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CRM project management requires long-term outlook

Up-front costs of a CRM system can be daunting at first, but the long-term benefits can justify the expenses -- if companies do their homework first.

While Nadine Larder determined her business needed a customer relationship management platform, the problem was that she couldn't afford it.

The owner and founder of PrinterBees, an online printing company that provides marketing materials for small businesses, was tracking customer information with spreadsheets and email. These tools were cheap, at roughly $20 to $40 a month, but she needed more sophisticated  tools. When Larder devised her CRM project, she wanted a CRM system that could organize data and advance the business, but she had to predict how much her business could benefit from a CRM system that was 10 times the cost of existing tools..

"I had to look past the money," Larder said. "It's like being in a chess game; you've got to be three moves ahead when you're a small business owner and you're making decisions like this."

Even small companies have come to see the wisdom of CRM systems. The worldwide CRM market grew to $20.4 billion in 2013, up 13.7% from $18 billion in 2012, according to Gartner Inc., fueled by digital marketing and customer experience initiatives. Gartner forecasts that the market will be worth about $36.4 billion by 2017. For many companies, having a CRM platform is simply a cost of doing business and an essential part of day-to-day operations.

While the up-front cost of converting to a modern CRM platform can be daunting, companies need to think long-term when planning their IT budget. Balancing the up-front costs with return on investment is the core goal of planning a CRM budget.

Planning for costs

"What is the best CRM on the market" was the only question executives at HourlyNerd Inc. asked at the start of their CRM budget process, said marketing manager Samantha Crowell. The Boston-based startup, which connects businesses with part-time consultants, was founded in 2013 and used inefficient Google documents to track customer data. Without much legacy data, Crowell said that company executives' main requirements were for a CRM system to integrate easily with other software and for it to reduce long-term costs.

I had to look past the money. It's like being in a chess game; you've got to be three moves ahead.
Nadine LarderPrinterBees

The company decided on but ran into problems with the cheaper version of the software. It needed the more feature-rich, enterprise-level platform to provide what it needed, including integrating with HubSpot marketing software. "You might think you [can make do] with a lower-end option, but you actually don't get very many things from your CRM with that option," Crowell said.

In the budget-making stages, the company underestimated the time it would take to implement the system: It took roughly seven months from the decision to when the Salesforce system went live. Those costs, as well as the ones associated with data migration, Crowell said, were the hardest to plan for.

"In startup culture, you just want something that's instant," Crowell said. "It took far too long, but you need to anticipate it, because it is a software platform with a sales cycle and it has a very long tail-end implementation."

Time is money

When it comes to CRM implementation, sometimes budgeting for the time the project will take is as important as cost. During implementation of Infusionsoft, PrinterBees was at a standstill while a consultant guided the company through the process. She emphasized that patience during implementation is essential to making sure the system works correctly and will save the company money in the long run.

"I knew I had to make this big investment, because business at the time wasn't booming," she said. "It's a successful project, looking back, because I invested the time to set it up, train it and teach it what I wanted it to do."

While Larder said her project ended up on-budget, HourlyNerd's price tag ended up being double the initial cost because of its midstream switch. But the company doesn't regret the change and sees it as a "cost of doing business," according to Crowell, and a worthwhile investment to have a single repository for sales data. Companies need to anticipate unexpected costs, Crowell said, and make a CRM budget flexible to adjust for problems. "There's always something unexpected that will come up that you need to budget for or just be comfortable spending on," she said.

Is a consultant right for you?

The longer the implementation, the more money it can cost. Companies can't afford to implement a new system themselves and risk having staff inadequately trained or have data migration hiccups to cripple business operations, further raising long-term costs. Employing a consultant to guide companies through the process is a way to make sure the process is smooth and prevents costly problems that come with an inexperienced hand directing the project.

When it upgraded to a modern CRM/ERP system from NetSuite Inc., Network Communications Inc. (NCI), a publishing company that sells advertising, used a consultant to determine the features it needed and to ensure that the project was completed as efficiently as possible. Despite this, senior vice president of finance and administration Diana Young still sets aside money in the yearly budget to cover new features or tweaks to the system. She builds this slack into the budget to account for customization or system maintenance.

"We had our list of what we knew had to be provided," Young said. "Some of that was stuff that NetSuite, in its core, couldn't do [for us at first], but they said that it could [be added on]. We set aside $100,000 for the year [for maintenance] and we haven't usually spent it."

While employing a consultant can be costly on top of the existing CRM platform expenditure, having one can be crucial in getting the system up and running as quickly as possible and can help save on long-term costs. NCI's previous ERP and CRM systems were on-premises and required special developers to reside in-house to fix problems. Young said with a switch to NetSuite's cloud platform and with a consultant helping in implementation and training the staff, those costs have been defrayed.

Larder said working with a consultant helped her CRM project stay on budget. "The big thing people have to look at is how much it will cost and how much time it'll take," Larder said. "You hire it out to someone who can do it in a quarter of the time and do it better [than if the company implemented it]."

HourlyNerd has benefited mostly through the growth in repeat customers, Crowell said. The company now has a way to follow up with customers on a monthly basis and track referrals, cultivating relationships and leading to sustained revenue. "Our founders gave us whatever we needed to get the best system for the future of the company," Crowell said. "We didn't have anything on the back end in order to control scale, and now we're able to scale up."

Larder has seen a 2,487% return on investment for PrinterBees, which she attributes to her research and patience during the project. "You've got to do your homework."

Next Steps

CRM, ERP upgrades come with risks, rewards

Building apps on top of CRM systems

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What's the hardest part of making a CRM budget?
One of the things to keep in mind about making a CRM budget is that you need to think about the weeks and months ahead. Instead of planning for the current month, you need to examine what could happen in the future and if the money that is being spent now can be justified later.