The (hidden) costs of CRM implementation
Here’s an unpopular opinion: CRM budgeting can accurately be nailed down almost to the digit.
In theory, yes.
In practice, just a week into the implementation process, you’re hitting your first roadblock: “What do they mean I have to pay that much for additional data storage?” And over time, the road to CRM success becomes a lot bumpier, as more unexpected expenses arise.
But planning CRM costs – even if you’re a first-time user – don’t have to be that way. To future-proof your implementation endeavor and put you on the right (and profitable) track, we’re here to uncover the hidden costs, help you avoid them, and share some considerations why hiring an implementation partner might be a good idea.
Table of Contents
- CRM system cost factors and why they’re deceiving
- CRM implementation, step by step
- CRM implementation cost breakdown
- Tips and tricks for your CRM implementation budget
- Common sources of hidden costs and fees
CRM system cost factors and why they’re deceiving
Given its unparalleled supremacy and surplus of choices in the CRM industry, let’s use Salesforce as an example of how CRMs often offer their services, especially cloud-based ones. Cloud-hosted CRMs are by far the most popular type nowadays and should be your go-to choice unless you have particular concerns about server uptime or compliance with data laws. Those also require a lot less upfront investment, making it ideal for most startups and small companies.
Salesforce splits its Sales Cloud licenses, or “editions”, into four core packages:
- Essential – $25/user per month for up to 10 users, billed annually. It includes lead and campaign management, email integration, and Salesforce’s mobile app. Aimed at small businesses, it’s the closest to a fully out-of-the-box solution one could get.
- Professional – $75/user/month, unlimited users. It has everything from Essential, plus a handful of extra features to enable better lead tracking and planning of entire sales cycles.
- Enterprise – $150/user/month, unlimited users. It builds upon Professional by offering more data and contract tracking for multiple sales departments, as well as truly opening up the platform’s customization possibilities.
- Unlimited – $300/user/month, unlimited users. All of Enterprise, plus 24/7 Salesforce support and a near-infinite number of customization options. As the joke goes, a skilled team could run a small country with this one.
But here’s the catch: As much as companies would love to napkin-scribble their amount of intended users, times the price of the license chosen, times 12 months to produce their sweat-free annual CRM budget, the problem arises from the fact that Salesforce is not a ready-made product. Nor are the vast majority of CRMs.
The prices above regarding the cost to use the license, and only that. Implementation isn’t included — meaning you’ll still need someone to perform legacy data migrations, customizations, integrations, user training, post-launch support, and even consulting for which separately paid add-ons you might want (and the list is huge).
For that, someone must scrutinize the exact needs of your company to understand and pinpoint which Salesforce features will work for you — otherwise, you run the risk of paying for Adobe Photoshop when what you really needed was Illustrator. It’s often at this crucial step that companies decide to work with an outside implementation partner.
CRM implementation, step by step
To give an idea of the amount of work, people, and brainpower involved in properly deploying a CRM solution, here’s a rough summary of how a typical CRM implementation process goes:
- Discovery – The purpose here is to identify your user groups according to their needs, foresight what your ideal processes should be, and which CRM requirements would take to get there.
- Planning – “Does this CRM configuration cover all existing business needs, including short-to-mid term projected ones?”. If yes, the project scope and implementation roadmap can be drafted.
- Development and testing – Moving from theory to practice, the system is configured and customized, data is migrated, integrations installed, access levels and permissions set, and the whole work is tested.
- User acceptance testing – With the software operational, it now has to pass your end-users practical needs, akin to a demo. Their feedback is essential to finetune the system before going live.
- Release – With proper testing and patching made beforehand, deployment should be more of a celebratory milestone than anything else.
- Training – A CRM solution is only as useful as what end-users can do with it. It’s paramount to train and onboard employees within the new system to break resistance and achieve fast adoption, ideally before release.
As a rule of thumb, the more thorough and precise the Discovery and Planning sessions are, the better the result tends to be, performance and ROI-wise.
Most trusted implementation partners will give you reliable quotes about how much their service costs. Some charge per task/hour — as in consulting costs X, data migration costs Y, template creation costs Z — while others will calculate fees on a per-project basis and hand you a final sum, often negotiable. The important detail here is that, unless you want your partner to perform support/maintenance duties post-implementation, this investment is a one-time deal.
