How much is your CRM worth ?

A few days ago we had an informal discussion at the bar

As the topics ebbed and flowed we started pondering the question on how would one put a value on your customer relationship management (CRM) system?

We threw around some ideas but it’s somewhat tricky since putting a value on something intangible is always going to be subject to a few assumptions. But we started to circle in on two aspects which seem to be critical – functionality and data quality.

Functionality – what you pay for

Functionality is actually simple to put a price tag to it. It’s what you pay your CRM vendor or provider. Wether it’s license cost plus operations expenses for an on-premise setup or just a simple pay-as-you-go per seat for a cloud based model – it’s a simple price. Someone in your company (eg. a controller) can put a clear price tag on what your spending on your CRM. The mechanism is also pretty straightforward – if you want more functionality (or more modules, reports, screens,…) you ask your vendor and he’ll quote you that incremental change or move to a different plan.

Data quality – what you work for

On the other hand, just because you’re spending millions on CRM software doesn’t mean that it’s worth anything. On day one of installing (or setting up), your CRM will be void of any data and pretty useless to most people. So long story short – the data (or quality thereof) is a key dimension to the value of your CRM. The data quality is the result of your processes and discipline on how you manage and use your CRM.

Value = Functionality x Data Quality

Assuming that the two key factors are functionality and data quality, determining the value of your CRM is a simple multiplication of the two, or the area denoted by the rectangle if plotted along two axes:

That leads to a pretty obvious thought, which seems to get neglected every now and then:

Investing into the data quality pays off too!

While CRM vendors focus on functionality, data quality is mostly up to you and your team. Still it’s key to understand where the overall value stems from to get the optimal return for your efforts.

Or in short: “Fill your CRM and keep it uptodate!”