Looking beyond the price tag when first considering a major purchase can be a problem. Whereas, at the end of the project it is easy to forget about the cost once you realize all the benefits. You need to be able to see the benefits, removal of pain points, and the quality of what you're getting. Last week I discussed whether or not you can afford to have Salesforce. Now we want you to consider your purchasing decision from another angle. What will happen if you don't buy Salesforce? There are three major considerations when mulling over whether or not to buy a CRM or whether to buy Salesforce versus some other CRM solution.
1. Gaining a Competitive Advantage by adopting CRM
In today's highly competitive global economy, there will always be winners and losers. The losers are always at a competitive disadvantage. Leveraging the right Technology can give you a significant leg-up. Not just against other companies at the same tier as you, but against companies much larger in size.
Consider the following:
- Overall CRM usage increased in recent years, from 56% in 2012 to 74% in 2013. (source)
- Size matters. 91% of companies with more than 11 employees use a CRM system, compared with 50% of companies employing fewer than 10 people. (source)
- As of 2012, companies still had not taken advantage of 80% of potential benefits from CRM use. Integration, extension, and collaboration are major areas where ROI can occur. (source)
- Sales reps saw productivity increased by 15% when they had mobile access to CRM applications. (source)
CRM usage is increasing; failure to adopt will mean you will get left behind. That said, larger companies are using them more than smaller companies. So for our start-ups out there, getting onboard early will give you an advantage against your peers who are slow to adopt. Even if you are slow to get on the CRM train, there is still light at the end of the tunnel. Since companies using CRM are missing out on 80% of their potential, you have a chance to implement and squeeze a lot more benefit than your competitors that are already using CRM. Regardless of when you adopt, increased productivity rates of 15% are hard to argue with.
2. You could be leaving money on the table.
If you take nothing else from this post, remember this statistic:
- CRM Offers an average return of $5.60 for every $1 spent. (source)
That's more than a 5-to-1 return-on-investment. So for a 10 person company on Salesforce Enterprise edition, a $15,000 annual investment for licensing, would yield on average, a return of $84,000. Now remember that's an average. And as we stated earlier, companies still aren't leveraging 80% of CRM benefits. So that $5.60 is representative of an ROI based on 20% usage efficiency. It would be more like $28 for every $1 assuming you could reach 100% efficiency and the rate of ROI continued on a linear path as you use the tool more and more to capacity. Now, 100% efficiency is nearly impossible. But, for the sake of argument, a 28% return on investment could mean $420,000 in additional revenue. I certainly wouldn't want to leave that much cheddar on the table.
You need to consider your opportunity costs, based on knowing how your company functions. Every company is different and won't all benefit in the same way. But ask yourself these questions:
- How would we benefit if our sales cycle was one week shorter? one month shorter?
- What would be the impact if we could improve customer acquisition by 5%, decrease customer turnover by 10%, or lower the cost of acquisition by 10%?
- How much money and time could you save if you knew which types of prospects yielded better probability of a sale?
- How much marketing and advertising dollars could you save knowing which channels showed better response? What would be the benefit of spending them where it counts?
- What else could you accomplish if you gained a marginal 5% productivity boost from all users?
What do you stand to gain or lose by not leveraging CRM?
3. Scalability. Growing as your company grows (size and needs).
So far I've made a case for what you'd be missing out if you don't buy a CRM, not specifically Salesforce. While its true all CRMs will yield some benefit in your organization. It's also true not all CRMs are created equally. Salesforce has rapidly made its way to the top of the stack of CRM options over the last 10 years. And for good reason, the large feature set, usability, proven track record of success, and scalability. You'd be missing out on all of those by not going with Salesforce. If you want a full list of features, Salesforce.com's website will tell you everything they offer. I wanted to specifically talk about scalability.
We see it all the time, a company is considering Salesforce and a few other competitors, and they end up going with a competitor for any number of reasons, the main one being cost. A year later they are back looking to implement Salesforce because the option they went with didn't do enough or they outgrew it.
A lot of CRMs cater to niche clients usually, small businesses. Unless you plan to always remain small, you likely don't want to start on a "Small Business" platform. Salesforce has multiple licensing tiers that you can start with and as you grow and adapt your business practices you can grow into additional license tiers that you need and can afford.
So now you made a bad decision and have to pay for it by changing over. Aside from the obvious financial penalties, this change also costs time, resources, (implementation and training), not to mention lost productivity while your people make the transition. You will need to migrate data from one system to another, and it doesn't always map nicely. And if you made the switch because you out grew your old system, this transition will likely be even more painful because now you're bigger, busier, there are more cogs in the system, and nobody has the time for this. Implementing any system can be painful. Better to buy one that will meet your needs from day one and anticipated needs well into the future.
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