Benefits as a Percentage of Turnover

Few companies that track benefits from CM projects find a relationship between the level of benefits and a particular percentage of turnover. The best one will get are ranges. Some idea of the possible benefit can be gleaned from the Hewson Group ^[8], who have reviewed various studies of the results of implementing CRM systems (though systems are, as we have seen, not the most important factor). As a caveat, they note that it is very difficult to assign benefits in this way. We concur with their reasons, which are that:

• There is rarely baseline data before a system is implemented.

• There are many other independent variables at work.

• Many benefits are soft and therefore hard to quantify.

None the less, they argue that CM programmes make a significant difference.

A convincing estimate of the benefits on offer comes from Insight Technology Group, which examined the effects of CM programmes where they are followed through to completion. Insight Technology identified that companies had achieved benefits (actual results) in five key areas, and these were the upper limits of the benefits achieved:

There is some evidence that smaller companies or business units can achieve greater benefits than larger companies. Singhal and Hendricks ^[9] state that most small firms believe that performance excellence is more relevant and applicable to larger firms. However, their research showed that small award-winning firms achieved on average 63 per cent increase in operating income, 39 per cent increase in sales, 17 per cent increase in return on sales, 21 per cent increase in employment and 42 per cent increase in assets. For each of these metrics the smaller award-winning firms outperformed the larger ones. Another interesting outcome was that high-capital-intensive award winners do not perform as well as lower-capital-intensive award winners. Great is small?

In summary, benefits as a proportion of turnover are potentially very large, but their variability implies that they clearly do not tell the whole story and should not be used alone to build a case for CRM investment.