Understanding those practices allows us to better draft a CRM implementation budget that falls into a reasonable ballpark.
CRM implementation cost breakdown
Here are some numbers to serve as a good starting point:
- Planning – Planning doesn’t cost cash as much as it consumes your man-hours, and it’s preferably done with a dedicated team from your side to devote full attention to this task. A complete system rollout can take a month or more of a small team’s work. In most cases, it will take around a week or two.
- Implementation service – This is where prices tend to vary a lot, and scouting for quotes is key. Overall, a grounded expectation is for a full implementation service to cost around the same as the initial investment into the CRM platform itself — but, as mentioned, paid only once.
- User training – The more users you have, the more users must be trained — doubly so if multiple departments are involved. General web courses run for about $1,500, but tailor-made onsite training can run upwards of $15,000 per department if yours is a big enterprise. A company employing 15 people would hardly ever go beyond $5,000.
- Support – Opting for the continuous support of an implementation partner usually adds 15% of your original implementation costs as a premium to your ongoing costs bill.
Tips and tricks for your CRM implementation budget
CRM implementation budgets are all about defining priorities and timelines. Best practices include:
- Establish a hard limit to over budgeting – Budget emergencies can happen even if no management mistakes are made. Your wallet isn’t bottomless, however, and no CRM implementation should ever put you into overdraft. This limit can be established focused on money — i.e. 20% beyond the estimated amount — or ROI metrics — i.e. 30% longer time to break even on the investment.
- Disclose your budget expectations to your implementation partner – Once you find a partner you can trust, don’t be afraid to be fully transparent with them — after you, they’re the most interested stakeholder in executing a great job (and retaining a client). Being thorough with your budget expectations helps your partner plan the implementation better and make the most out of your coin.
- Must-haves are mandatory. Nice-to-haves aren’t – No matter how flashy a feature feels like, if it doesn’t solve a fundamental business issue, put it on the back burner. It’s super easy to get carried away with every incremental upgrade multiple add-ons may provide, but if they’re overflowing your budget over minuscule ROIs, it’s fluff. Revisit those once your budget allocation is further pinned down.
- Don’t fall for the sunken cost fallacy – CRM implementation, especially when done for the first time, is a massive workflow overhaul. Beyond that, it’s an iterative process that will be far from over at launch, lasting you for years. Do not hesitate to review major decisions, including ditching providers, if the result isn’t shaping up to your gusto. Course correcting your implementation will pay off in the long haul.
Common sources of hidden costs and fees
Those are where a contract’s fine print can catch you by surprise. Be extra aware of:
- Ongoing costs – The bulk of your ongoing costs will be license renewal fees, but not only. Nice-to-have third-party add-ons are also mostly charged per user/month, and grabbing a lot of those increases ongoing costs fast.
- Optional features – After a discovery session, implementation partners might suggest optional features you haven’t thought of, and thus weren’t included in your original budget ballpark. The final word is always yours, but don’t be scared if the proposed solution is way past your initial expectations.
- Unfactored scaling – Remember, a key factor in a CRM subscription price is the number of users. When your company grows, it will demand additional users (or even licenses), and a CRM’s price per user doesn’t always scale in proportion. Be sure to future-proof your CRM solution by clearing this out beforehand.
- Discount expiration – Many CRM providers are open to negotiating discounts to the MSRP price for new clients or multi-year agreements. Letting it expire without a renegotiation can increase a CRM subscription substantially, and catch your projected budget by surprise.
- Opportunity costs – This one is often disregarded since it’s hard to quantify, but it’s very, very real. A badly-projected CRM implementation eats up man-hours without living up to its full expectations, and as a result, your investment will take way longer to pay off. Hence why it’s crucial to do it once, and do it right.
An experienced partner is your secret weapon
The best possible advice to be given regarding CRM implementation is to never do it alone. A small startup with savvy developers may get away with it, but for any company with more than ten employees, there isn’t much of a reason to not delegate it to a specialized vendor.
An external partner determines what CRM editions and features can bring maximum value — and, most importantly, at a reasonable cost — while you can focus on bigger-picture strategic objectives and growing your business.
When done with thorough preparation and expert assistance, Salesforce implementation can bring a four-year investment return average of 300~500%, not to mention IT cost reductions and organizational enhancements.
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