Sales Force Marketing - Salesforce.com CRM:
Implementing CRM - What's the Price?

As Customer Relationship Management (CRM) systems move from being "nice to haves" to essential tools in keeping businesses competitive, their implementation is growing at a rate to match. And of course, price and cost play a vital role. However, the price of a CRM system is more than just the cost of the software and IT.

When budgeting for a project, assessing quotes from a solutions provider, or just trying to get a realistic idea of how much you'll need to spend, here's a guide to some of the key factors you need to consider.

1) Software Costs:

These usually consist of:
the price of software licenses
the price of software maintenance.

2) Professional Service Costs:

Professional services refer to what you need to get done to get your CRM system up and running. They can include the costs of everything from scoping the project to software configuration, hardware and training. They include internal costs (such as the time of your own staff) as well as the price charged by your solutions provider.

3) Support Costs

Support costs generally refer to the price of assistance to keep the system going. They will usually include the costs of technical support, administrator support and user support, such as access to a help desk. Sometimes support costs include CRM software maintenance costs: it depends on wording and the vendor.

Building a system from scratch?

If you decide to build or implement a system yourself, you'll need to include several other factors in the price. Probably the most significant costs will be developing or acquiring the wide mix of business, administration, management and technical skills. Do not underestimate how important these skills are to a successful CRM project. And if you go down this route, you're well, quite literally, on your own.

So, assuming you intend to employ the help of a solutions provider, here's a look at each of the three main areas of project costs in more detail:

The Price of CRM Software

Working out the price of software licenses is usually straightforward. There will be a price for a single user license, number of users or multiple user licenses. Remember to allow for expansion with the number of software licenses you buy: the number of users can quickly grow as the benefits of using it become apparent. It can also be useful to have extra licenses on hand ready for new staff.

When buying CRM software there's sometimes the choice between named or concurrent licenses: most businesses prefer concurrent. Note some vendors only supply software licenses in batch quantities, so you may have to buy 5, 10 or 15 etc.

Maintenance costs are to cover when the software manufacturers update, alter or modify the product to correct faults, improve its performance or adapt it to work under new conditions. This is usually charged as a separate line item per software license, as a set annual fee (a bit like insurance). Some resellers make maintenance charges compulsory - meaning you can't buy licenses without maintenance. If it's not a separate item check it is included in the license or support price. Don't buy CRM software without maintenance.

The Price of Professional Services:

Here's where working out the cost of a CRM project starts getting more involved. Unlike software licenses, which have a clearly identifiable unit price, professional service costs are not directly user-based. What's more, professional services costs can be the largest expense - mainly because they encompass such a wide variety of different tasks. They also vary due to installation type, degree of customization, business, solutions provider, level of integration with other office systems and so on.

A good starting point to estimating the price of professional services is by producing a project-scoping document. Once you've identified your business requirements, a project scoping document will help show what needs to be done to realize these requirements. It's recommended that you use an experienced project manager or consultant to produce this, which may of course incur a charge in itself. However, you may be able to negotiate on this if you choose to work with the CRM solutions provider who produces the scoping document.

Depending on the nature and complexity of your CRM project, the project-scoping document may include:

Business process analysis
CRM project specification
Sales, marketing, and customer service systems design
Internal resources required (you'll need high levels of input, and hence staff time, from several key areas within your company)
Project Management
CRM system design
System build and configuration
Data import
Data cleansing
System installation
Various levels of training
Internal procedure rewrite, updates
Hardware installation and upgrades
Additional software requirements
Depth of system integration to other office systems

There are identifiable issues that affect each of these elements, the complexity of a CRM project and hence the level of professional services you require.

For example, the price of your project will be affected by how much 'out of the box' software functionality you intend to use and the level of system configuration required. The sophistication of your reporting requirement will influence system design, while the number of staff, their existing skills and the system complexity will affect the levels of training. Existing IT infrastructure will dictate whether you need to buy additional hardware and software, and degree of change to your current customer facing procedures will also influence overall costs.

Data is also an important consideration when determining the price of professional services.
Depending on what you do with it, it can take up significant internal resources. Usually your own staff are the best people to work on your data because they work with it day in and day out. You need to think hard about the value of existing data: how much of it will you use, what format is it in, how much reformatting is required and how much cleansing is needed.
Data that's taken years to build up may be heartbreaking to part with, but similarly it can also be over-valued, particularly if it's going to take up skilled staff time to assess, cleanse and reformat. Do you really need to keep details of contacts from web-enquiries four years ago? Or even six months? It depends on your business. If you're going to clean your data, a new CRM project is the ideal time, but don't underestimate the work involved.

Once you've identified the professional services you'll need, you can cost each factor - usually by working through the scoping document with your CRM solutions provider.

Costs of System Support

The price of CRM system and software support will depend on what's offered by your solutions provider and the level you choose to take.

CRM solutions providers vary in terms of what they offer and how much they charge. However, most will be able to offer some level of support. If they don't, or you prefer not to pay for a support contract, then if a support issue arises it will probably be priced as a professional service.

A typical support structure may include:

User assistance and support - ideally via a dedicated support line. Make sure it uses trained support staff who can answer questions from all levels of user: from 'How do I...?' to technical details.

Administrator assistance and support - again this should be via a dedicated support line to address issues connected with the running of the system.

Supply of software corrections and revisions (may be included as maintenance).

"Bug" reporting and control.

Remote intervention and remote diagnostics - web dial-in, with controlled access.

Self Service - some of the better CRM solutions providers offer 24/7 access to an online support centre. These will typically allows you to find out how your issue is progressing and provide access to a knowledge base.

Other CRM support costs to consider are system administration, additional user training, on-site visits, system developments and additional license installs.

So How Much does a CRM System Cost?

It depends on your business requirements, what you want to do and how you're going to do it.

Make sure you involve key staff from marketing, sales, customer service, IT and finance. The factors which need to be taken into consideration when pricing a project can be quite subtle, particularly because of the different requirements between businesses. This is where the input from experienced CRM specialists can be invaluable.

As well as costs, an independent CRM specialist can advise the best software to suit your business needs - what you want to achieve from it, your sector, your customer requirements, how it will fit into your existing systems and processes, how it will integrate with other business software, and of course your budget.

Source: Peter Elgar link

Contact us for a free sales and marketing consultation on the effectiveness of your current go-to-market strategies and to discuss how our RevGen Sales Systems can improve your bottom line.