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CRM Customization ROI Calculator

CRM Customization ROI Calculator

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CRM MVP Mitch Milam returns as a guest blogger. You can read more from Mitch at his blog.

When implementing Dynamics CRM or designing a customized solution within Dynamics CRM you will often find yourself asked by the powers-that-be what their Return on Investment (ROI) will be. Since I consult for a living, I get asked this more than most.

Here is a common approach to show the ROI for a specific customization made to Dynamics CRM.

Understanding the User’s Workflow

Note: In this particular case, I’m not referring to the workflow process built into Dynamics CRM, but rather, the procedures and processes performed by the user.

The best way to understand how a user utilizes CRM is simply to watch them work. What you are looking for is repetitive, reproducible tasks that get performed on a frequent basis.

For example: The scheduling a follow-up call with a customer.

Ask yourself the following questions:

  1. What did the user need to do to make that action happen?
  2. How long did it take them to get to a location where they could enter data?
  3. How many times per day do they perform this operation?

Calculating ROI

Once we have the basics for our operation recorded, we can start the ROI calculation process.

Step 1: Calculating the cost per minute of the user

First of all, we need to know how much the user cost the company per minute, which we can determine using the following calculation:

Cost per Minute = Salary / Number of minutes per year

Which looks like this in Excel:

clip_image002

Step 2: How long does the operation take

As part of our user workflow analysis, we recorded the number of seconds it took the user to record our action. Using this calculation, we can determine the assumed cost of operation:

Cost = (cost per minute / 60) * time [in seconds] of the operation

Which looks like this in Excel:

clip_image004

Step 3: Determine Repetitions

Using the cost per operation, we can insert the number of times the user said they perform the action per day then extrapolate that number into weekly, monthly and yearly frequency and costs:

clip_image006

Step 4: Determining operational costs

Finally, we can calculate the operational cost of this activity:

Operational cost = Number of personnel * year cost [of action]

clip_image008

ROI in Action

Now that we know the assumed annual cost for the action, we can calculate our ROI for our solution.

Solution: Place a Phone Call button on the toolbar of the Contact Form.

Time Saved: 2 seconds

Cost Savings Is calculated by:

number of seconds saved * cost per second * yearly number of repetitions

Which we can as:

clip_image010

If it cost $150 to implement and test the solution, then our actual savings over the course of a year is $619.23. When you consider that other, similar solutions can be implemented, your ROI continues to rise.

Summary

Today I’ve shown you how to perform a simple and quick ROI calculation to justify a proposed customization change to CRM to make the job of the CRM user more efficient and easier.

An Excel worksheet with this calculation may be found on my blog in the Free Utilities section.

Cheers,

Mitch Milam



  • Just a remark: Solution Savings shows 759.23 but formula assumes the "cost per second".

    such result is based on the "operation cost" instead of "cost per second" right ?

  • Great post.  I love this stuff.   I have expanded you spreadsheet to show a few additional formulas, and Expressions.

  • Great work Mitch! I love this...

  • Good attempt Mitch.  Gave a new dimension on ROI calculation.

  • Nice work Mitch!  One thing I might add about ROI calculations is that it's a good idea to look at how redistribution of resources or changes in the operation impact the overall ROI of a CRM project.  Our ROI was based on reallocating resources rather than looking at operation statistics.

    When I implemented a solution, I found that my company was able to reduce overhead due to efficiency gains and pay for the cost of implementing CRM in savings.  These were real savings after we implemented the solution.  

    We also found that we had additional ROI as we took advantage of new platform features and functionality beyond the initial implementation.

  • Brilliant! A 5 min crash course on calculating ROI. Helped me a lot

  • Helped me a lot too, thank you.

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