Custom CRM development can be a better alternative if you want something very specific.
Select a relevant model and structure
Besides the cost of CRM, its model and structure are the key metrics that have a far-reaching impact on the budget. The inclination is clearly towards cloud-based software solutions and there are plenty of good reasons why businesses prefer them. Cloud CRMs operate on a SaaS model, which means that you pay for it on a monthly basis rather than incurring a major expense upfront for a long-term license. Another benefit of a cloud-based system is that it gives you the freedom and flexibility to scale rapidly. Further, you get the simplicity of arrangement as there is no equipment substitution needed.
The other option is that of an on-premise CRM, which offers the definitive advantage of control. It is particularly apt for the organizations that deal with confidential information and data. Leveraging the cloud provides control to an outsider, which you would not really want due to concerns related to administrative disturbances and information recovery. The choice between cloud and on-premises solutions really depends on the individual needs of the business. An on-premises arrangement emerges as an expensive option in terms of servers and arrangement. A cloud-based CRM is less capital-intensive.
Verify the price impact of a CRM investment
The next obvious question will be about the price impact of the investment. You cannot expect to answer this one with a one-size-fits-all mindset because the best strategy to utilize will always be context-dependent. It is hard to measure customer satisfaction in terms of money, which means that you will have to rely on metrics such as revenue per client, client securing cost, and transformation rate to assess the value of a CRM software to the business. The better approach towards grappling the measurement would be to identify an activity in the CRM that you can correlate with its value. For instance, you can check the growth achieved in terms of the outreach volume and associate it with the change in revenue while comparing the new system with the old.
Typically, the implementation may improve one metric, but not build revenue straightaway. For this reason, it becomes advisable to view the price impact of the CRM implementation rather than get a tangible revenue growth figure. For example, the implementation of a new CRM may yield improved analytics for an organization, with the reporting structure moving from automatic to manual. The revenue impact can be measured in terms of the hours and the costs spared with the elimination of manual reporting. Multiple factors are involved other than the price impact of the CRM that can be considered for assessing its value for a business. It could be in the form of change in culture, with greater collaboration and better communication between teams. Further, your business could derive extensive benefits in the form of better staff morale.
Focus on the key features of the CRM
When businesses envision a CRM, they need to consider the key features they require in it. The best way to do it is by creating an exceptionally tight business case. Basically, you can consider the certain instances while deciding the features you would want the software to have. For example, you may want the CRM that enables the reps to coordinate with clients proficiently and improve client lifetime esteem as well. Further, you may want it to be capable of saving man-hours everyday so that the team can utilize them for accomplishing more in terms of prospecting and lead closures. In addition to the specific features you may want, you can consider the following factors while deciding the feasibility of the CRM software:
Ease of implementation: First things first, being able to implement the CRM and getting the workforce up and running with it is critical. Simplicity and good tracking capabilities are the key factors that make a solution relevant for any organization. Primarily, you need to consider fitness for purpose and requirement; some systems could be necessarily complex, but ideally you should opt for one that is as simple as possible.
Feature flexibility: Secondly, the number of available features and the ability to build customizable ones should be on the list of factors you need to consider. You will certainly want to make changes once or more after the initial setup of the system. If it is not flexible enough to enable customization or addition of new features, the CRM will translate into a massive cost down the line.
Remote access: Another important consideration that you should prioritize is remote access because there is an ever-increasing inclination towards a remote workforce in organizations today. If the system of your choice does not have this feature, you will surely need an upgrade in the near future.
Integrations: Most probably, you will need to connect your CRM software to other systems that you have in your business ecosystem. It is important to understand the possibility right from day one of the implementation. An easy-to-integrate CRM is the best choice as it will cut down on customization costs to a considerable extent.
Weigh functionality against cost
Another important suggestion for finalizing the budget for a CRM software is to weigh the functionality of a system against its cost. A typical pricing plan for CRM software will charge more for extra features. This can increase the overall cost significantly, particularly if you are paying on per user per month basis. Similarly, your budget will increase in case you need customization for the set up because you will obviously have to hire a professional or team with the right skills and expertise.
The biggest mistake that a business can make is not leaving any redundancy in the budget plan. This often leaves no room for feature enhancement in the future and the business may actually end up toppling its budget if it decides to go for new features. When measuring up functionality versus cost, you need to look at essential and desirable features. Further, you also need to bear in mind the difficulty to implement the setup and cost.
Conclusion
Now that all has been explained about CRM, its benefits as a business investment, and the budget to implement or develop a software, the choice of a relevant one becomes easier. And that goes for both the alternatives, whether you opt for an out-of-the-box solution or approach a software development company to develop a custom CRM for the specific needs of your business. Remember that this should be a well-thought decision, with careful consideration of the relevant factors and a smart choice between build and buy.
Start by understanding the needs of your business, researching the available options, and deciding the CRM software that would be best suited for your business. Conveying your budget carefully to your technology partner is the next important step because they are in a good position to help you with the decision. Funnel CRM, Field Force Connect, Kapture CRM, Hubspot CRM, Zoho CRM, Salesforce CRM are few that are listed by GoodFirms. The right choice can make or break your business in the long run because it greatly impacts customer satisfaction and business performance. So this one definitely deserves clear thinking and strategic planning right from the time you start.
Share your views here if you have used any CRM software.
