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Is CRM Costly? Five-way analysis. (Video)

Read Time: 5 minutes

CRM is costly only if we don’t use it. Also, we should consider it as a necessary HR expenditure. Why do we provide Tea/Coffee or chairs for our team members to work? To increase employee productivity. Right? CRM also comes in the same category. 

Most of the SMEs think that CRM is very costly (they think of it as अमीरों के चोंचले). They believe that they will buy CRM once they grow big. Nothing can be more wrong than this. 

You need systems to grow and manage growth. It would be complicated to implement new systems once we grow.  

BTW, if you are not able to decide whether you need a CRM or not, you should watch this video.

Let us analyse the cost of CRM in five ways:

1. Gym subscription v/s CRM cost.  

The best gym in my city has an annual subscription of 80,000 rs per year. My friend Ramesh is a big fan of it. But, my other friend, Suresh, finds it very costly. 

You might think that Ramesh has lots of money to waste on it. 

But the truth is very different. 

Suresh does not like exercise, and he is not going to visit the gym regularly. 

Whereas Ramesh is very regular to the gym. He never misses going to the gym, even a single day. Ramesh takes full advantage of the dietician and also special classes. 

It’s evident from the difference in fitness levels of both of them.

So, where is the difference? The Gym is the same. The usage is different; the motive is different, the purpose is different. 

The Gym on its own does not do any good. It’s only useful if we utilise it properly and thoroughly. 

The same is the case with CRM. You will find CRM costly only if you are not going to use it. 

Unfortunately, most companies don’t plan properly the changes that will need to be made in their working style when they bring in CRM. 

CRM can bring Digital Transformation. Incidentally, Digital Transformation is not about technology. It’s actually about how people make use of technology to transform their work. 

2. Two types of CRM Costs. 

When you implement CRM, there are two types of costs. Hard cost and soft cost. 

Hard Cost is the cost you pay to the CRM vendor for the software, implementation, customisation, training etc. 

Here is a link to how Enjay helps clients implement CRM (Don’t miss the video).

Soft cost is the cost that you incur internally for change management. 

Generally, the soft cost is always ignored and never taken seriously. Most of the organisations don’t even count it. 

Also, soft-cost is generally much higher than hard-cost, which means that the amount you pay for the software is a small fraction of the overall cost of the transformation. 

So, if you don’t get proper support and guidance from your CRM vendor, then your soft cost increases significantly. So, when you lookout for the lowest price, consider this. 

3. Free CRM v/s paid solutions.

CRM is not just the software, but it’s a framework, a different kind of management system. The software vendor also brings in best practices and guidance, which is very important.

Going for Free CRM or paid solution depends on whether you want to save time or money. 

Why is that?

98.5% of the time, self-implemented (or free version) CRM usually fails unless you have some experienced consultant guiding you through it. 

So, if you are a tiny startup with sound management ideas and technology understanding, there are very bright chances that you will be able to implement a free CRM successfully. 

What is the real reason why a CRM software company gives Free CRM?

They don’t give free CRM for you to use; it’s actually for them. They want to generate more leads for their costly premium cloud-based software. The organisations that use Free CRM are qualified leads for the vendor.  

Free CRM solutions are generally crippled solutions and not complete solutions. Few exceptions are open source CRM solutions. 

4. One time cost CRM v/s subscription-based CRM. 

Traditionally, most SME owners have bought PC software with one-time cost and a nominal AMC amount, especially in India. 

But not a single modern CRM platform is available for a one-time cost. There is a reason for it. 

  1. Continuous Development: Modern CRM systems are very complex and ever-evolving. They require ongoing development costs, with high costs in R&D. 
  2. Connected Systems: Any CRM system cannot exist in isolation. It has to be connected and integrated with various other systems, like Email, Website, and third-party applications. This means you have to always host it in Cloud (either private or public). 
  3. Always-ON: CRM is no more a data-entry tool, as it used to be 20-25 years back. Most people use CRM on their mobile devices daily. This means CRM has to be available continuously, anytime, anywhere. 

All the above parameters increase the cost of development and maintenance. 

5. Don’t look at CRM costs in isolation. 

People’s biggest mistake is to look at CRM cost in isolation and as an additional cost. 

Let us consider it differently. 

  1. Consider that you have five people in your sales team. The average salary is 30,000 per month. So, you are paying 1,50,000 per month and 18,00,000 per year in salary. 
  2. You are getting a particular output (the result, not the sales) from this team.  
  3. Do you think that if your team is better organised and uses better automation tools, their efficiency will increase?
  4. If yes, how much %age increase is possible? Generally, a 20-30% increase in efficiency is possible. 
  5. Now, for a 20-30% increase in efficiency, can you spend 4-5% of the salary?

CRM is a fundamental tool for every Salesperson. It’s like in the olden days; you had to provide a type-writer to a typist. You have to give a computer to everyone in your team. 

You also spend on training your sales team or for conveyance and travelling. 

CRM is very similar to it. Your sales team requires CRM; without the CRM, your sales team would be crippled. 

Conclusion

I want to repeat that CRM is costly only if you don’t use it fully. 

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