Let’s get something straight. Implementing a CRM system is a big deal. Period.
Regardless of your business size, the number of employees (5 or 5000), and what you think you already know about CRM systems, it’s still going to be a big deal. And what do good managers typically do in such situations? Yup, plan carefully and prepare for caveats.
Speaking of caveats. There are plenty. And I will tell you about most of them, excluding only the ones that are specific to your team and brand, since all businesses are different in a number of ways.
Understanding What You Need
To approach the task, let’s turn the CRM budgeting into a project. Our ultimate goal is to determine how much it will cost our business to implement a CRM system. Sounds easy enough. But if that were true, why would over 70% of CRM implementations fail? Well, the number one reason is incorrect budgeting, which leads to improper usage, organizational discomfort, etc. Before you know it, you find yourself spending money on something that was supposed to skyrocket your sales but is currently an added cost.
The real cost of CRM implementation is hard to assess when you’re just starting. These costs have two categories – actual and hidden. Each of those has its own currency – dollars or time. So in total, we have 4 types of costs to worry about:
- Actual fees
- Actual time investments
- Hidden fees
- Hidden time investments
Before we go over each category though, there is an important matter to discuss.
What Do You Need the CRM for?
“What do you mean? I need it to improve my profits!” – Bad answer.
I mean, actually answer this question in detail. And don’t forget to invite all the teams that will be using the CRM to the party. Here is a list of topics that you need to discuss:
- List of required features – Create a list with “essential” and “desirable” features. Focus on the essential ones at the start. You can add the others later.
- Business processes – Think about your business processes and where you’re lacking the most, aka at which point you start losing leads. Make sure to talk about this with the vendor and ask them how exactly their CRM can help you solve this issue.
- Non-functional needs – Do you really need 24/7 uptime on your CRM? How easy is it to scale? What backup and recovery services do you need? What level of data security is required? Ask the vendor about all of this.
- System design – This is mostly about user experience, CRM dashboards, reporting, etc. Most vendors offer a free trial, do check it out with the whole team. Don’t skip this step.
If the CRM system you’re considering doesn’t meet 70% of your requirements, don’t think twice – look elsewhere.
OK, on to the costs.
These include some of the most obvious costs that can be found even prior to talking to any CRM vendor. Usually, leading CRM providers like Monday.com and Pipedrive have a transparent, detailed pricing page where you can find everything you need. Actual fees include the setup model (cloud vs on-premises), cost per user, implementation fees, and provided service.
Just like many other tools, CRM software can be set up either on the cloud or on-premises. There are ups and downs for both models, but generally, cloud-based CRM is preferable, unless you’re dealing with highly sensitive data or simply need to keep all of your data at your office (out of security reasons, for instance).
Cloud-based CRM is offered via a monthly/annual subscription model, gives you tons of flexibility and customization, remote working options, as well as easier scaling possibilities. On top of that, you don’t have to worry about software updates, maintenance, or uptime.
On-premises CRM systems are “hard-coded” on your servers in your office space. These offer maximum security (since there is no third-party access) and stability. However, you’ll need to take care of the maintenance fees, updates, and uptime yourself. Also, there is no remote access and you’ll have to buy a lot of hardware upfront for a hefty sum.
Just as a heads-up, in 2019, over 75% of total CRM spendings accounted for cloud-based systems. My advice is to opt for cloud-based solutions unless you absolutely know what you’re doing.
Cost per User
Some CRM vendors install a limit on the number of users that can access the system with the given subscription plan. In such cases, you will either have to pay for each extra user or change your subscription plan as your team grows.
Unless you’re extremely well-versed in coding, you will absolutely need help with CRM implementation. Luckily, all vendors offer these services, however, very few offer them for free. The vendors that do are the likes of HubSpot, if you’re already using some of their other SaaS tools.
The implementation cost will depend on the number of services that you require, and it’s an important step to consult the vendor before buying the software. It’s a bit of a shady area so many vendors don’t even talk about implementation unless you ask them directly. The rule of thumb is to expect to spend $1 on implementation, for every $1 you spend on your annual subscription.
