Oct 10, 2010
The Cost Implication of a CRM for SMBs
Recently I held several discussions with a few of my friends running small companies(sub 1 million dollars). The meeting was purposed specifically on the point of why they are not using the CRM to manage their sales team(I dont say sales force here because a sub one million dollar company can afford only a small team) and the most common myth amongst them was that CRM is an expensive software both in terms of resources(cash and people) and time.
Before going deep into this topic, Lets analyze the expectations of a normal SMB from their sales team. Similar to other organizations, SMBs want their sales team to :
- Manage different types of conversations that can happen between a company and a consumer and learn about their needs .
- The team is then supposed to analyze their needs and make proper promotions to the user at strategic times in the future.
CRMs are built to handle the above two requirements. Other wide spread use of CRM is to manage support tickets and calls from the users.
Given the advantages that a CRM brings to the table, its worth a shot to analyze the costs associated with deploying a CRM for a small organization. Let me be crystal clear before we move ahead, the cost associated is not an absolute zero and if you are looking for an absolute zero kinda idea on CRM deployment, then this post might not be worth a read for you further. But one thing that i can assure is that the small cost associated with CRM deployment is really worth a shot given the boost that it can give to your sales graph. To estimate the effectiveness of the application of CRM to your business, you must take an informed decision and evaluate atleast the following factors before going all guns.
CRM Installation and infrastructure Costs: A good CRM incurs some cost to be installed at the consumer site. But here comes open source to the rescue. There are a lot of good open source CRMs(SugarCRM, vTiger etc) available these days that come with easy to use installers and the only cost that you would need to incur is the cost of hosting(shared hosting is available ranging from 3$per month to maximum of 10$ per month depending upon the choice of your host). Data storage is also so cheap these days(You can look at the amazon plans to know more about them)
Customization Costs: Its quite a possibility that the default CRM installation does not match your business requirements exactly. You might need additional functionality to get your business representation effectively on a CRM. It used to cost a lot of money during late nineties and early twenties but today a lot of CRMs come with easy to use configuration tools which have made customizations a real cake walk even for a non technical user. Most of the customizations can be handled using the embedded configuration tools. In case you need to get some module or functionality built which can’t be handled by these configuration settings, then you can easily hire a good cheap developer to do the customizations for you(Crowd sourcing based freelance portals like odesk, elance, Rentacoder, getafreelancer etc are the key here).
CRM Training Costs: A lot of people would argue that the training costs of a CRM is too high. With open source coming into play, a lot of users now contribute their knowledge to the community and hence lot of knowledge base is available regarding the effective CRM usage (obviously for good CRMs like SugarCRM). With the advent of social networks and portals every good CRM software have got an end point like facebook pages, twitter account where you can reach the maintainers of the software and they will help you in the right direction for training your employees in their software. Though there would be a bit of training cost involved initially but it wont scale linearly like the older days rather it would keep on decreasing as you build your business on top of it.
CRM Maintainence Cost: Technically it would be nothing more than the hosting cost that you would require to host the CRM plus the database and the file system costs(which have gone to dirt cheap levels with amazon’s cloud hosting leading from the front and will go cheaper in future).
With all that said, Its worth a shot to compare the cost of using a CRM with the boosts in the sales that the CRM brings to your specific business before taking the final decision of going ahead with CRM deployment(I will take up how a company can use a CRM in a seperate post). After all its all about increasing the profitability.
