How to Calculate CRM ROI and Improve Its Value

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Adopting CRM software can be a substantial investment. Are you getting the most out of it? Calculating your CRM’s ROI can help answer that question.


This guide explores what CRM ROI is, how to measure it, and best practices for maximizing it. By understanding your CRM’s ROI, you can quantify the impact, identify underutilized features, and make data-driven decisions to upgrade or explore alternative CRM solutions.

How to Calculate CRM ROI and Improve Its Value

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What is CRM Return on Investment (ROI)?

CRM ROI, which stands for Customer Relationship Management Return on Investment, is a key metric used to evaluate a CRM’s efficiency and profitability. It compares the net income earned through improved customer relationships to the total costs of implementing and maintaining the CRM system over a specific period.


The ROI of CRM is typically expressed in percentages. Principally, the higher the ROI, the more profitable your business is using CRM. Here’s a breakdown of what different ROI ranges signify:


  • ROI above 100%: the CRM system is generating more financial benefits than its costs, making the investment worthwhile.
  • ROI below 100%: the CRM costs outweigh the benefits, indicating a need to reassess the CRM strategy.
  • ROI of 100%: the money spent on CRM equals the money earned.


What Metrics Should Be Used to Measure CRM ROI?

To measure the ROI of CRM, you first need to calculate CRM expenses and net sales revenues.


1. CRM Expense Metrics


The total costs of adopting your CRM include: 


  • Research and installation costs: the time spent looking for the ideal CRM and any extra installation fees you paid.
  • Onboarding costs: from the moment the CRM is installed until your team is confident enough to use it.
  • Subscription costs: monthly or annual fees for the CRM software and add-on feature purchases.


Generally, lower overall costs (e.g., a competitive price tag and a short learning curve) often translate to a higher CRM ROI.


2. Net Sales Revenue Metrics


Use this formula to calculate the net sales revenue. 


Net revenue = Total revenue – Total operating expenses


Total Operating Expenses include salaries, rent, utilities, marketing expenses, and other related expenses.


That said, Net Revenue might not always capture the full picture of your CRM’s impact on your unique sales challenges. For instance, if your main challenge is lead conversion, a more specific metric, like the improvement in conversion rate after CRM software implementation, would be valuable. This directly shows how CRM adoption has improved your ability to turn leads into paying customers.


To do this, calculate your ‘conversion rate’ with the following formula: 


Conversion rate = Number of leads that moved to the next stage / Total initial number of leads x 100%


Other common sales metrics include:


  • Average sales cycle = Total number of days to convert leads into customers / Number of closed deals
  • Customer acquisition cost (CAC) = Total sales and marketing expenses / Number of new customers
  • Customer lifetime value (CLV) = (Average purchase value x Purchase frequency) x Customer lifespan / Customer churn rate
  • Revenue growth rate = (Current period’s revenue – previous period’s revenue) / Number of new customers x 100%
  • Upsell or cross-selling rate = (Number of customers who accepted the upsell / Total number of customers) x 100%


Related: Learn more key sales metrics every sales rep should track in this blog.


How to Measure CRM ROI

Use the following formula to calculate CRM ROI:


CRM ROI = (Net revenue after CRM implementation – CRM costs) / CRM costs x 100%


Here’s a practical example of how it works. You spent $20,000 on new CRM software, and your net revenue is $100,000. In that case, your CRM ROI is:


CRM ROI = (100,000 – 20,000) / 20,000 x 100% = 400%.


400% CRM ROI means that for every dollar invested in the sales CRM software, you’ll get $4.00 back.


What Is a Good CRM ROI?

Unfortunately, there isn’t a one-size-fits-all answer for a ‘good’ CRM ROI. As long as the ROI is over 100%, you’re making money back on your investment. That said, some studies can help you gauge your CRM performance.


A 2014 study found that for every dollar spent, a company gets $8.71 back. In 2014, the rate increased by 1.5x yearly. So, generally speaking, if your CRM ROI is at least 871%, your CRM is a good investment.


How to Evaluate Your CRM ROI

Here are some questions to guide you.


  1. What aspects of your business do you want to improve the most? Does your CRM excel at this?


For example, if you own an agency business and are looking to improve the sales process (such as accurate lead tracking and deal customization), choose CRM software with a strong sales solution like Pipeline CRM. We are one of the best CRM agencies on the market.


  1. Does the CRM increase your productivity?


A CRM tool with sales automation features like adding recurring deals, suggesting ‘next step,’ and follow-up reminders increases productivity, allowing you to focus on more important business tasks.


  1. Can the CRM Grow With You?


One reason your CRM may not be the best investment is its growth limitation. You might start using the CRM when you’re just a small business. As your company grows, the CRM can’t accommodate all your needs, preventing you from unlocking your business’s full potential.


Pro tip: This free CRM handbook will help you choose the right CRM for your business


How to Optimize the Value of Your CRM ROI

Now, to get the most out of your CRM capabilities and investment, here are a few things you can do:


1. Provide Effective Onboarding


Provide continuous and practical training to your team, especially during the first few weeks of the CRM adoption. Tailor the material to use real-life data from your business. This will not only accelerate the onboarding phase but also help your team see firsthand the positive impact the CRM tool can have on their daily work.


2. Customize the Sales Pipelines


Your CRM should represent your sales processes. Make some adjustments right from the start to ensure effective workflow. For instance, tailor the deal profile pages, create custom activities for easy sales tracking, create multiple sales pipelines for different sales needs, and give special permissions for specific users.


Related: Discover five key scenarios where multiple sales pipelines can unlock even greater success.


3. Leverage Automation Features


Some CRM tools offer advanced automation solutions to free up your time. These include:


  • Workflow automation: send follow-up emails, update contact records, and assign leads to sales reps.
  • Email automation: set up an automated email sequence to welcome new leads or follow up cold prospects, send emails in bulk, and activate autoresponder.
  • Lead and task scoring: prioritize building relationships with hot leads and important tasks.


4. Integrate With Other Tools


Connect your CRM with tools you love. This eliminates errors and delays in manual data transfer and makes the CRM the only source of truth for all sales-related activities. Some common integrations include email marketing, contacts and calendars, task management, marketing automation, accounting, and phone solutions. Pipeline CRM, for instance, offers Mailchimp, QuickBooks, and CallRail integrations, among other popular sales and marketing integration options.


5. Foster Solid Team Collaboration


Set up lead assignment rules to minimize delay or unassigned leads. Combine this with automatic reminders and email drip campaigns to ensure each contact gets the attention it deserves and turns into paying customers.


CRM ROI Lets You Know the Real Value of Your CRM Software

Not all CRM tools are created equal. Calculate your CRM’s ROI to see its real value to your business.


Want to see the real impact of a powerful CRM? Pipeline CRM helped a manufacturing business slash its time-to-close by 42%! Discover their success stories here.