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Cost Reduction Benefits

By streamlining and integrating customer-facing processes and providing richer customer data to sales, marketing, and service personnel, CRM can produce significant cost reduction benefits in a few key areas: cost to acquire customers, cost of sales, and cost to retain and serve customers.


Decreased Cost of Sales

CRM can reduce the cost of sales by increasing sales force productivity, enhancing partner-channel productivity, decreasing quotation-proposal generation time, and improving order-configuration accuracy.

CRM can lower the cost to retain and serve customers by deflecting simple customer service issues to the Web and streamlining the process of serving customers through other channels.

The Business Case

In virtually every industry all over the world, companies are investing in Customer Relationship Management, or CRM. This technology supports the adoption of more customer-centric strategies.

Businesses and organisations are turning to CRM and related technologies because they understand that having the technology to execute a customer-centric strategy is a business imperative.

Just as back-office automation became essential for competitive success in the late twentieth century, the application of technology to front-office processes—sales, marketing, customer service, and partner and employee relationship management—is now an imperative for success in the twenty-first century. Businesses that understand the strategic value of CRM technology to achieve dramatic increases in revenue, productivity, and customer satisfaction will have a significant lead on their competitors who lack in this technology.

What makes up a CRM Solution?

Although CRM software can deliver a wealth of benefits, many companies fail to appreciate that technology is just one component of a successful CRM initiative. When implemented effectively, a CRM strategy results in greater employee, partner, and customer satisfaction and an improvement in an organisation’s financial performance.

The following components are central to any CRM initiative:

• Effective customer segmentation
• Integrated multichannel strategy
• Well-defined business processes
• The right skill sets and mindsets
• The right technology

The Benefits to a Business of CRM

When properly done, a CRM strategy can deliver significant business benefits. The benefits are driven by two main factors: reduced costs and increased revenues. Looking at these two factors more closely, CRM solutions let organisations reduce the cost of acquiring, selling to, and serving customers, and they help organisations enhance revenue by increasing sales per representative, sales per customer, average order size, and other revenue-driving metrics.

Decreased Customer Acquisition Costs

Effective CRM strategies help organisations better understand a customer’s preferences, buying behaviour, revenue, profitability, and purchasing frequency. Having this knowledge can reduce customer acquisition costs significantly. For example, within one high-tech company, the implementation of a CRM system helped the telemarketing group to dramatically lower the number of calls required to generate leads.

Revenue Enhancement Benefits

Because CRM strategies allow organisations to monitor, measure, and track every customer interaction, organisations can determine the precise results of those interactions and therefore calculate the return on every marketing, sales, and service effort. Indeed, with CRM capabilities, organisations can determine the profitability of each customer or account and thereby adjust their allocation of resources to each customer based on that customer’s profitability. By extending this capability across all communication and distribution channels, an organisation can optimise its business model. That is, it can reach the right customers and prospects through the right channels at the right time with the right product or service. These capabilities lead to improvements in key areas, including increased close rates, increased revenue per sale, and improved customer retention.