Three steps to building a CRM budget

Before you proceed with the implementation of your new CRM, a budget has to be created. Not all costs are obvious so you may need to do some digging to gain a true figure. At the same time, you may find yourself bombarded with vendors, all offering the next best thing.

If you follow a budget, some of these can be ruled out straight away due to price, leaving you with a clear path forward. Whilst building your CRM budget, you also need to take your timeline into account. Whilst this may seem like a vague budgeting step, it is something that cannot be ignored.

Questions to ask yourself are: when will the system go live? By what date does it need to be fully completed? What is the latest date that I can make my decision? Who else in the company is going to be involved in drawing up the budget? How can I check out demos?

The answers may have an impact on your costings. With so many steps involved in building your CRM budget, we are going to focus on just three of them. These are the key areas that we recommend you focus on:

1. Break down your budget into several components

These are the main ones but do remember that hidden costs need to be added:

• Time for a needs analysis and selection of vendor
• Cost of the system
• Training
• Migration of old data
• Customization
• Integration with existing software

This is only a skeleton overview of the costs involved. You must work to an hourly rate to calculate the additional time that will be spent working on the project. This is the only way you can establish a full budget. A CRM report has shown that most businesses pay, on average, $1,800 for each user of their system over five years.

Hidden costs can be killers so always add consideration for vendor support, consultancy, training, customization, overtime, etc. To accurately break your CRM budget down into key components, it is essential to decide on what you want from the platform.

Is your main goal the improvement of sales productivity or better reporting and tracking? By taking the time to consider this you can narrow down the CRM software systems that may be suitable, saving you a lot of time. With so many CRM systems out there, if you don’t pinpoint exactly what you are looking for, you won’t make a sound decision nor will your budget be accurate.

2. Substantiate the cost of your CRM investment

Always keep this question in mind: how will this CRM improve business revenue? You can examine this by looking at revenue per user, customer acquisition costs, or conversion rates. Which method you use is up to you and much will depend upon your type of business.

Try to find ways of quantifying savings. For instance, look at how your ROI will improve over five years.

3. Choose your deployment model and pricing structure

Are you going down the road of a cloud or on-premise CRM? CRM research showed that 79% of people were planning a cloud project. Both have different advantages and which one you go for will likely depend upon the size of your company. Your choice will also impact dramatically upon your costings i.e. on-premise costs more up-front but a cloud solution requires regular payments.

The on-premise or cloud argument may be won according to the features offered by each system, with costings being a secondary consideration. Always balance functionality against cost, remembering that most CRMs charge more for each additional feature.

This can soon add up, particularly when paying per user/per month. Customization will also bring its own cost. Consider what you need against what you want; the two are very different. Don’t make any rash buying decisions. Sit on your conclusion for a few days and then re-evaluate.

Finally, allow some leeway in your CRM budget for adding features in the future. This way, you will not have to hold back when you realize that additions are required going forward. The final cost may at first appear high, particularly for start-ups and SMEs.

However, remember that most CRM systems are developed over time, so you will not be dishing out a huge sum of money all in one go.

How far should you commit?

Whilst working on your budget, also beware of the systems that tie you in for a long-term contract. Vendors may try and blind you with clever marketing but most of the time, it is not a good idea. The best CRMs come commitment-free, so make these systems your preferred option.

A ready-to-go CRM fund

If you find yourself in a position where you have been handed a CRM fund, without being involved in the budget-building process, you need to understand precisely how it was made. If other people have been involved in putting the budget plan together, you need to be sure that you are aware of the details of how it was planned.

It is impossible to move forward accurately if you fail to take account of something they have specifically built-in. If one person headed the budgeting team, consult with them and consider all of the intricacies that they have accounted for.

Justifying your CRM budget

Once your budget planning is complete, do be ready to justify it going forward. Not everyone will be fully on-board, particularly if your company has never purchased a CRM system before. If this is a brand new undertaking for management and shareholders, you will need to explain it to them.

After all, whilst you fully understand why they should spend money on a CRM, they may not. Think about the outstanding benefits that your company can take advantage of and then you will be fully prepared for any type of questioning. A CRM is a wonderfully powerful tool.

Not only does your budget forecasting need to be accurate but you need to understand your preferred system inside-out, understand how it works, and be ready to show just how effective it will be, thus justifying your CRM budget.