89% Companies See Revenue Bump After New CRM Implementation
Customer Relationship Management (CRM) is the mainstay of sales technology today. About 45% of companies use this tool to ramp up sales productivity, and ultimately, revenue. Nine out of 10 companies also experience the benefits of CRM.
However, implementing a CRM is a massive investment involving changes in business processes, a learning curve, and a long time to value. In fact, the average time to realize the Return on Investment for a CRM is 13 months, according to G2 research.
Calculating the RoI is often challenging, given that accurately measuring CRM’s impact on headline key performance indicators (KPIs) is a knotty problem. For example, how much does CRM really contribute to revenue growth or conversion rates? Can we put a number to it?
The elusive nature of these impact numbers is the reason that many organizations are unable to say with conviction that CRM actually makes a difference for them.
Do CRM platforms truly live up to their expectations and promises? Do the benefits of CRM really stack up?
Freshworks commissioned a global survey of sales leaders with Forrester to hunt for answers.
In this blog, let’s talk about:
- Whom we spoke to for the Forrester survey
- Expectations from a CRM implementation
- Impact/benefits of CRM
- Why a CRM doesn’t always stack up
Whom did we speak to?
Expectations from a new CRM implementation
We can quantify headline KPIs more efficiently, and this is the primary reason we used this method to measure the benefits of CRM in the Forrester study.
Among the headline KPIs, which ones were the most important to sales leaders?
- 38% of sales leaders felt that total revenue growth was the critical factor on which the success of a CRM should be measured.
- 31% of respondents said that more market penetration is critical in measuring the benefits of CRM.
- 1 out of 3 wanted CRM to improve customer lifetime value.
- 1 out of 4 leaders wanted CRM to push up their conversion rates.
But the benefits of CRM go beyond just the headline numbers. There are several ways to track the success of your CRM initiatives. Let’s look at a few approaches to evaluate CRM beyond the headline KPIs:
Adoption by sales teams: A CRM doesn’t start delivering the goods as soon as it’s implemented.
If your sales teams use your CRM only when forced to, your entire investment in CRM is at risk. A majority of salespeople feel CRM eats into their selling time anyway and is just a manifestation of duplicate work.
One of the key ways to overcome this problem is to increase adoption rates — you don’t want your salespeople to be struggling with their CRM when they should be engaging with prospects and customers.
You need a visually appealing user interface that’s easy to navigate. Sellers should be able to pick up the CRM solution, get onboarded, trained quickly, and not spend time figuring out functionalities that are not critical to their job.
Leggett’s ideal CRM will get adoption rates up, but how do higher adoption rates translate into the success of a CRM?
According to a CSO Insights study, teams with an adoption rate of 75% or more (high adoption) have higher quota attainment and win rates.
Organizations with high adoption rates fared 3% better in terms of attaining quota and 6% better in terms of win rates.
Selling time: You can measure a CRM’s success by the amount of time sales reps save by not performing mundane tasks like manually logging prospect information, sales conversations, and deal progress.
Research shows that sales reps spend two-thirds of their time on non-revenue generating activities such as filling in data and sending out emails.
They’re spending a lot of time on their systems manually entering data. This impacts productivity, selling time, and motivation levels. Salespeople want to sell and deal with customers.
Forrester research finds that this lost selling time leads to them closing less than half their forecast deals.
As sales leaders, we need to ask: is my CRM adding to rep productivity, or is it holding it back?
Ease of reporting: Sales reports act as reality checks to track your progress against the targets. Reports give you critical insights into where you’re doing better than expected, where your gaps lie, and how to close them. You can evaluate the CRM on how easy it is to generate such reports at the click of a button.
You can evaluate the ease of reporting by answering questions like these:
- Does pulling out reports need a specialist or someone from a tech background?
- Does the CRM tool allow you to customize reports easily and intuitively?
- Does it help you forecast the pipeline accurately by showing you deals most likely to close?
How easy is it for your CRM to answer the above questions? A modern and state-of-the-art CRM should allow you to get these reports and more with just a few clicks.
In the above approaches, it becomes difficult to pin down the correct attribution for CRM. For instance, how can you quantify “ease of reporting”? The results of these approaches are mostly intangible, though, from a practical perspective, we know they improve sales productivity.
Benefits of CRM
In a Harvard Business Review study, over half (52%) of the high-performing salespeople surveyed indicated that they were power users who take full advantage of their company’s CRM technology.
As per the Forrester report, 9 out of 10 respondents said their companies saw measurable, significant benefits or cost improvements after implementing CRM. This has also led to 22% of companies expanding their CRM initiatives.
Here’s how CRM benefits a host of sales metrics and ups sales productivity.
The Holy Grail of all sales metrics. According to the Forrester study, 4 out of 10 organizations see their revenues rise 11-20% after implementing CRM.
The benefits of CRM don’t stop here: Another 44% see their topline grow between 1-10% after implementing a new CRM.
Here are three potential reasons why a CRM may be causing a near-term impact on revenue growth.
Higher sales productivity: A modern cloud CRM platform will typically automate mundane tasks and workflows and free up selling time for salespeople who can then focus on “core selling” – emails, calls, demos, and more. You will be able to send out reminder emails, set up calls, and schedule demos automatically.
