Successful implementations of CRM applications have yielded returns ranging from 16% to more than 1,000%, according to a recent 'return on investment study' by market analysts, IDC.
IDC's study also found that technology-related savings accounted for only 7% of the average return on investment (ROI) from CRM (customer relationship management), while benefits accrued from increased productivity and business process enhancements accounted for 51% and 42% of the ROI respectively.
"The net impact on an organisation can at times be subtle, and distributed throughout the enterprise," said Mary Wardley, vice president for IDC's CRM applications research division. "For example, cost savings and productivity enhancements can be evidenced in saving a sales person twenty minutes per week in writing activity reports, or answering four times the volume of web-based service requests in the same amount of time."
Other key findings from IDC's ROI study, 'The Financial Impact of CRM', include:
- Only 19% of the companies that participated in the study generated an ROI of 50% or less, while 52% generated an ROI between 51% and 500%, and 30% reported returns of 501% or more.
- Some 58% of participants experienced payback in one year or less, while 35% experienced payback in one to three years, and 8% experienced payback in three years or more.
- The median initial investment in a CRM application is approximately US$426,000 which includes the accumulation of all costs incurred before the CRM implementation enters production at a site. The median total cost over the first five years is estimated at some US$1.2 million.
"Companies are seeking to create a transparency that masks internal divisions and complexities, enabling their customers to feel that they are dealing with one organisation," explained Wardley. "The road to transparency begins by attending to the data infrastructure � the rationalising and centralising of customer information for use throughout an organisation � and extends to integrated customer processes."
"Over and above the numbers, the lessons and best practices highlighted in the study are instructive. Companies evaluating ROI need to look beyond purely technological measures, and achieve the best results when they focus on a pressing business problem," explained Henry Morris, group vice president of Applications and Information Access for IDC.
Three of Siebel's CRM customers, EMI Industries, Martindale Hubbell, and BCAA, participated in the study. Siebel's integrated family of applications have empowered employees of small and large companies to better know their customers and personalise product and service offerings, allowing them to establish profitable relationships and generate positive ROI from their CRM deployments. Siebel's CRM application alone has been deployed for more than 2.2 million users.
BCAA, a 24-hour roadside service, supports 715,000 members and 2 million customers through 23 sales centres, two call centres, and a full-service travel and insurance agency. By deploying Siebel Insurance, BCAA has increased revenue by developing approximately 7,500 opportunities per month with a closing ratio of 38%, enabling agents to efficiently cross-sell and up-sell.
Martindale-Hubbell (MH) provides the Martindale-Hubbell Legal Network, a worldwide database of information for the legal profession. MH set out to create a single source of customer information, allowing employees to collaborate between front- and back-office applications across all customer segments. Its CRM deployment allowed it to gain insight into both customer behaviour and operational effectiveness.
Tampa-based EMI Industries is a manufacturer and distributor of point-of-sale food service equipment. EMI streamlined its customer communication using Siebel Sales, Siebel Call Centre, and Siebel Partner Relationship Management. It uses these applications to manage and synchronise internal communications and customer interactions across all channels, and has received hundreds of thousands of dollars through productivity improvements. EMI's vice president, David Hahmann, said: "If the performance of the solution continues at current levels, the annual benefit to EMI is calculated to be approximately US$2.2 million."
About the study
The study examines the financial impact of CRM applications on the core processes that contribute to an organisation's success. IDC conducted more than 30 in-person interviews with executives from organisations in North America and Europe that have implemented CRM applications, in order to determine success factors and identify motivations and drivers for CRM. The financial impact research methodology developed by IDC uses a standard set of financial assumptions across all case studies to ensure comparability. As a result, case studies and analysis reflect the type of real-world scenario that a company would likely face in its own decision-making process.