Dynamics CRM - Simple Statistics That Can Help Increase Sales

Increasing Sales and retaining clients are typically top priorities for sales departments of most companies. If you are fortunate enough to use a Client Relationship Management (CRM) system, then you may already experience the added sales and client retention benefits that a CRM system can bring to your organization.

If you are looking at implementing a CRM, you should look at the efficiencies that can be gained. Some of the major benefits that CRM can bring to your organization include:

• Revenue increases of up to 41% per sales person
• Decreased sales cycles of over 24%
• Lead conversion rate improvements of over 300%
• Customer Retention improvements of 27%
• Decreased sales and marketing costs of 23%
• Improved profit margins of over 2%

These figures typically are achieved only if you implement a CRM system properly and wrap and embrace the process change that comes with it.

ROI Example:

In order to show how a proper CRM implementation will help a company, I will use and example of a company with $100M/year in revenue with 10% Gross Margins or $10M in profit, and 15% of total revenues are cost of sales or $15M. We will assume a company this size will have 20 seats of CRM and using a potential cost of $3,000 for a first year cost, which includes installation and software (assuming a Dynamics CRM implementation). The first year costs for CRM is $60,000.

Using this example above and looking at the parameters of Decrease in Sales Costs and Increases in Gross Margins, then the following results could be expected:

1. Decreased Sales and Marketing Costs:

With a 23% reduction in sales and marketing costs applied against a 15% cost of sales on total revenue of $100M would be equal to $3.45M in cost reduction.

2. Improved Margins:

With an average of 2% increase in margins, this would mean on the example, 2% on $100M would be $2M. Another way to look at the gross margin increases would be to understand how many additional sales you would need to achieve this figure. In this case, it would be equal to selling an additional $20M in revenue (10% GM percentage on $20M is $2M in GM).

These two parameters added together would potentially be worth $5.45M in value.

One factor that isn't included in these figures would be the client retention number, which could be 27% (on average) of a potential client lose. Unfortunately I cannot find any figures to give exact numbers on client lose per year, but if you use 10% and you can maintain 27% of that number then this would be worth $2.7M in this example.

Although this is a fictitious example, it is there to show the power of a positive ROI on a CRM implementation. An investment of $60,000 is has a return of 9,083%.

As can be seen by this example, embracing a methodology and utilizing a CRM system properly will more than pay off and have a significant ROI.

If you would like to learn more on how CRM can help your organization increase sales, boost profits and margins and retain clients, please contact Chris Hamilton at Avanade Inc. at chris.hamilton@avanade.com or by phone at 403-476-1473.