Different vendors offer different services that come with your subscription plan. The cost depends on your subscription level, business requirements (number of records, contacts, data storage, etc.), and add-ons (features, integrations, or functionality that can be added to your CRM system). These are simple enough to evaluate and will vary from business to business.
However, if you’ve been keeping track of any data at all, you should have the number of contacts, records, and storage that you generally use. Also, some CRM vendors like SharpSpring offer flexible pricing, so that you can add/remove features and integrations as required after you have subscribed. This allows you to start small and upgrade your system as you go.
Actual Time Investments
Setting up a CRM system can take up to 20 weeks depending on the size of your team. However, it’s important to note that it can take way more if you don’t consider this seriously.
There are three important things here – data migration, learning to use the CRM, and actually using the CRM.
- Data migration – Most vendors offer drag-and-drop data migration functionality which makes the transfer a breeze. However, you will still need to take the time and collect all of your data in a single space, remove incorrect records, delete duplicate entries, add missing data as needed, prioritize data by value (in case it’s too big so as not to overpay for storage), and repeat this process once you’re done. Trust me, this will take time and you can’t afford to skip this step.
- Learning to use the CRM – If you’ve been wise and invited your whole team to discuss CRM implementation, this will be easy for you. People are always against change unless they were a part of it in the first place. This way, they will be happy and willing to learn to use the CRM which is a nice productivity boost.
- Actually using the CRM – A whole quarter may pass before your team gets fully comfortable with the new CRM system. During this time, you should expect close to all tasks to take a little longer to complete, simply because people aren’t used to the software. Naturally, the larger the team, the more time will be needed.
Make sure to dedicate at least 10-15 hours of training sessions to each team that will be using the CRM.
Just like with any other business, hidden fees are present in CRM. You’ll generally encounter them in two forms – the vendor isn’t completely honest with the costs, or you didn’t ask the right questions before committing.
Common hidden fees can be found in the following categories:
- Amount of customization – Customization varies from vendor to vendor. One may give an option for free while the other may charge you for it.
- Adding more users – Unless the cost per additional user is stated on the pricing page, ask the vendor about it.
- Data migration – Data migration doesn’t always come for free. Check this with your CRM provider.
- Vendor’s staff overtime – When the vendor is taking care of the implementation, make sure to check how much time that will take to avoid unnecessary surprises.
- Minimum contract terms – This step is almost never discussed unless you specifically ask about it. Is there is a minimum number of subscriptions? Are the fees based on total employees or the number of CRM users? Who is responsible in case of a data breach?
- Ongoing training and support – This mostly concerns larger teams that require more time for training due to the difficulty of bringing them all together in one place at the same time.
- Premium add-ons – The vendor may include a premium add-on in their subscription model for free, but then charge you for full access.
Hidden Time Investments
These costs usually occur when you’ve messed up in one of the two categories – understanding your business and team requirements, or getting your data ready.
Understanding the requirements that you need may take a lot of time and effort, but ultimately, this will make or break the CRM implementation. A lot of scary problems will arise if you can’t pinpoint your needs – choosing a vendor will become a random selection, free trials and demos will be wasted on pointless software exploration, you’ll be encountering problems you didn’t think existed, the CRM system won’t do what your team needs, so they will stop using it. This list can go on.
Data migration can be tricky as well. You almost never expect to have as much data as you do, even if you’re a small business. Don’t underestimate the amount of customer data, the time it takes to find errors, duplicate entries, and missing information, and, of course, the importance of complete and good data to your business.
The worst thing is, if the CRM implementation fails, you’ll need to do it all over again. From scratch.
What is the True Cost of CRM Implementation?
The truth is, there is no easy answer. Unfortunately, I cannot tell you “hey, implementing a CRM system costs X+Y+Z”. However, that’s not the important part. This article gave you all the information you need to plan everything carefully, prepare for all the possible caveats, and understand what you’re getting into. Once you nail this, all you’ll have to do is just add some figures on a calculator.