How to find the ROI for Salesforce
There are very few conversations about choosing a new CRM where Salesforce doesn’t come up. When you’re choosing something as important as a new Customer Relationship Management tool, bottom-line results reign supreme. And if you need to convince the decision-makers at your company (or even yourself!), you need tangible ROI.
When evaluating technology solutions that may benefit your organization, executives will undoubtedly ask you at least three questions:
- What are we getting for our money?
- What is the ROI?
- What is the adoption rate for each system?
At one time or another, you have probably heard at least one of these questions. Successful businesses do a cost-benefit analysis on all significant uses of money, and the greater a particular use of funds, the stricter a cost-benefit assessment should be. Costs and benefits, in most cases, are hard to determine but don’t let perfection be the enemy of valuable information.
This article will break down the various ways to find the ROI of Salesforce for your specific business needs.
Two metrics for determining Salesforce ROI
- For Salesforce products related to sales, profit increase is the key metric to consider. Profit is the difference between increased revenue from sales and all related costs.
- Net savings are another key metric to consider. Net savings are the difference between the costs associated with the new system and related cost reductions.
Calculating ROI based on profit gains
You can determine profit by calculating the increase in sales for a relevant period of time since implementing Salesforce, multiplied by your gross profit margin, and divided by the total cost of the platform (including admin and development costs and Salesforce partners). The time period needs to be long enough to show impact.
Calculating profit: (increase in sales x profit margin) / total cost of Salesforce
ROI can be calculated over different periods of time and monitored accordingly. This calculation often needs to be refined because the ROI profit and increase in sales may be caused by a number of other factors besides Salesforce, such as:
- New investments in marketing
- New salespeople
- New products and pricing
- New relationships
One possible approach is to estimate the impact each major initiative has on the increased revenue and define this impact as a percentage. For example, if Salesforce impacted the revenue increase by 25 percent, multiply 25 percent by the ROI calculated to find the profit related to Salesforce.
For example, if Salesforce impacted the revenue by 25 percent, multiply 25 percent by the increase in sales for the relevant period, multiplied by the gross profit percentage, and divided by Salesforce total costs. You can also take the ROI number calculated at the beginning of this section and multiply it by 25 percent.
Calculating ROI based on net savings from process improvement
For simplification purposes, Salesforce and related benefits from process improvements become one.
You can take the aggregate of the cost reductions for the relevant period relating to Salesforce process improvements, less the total cost of the platform (including admin costs and Salesforce partners) for the same time period. In this case, as well, the time period should be long enough to show impact.
However, actual situations may be much more complex. For example, in a particular operational area, new managers, new employees, and new processes can create cost savings. In that case, the same approach can be used by multiplying the net savings by the percentage of improvement attributable to Salesforce.
Increase ROI with Salesforce by increasing user adoption
Increasing user adoption for Salesforce is absolutely important, and adoption rates must be measured and monitored to ensure high levels are consistently achieved. Low adoption rates indicate problems that should receive immediate attention.
In addition, if parallel systems, such as Excel, and legacy systems, continue to be used after implementing the new system, the parallel system should be eliminated.
In addition to increasing user adoption, a business can also have qualitative ROI considerations such as improved morale, attracting better talent, becoming more green, consistent legal compliance, etc. Achievement of these objectives may also play a major role in ROI considerations.
About the author
Spencer Pereira has a degree in integrated marketing communications and writing. He has worked in various marketing roles at Google and Valmont Industries.Tags: adoption, Analytics, ROI, Salesforce