Top 10 Reasons for Using a Client Relationship Manangement (CRM) System

If your company is not using a Client Relationship Management (CRM) software or a CRM system, then you are probably missing a good opportunity to increase revenues and reduce costs.

There are numerous benefits to properly implementing CRM software and I have gone through several web site and compiled information into a top 10 list.

Top 10 Reasons Your Company Should Use CRM Software:

1. Revenue increases of up to 41% per sales representative - That's $410,000 additional on every $1M in quota.
2. Decrease sales cycles by over 24% - If you average sale takes 4 months, this is like adding 1 additional sale per year.
3. Lead conversion rate improvements by over 300%
4. Increase customer retention improvements by 27% - This can have a significant impact on adding to the bottom line - less costly to maintain a current client then to get a new one.
5. Decrease sales and marketing costs by 23% - Huge impact on the overall performance of a company.
6. Improve profit margins by over 2% - This also has a significant impact on the overall performance of a company.
7. Increasing customer retention by 5% can increase profits by 25% to 95%
8. 65% of a businesses revenue is generated by loyal repeat clients - Understand what clients are your best clients and get to know them and their spending habits - Upsell them!!!
9. 80% of sales leads are lost, ignored or discarded - Just because someone didn't buy in the past doesn't mean that they are not interested today - Follow up.
10. 73% of organizations have no process to requalifying or revisting business leads - Gain business that you didn't have before.

An interesting piece of information that IDC reported is that ROI from CRM is between 16% and 1000% and that half of all companies surveyed see between 50% and 500% on ROI.

The whole concept behind these figures is that you adhere to a process to manage sales and by managing this process, the benefits will follow. Key to making a CRM system work is to understand what you want to accomplish and implement CRM to meet your goals. Over 50% of all CRM implementations are deemed to be a failure due to the fact that there was not a proper implementation to meet the objectives that were desired. So just implementing CRM alone is not the answer. Determining what you want to accomplish and mapping it out is where you want to start.

If you would like to understand how Avanade can help you leverage the power of CRM for your organization, please feel free to contact Chris Hamilton in Calgary at 403-476-1473 or via email at chris.hamilton@avanade.com .

Avanade offers a hosted model in addition to a client server model.

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.