Quantifying CRM ROI

calculatorAfter analyzing numerous case studies over the past three years, Nucleus Research came up with some pretty impressive numbers to quantify the effect certain marketing and management investment decisions can have on a company. These numbers take into account both hard returns, such as cost savings, sales, and avoided hires, and soft returns, such as productivity, customer retention, and collaboration. Let's check them out:

  • Average return on CRM investments: $5.60 for every $1 spent. 63% of this was realized via direct benefits; 37% was realized indirectly.
  • Average return on workforce management investments: $7.88 for every $1 spent. Tracking of time and attendance provided the largest benefits.
  • Average return on business analytics investments: $10.66 for every $1 spent. Business analytics was thought to have the highest ROI because it tends to influence the biggest changes with equally big outcomes.

Still not convinced? David O'Connell, a principal analyst with Nucleus, calls business analytics "extremely lucrative", saying

"It's perilous for companies not to be deploying analytics," O'Connell says. "With so many organizations opting not to invest in analytics, those companies that leverage this technology to learn more about their customers, products, and costs will be in a strong position to cost-effectively grow their business at the expense of rivals."

Nucleus also found that, whereas most software applications tend to have a large initial impact but fizzle out over the product's lifetime, CRM programs not only hold their value over the long run but also benefit from additional future investments. Adding on a secondary application such as a social media manager on top of existing CRM programs often resulted in triple-digit ROI. Innovations in cloud management, focus on the end-user, and greater use of social and mobile integration have created a whole new way of managing relationships, and have helped to contribute to lowering costs while keeping benefits high.

Between the staggering ROI numbers and the thought of your rivals overpowering you, this should be ample information to convince CFOs and CIOs alike that customer relationship management needs to be in your business plan. Remember, the more information you know about your customers the better, so make sure you push customer feedback into your CRM system so you can run targeted campaigns and approach customers in a relevant and aggergated way.

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