Identify upsell and cross-sell opportunities: Once leads convert, a CRM will enable you to run campaigns to upsell and cross-sell products and services through relevant communications to maximize revenue.
Re-engage cold leads: Through CRM, you will be able to run campaigns to re-engage leads that have gone cold. This way, you will slowly nudge them toward conversion by personalizing your communications based on their past activities or interests.
Customer Lifetime Value
Research shows that it is at least five times more expensive to get a new customer than to retain one. A high customer lifetime value indicates that you get more revenue from your existing customers while keeping your churn rate low.
The Forrester study found that 8 out of 10 salespeople said that CRM had increased their customer lifetime value between 1-10%. In 24% of cases, the customer lifetime value had increased from 11-20% — another of the biggest benefits of CRM.
How does a CRM help businesses improve Customer Lifetime Value?
Customer onboarding and training: Tailor training programs for your buyers. A CRM will ensure that you can chart out a training program, help buyers understand your product, and start using it to achieve their goals.
Client engagement: You will be able to send out emails on product updates and new features, tips and hacks, and helpful videos — all managed through your CRM. Engaging with your clients regularly ensures that they connect with your brand, relate to it, and stay with you.
Targeted promotions: By segmenting your customers with a CRM, you will find the customers who respond well to discounts and other promotional offers. In turn, this will help you retain numbers in that segment and increase their lifetime value.
In the Forrester study, 74% of salespeople said that a CRM positively impacted conversion rate. A closer look at the data says that for about 3 out of 10 respondents, conversion rates grew by 11-20% after implementing CRM.
Here’s how a CRM may impact conversion rates at your organization:
Lead Scoring: By assigning scores to leads, sales reps will be able to invest their time pursuing the right sales leads for your business and converting them. In suites like Freshsales CRM, AI helps you score leads based on a lead’s characteristics and behavior. This will enable you to drive up sales conversion rates by 50%.
Callback Reminders: When prospects first reach out, you want to keep things moving and use the momentum. To keep things moving, a CRM will help you track callbacks to multiple leads. Research shows that it takes at least five follow-up efforts after the initial sales contact before a customer says yes, but 44% of sales reps give up after a single “no”.
Standardize Processes: With a CRM, you will be able to create a list of the activities and map them onto each stage of the buyer journey — for instance, sending out successful case studies at the top of the funnel and discussing Proof of Concepts (PoCs) at the bottom of the funnel.
Why a CRM doesn’t always stack up
We’ve discussed the benefits of CRM. But a CRM is not always a wand you can wave and say, “Abracadabra!” to achieve your numbers. Often, there are common challenges faced by sales teams (even those using CRM) that are not really captured by metrics or numbers.
Lack of context
Sales and marketing often use different tools to track the customer buyer journey (this could also be a CRM!). This leads to problems of context and missing information.
Often, you don’t get visibility into the upper parts of the funnel, leading to a fragmented view. And unless you know how buyers have engaged in the past, you will waste both your time and the buyer’s time by hitting discordant notes on your sales call.
Why does this happen? According to the Forrester report, nearly half the organizations surveyed (47%) currently manage sales ops across multiple tools and spreadsheets, creating data islands that do not talk to one another.
Time wasted on non-revenue generating tasks
In a post-Covid situation, your team needs to spend more time researching, learning, and responding to the new set of problems that have cropped up in the buyers’ organizations.
But the reality is that the average sales rep spends 15% of their time on administrative tasks.
In the Forrester report, 31% of respondents said “Automation of routine tasks” was one of the most important attributes the ideal CRM should have.
We’ve discussed a couple of problems you might run into while using a CRM, but here’s how, with the right product, you can still realize the benefits of CRM.
A modern CRM would help you enrich your lead information by pulling in all the available profile information for leads and contacts (email address, LinkedIn profile, designation, and so on) and auto-updating it.
The ideal CRM will also give you a 360° view of your prospect information and customer journey.
Another benefit of CRM would be updating the lead logs from the emails exchanged between the salesperson and the lead.
Tying it all together
CRM is not a panacea, but if you have the right one for your business and use it in the right way, you can bring business value to the table and reap the full benefits of CRM — the data shows you that.
CRM often promises the moon and more, but simply implementing it will not deliver the goods. The challenges associated with a CRM need to be tackled by keeping the following things in mind:
- Define the key drivers and business goals for your CRM investment. Not only from an internal workings perspective — a CRM is not just about making life easier for your team — but also factoring in what benefits it brings to the table from a customer standpoint.
- Collaborate and develop a holistic business use case that involves stakeholders from other business areas. Keep in mind the end-users and their requirements as well.
- Establish the right metrics that can be measured and tracked back to your CRM. This will ensure that the RoI question is answered and that your team is working toward the correct numbers.
Keep in mind the contrasting metrics that we observed. While several companies become disillusioned and want to change their CRM within the next two years, many companies also see their headline KPIs boosted after implementing CRM.
Which bucket do you want your company to fall under?
Images in this post were created by Raghuraman Jaganathan
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