While executives at many organizations focus much of their expense-side attention on cutting small, “unnecessary” costs such as eliminating free lunches for employees, these same organizations collectively squander hundreds of millions of dollars by choosing the wrong CRM system — a decision that often results in outright CRM failure.
What are some of the cost components of choosing the wrong CRM system?
Paying for Unused Licenses
In the days when shrink-wrapped enterprise software was prevalent, if a software package was purchased and not utilized, it became known as “shelfware”. In the Software as a Service world, the new “shelfware” is unused CRM subscription licenses. The total cost of a two-year subscription for dozens or more unused licenses can be significant.
Diverting People from Their Primary Jobs
When the wrong CRM system is selected, there can be a large cost associated with taking employees away from other tasks in order to focus on the roles and responsibilities of the CRM implementation. Project managers who are not managing other internal projects and developers who are not developing for other systems while working on an ultimately unsuccessful CRM project represent a high, internal cost.
Paying for Outside Experts
While it’s often a good idea to hire an outside consulting team for your CRM implementation, if the wrong CRM system is chosen, the money paid to external resources will have been all for naught.
Missing Out on the Financial Benefits of a Successful CRM Implementation
Most companies invest in CRM in order to decrease costs and/or to increase revenue. When the wrong CRM system is selected, these financial benefits are not realized. If the right CRM system would have resulted in increased sales and in greater operational efficiencies, then there’s a large opportunity cost associated with the wrong CRM decision.
When a large project fails, there can be an effect on the attitude of employees, which can, in turn, come at a cost. Many users may have been looking forward to the promise of outcomes such as easier access to information and to better internal communication.
The Cost of Doing it All Over
Most companies that choose the wrong CRM system the first time around don’t end up giving up on CRM altogether. So, they end up going through the entire process again. While there’s some intelligence to be gleaned from Round 1, there’s an entire, secondary set of expenses incurred with another CRM project.
It’s very important to take the right approach to evaluating CRM systems in order to avoid the very costly consequences of selecting the wrong CRM solution.