20 Ways To Cut The Cost Of Your CRM Project

by Richard Boardman on December 11, 2010

Photograph courtesy of kevindooley

If you’re looking to cut the costs of implementing a CRM system, then here are 20 ways (split over two posts):

Do you really need new CRM software? – sometimes organisations already have CRM software, but it just isn’t working well for them. The temptation is often to replace it with something new. However, the fault may not be with the software itself, but in the way it’s been implemented or used. Re-implementing what you already have is likely to be significantly cheaper than buying a new system.

Pick your shots – as I mentioned in my post on how to phase CRM projects, it’s generally best not to try and do too much in one go. If you can focus on the areas where you can achieve the greatest impact, you can lower costs, and increase the return on investment from the project.

Create a detailed requirements specification – this will allow you to solicit firm bids from prospective vendors in a competitive environment which will allow you to buy more cost effectively.

Don’t get locked in – one very expensive mistake a lot of organisations make is to commit to a vendor before the final costs for a project are known. This removes the incentive for a vendor to offer competitive pricing, and it’s is a lousy position to try and negotiate from.

Do you quality for a discount? – companies like Microsoft and Salesforce.com offer highly discounted software to certain sectors such as charities and educational establishments. If you think you may qualify, then it’s worth asking the question.

Haggle – most CRM software and service pricing is negotiable, so don’t be afraid to haggle. If there’s a large number of service days involved it may be worth getting an independent CRM consultant involved to verify that the quoted amounts are appropriate for the work involved. Quarter and year ends are time when vendors are most motivated to cut deals, and you will tend to negotiate much more successfully the less optimistic the prospective vendor is about their likelihood of winning your business.

Trade – there are a couple of dimensions to this, but you may be able to offer the products or services that your company provide in full or partial payment. You may also be able to trade in other ways, particularly in terms of you ability to act as a reference site.  Vendors are always anxious to secure new references particularly if they have a new product or are entering a new market. Your willingness to act as one could secure a substantial discount.

Terms matter – it’s not just what you pay for software and services that’s important, check the small print as well. There can be a range of hidden terms and costs that can become very expensive over the life of the system. Be aware of these and address them in your negotiations.

Don’t over-customise – the more customisation you do, the greater the implementation costs. While you should always tailor the system to meet your unique needs, organisations can be prone to adding unnecessary ‘frills’ to the system, or capabilities that later prove to be expensive white elephants. Keeping as close as possible to the out of the box capabilities and ruthlessly cutting out any development requirements that don’t add significant value can be a very effective way to cut costs.

Don’t get hooked up on labels – it’s often tempting to go for the known names in the industry, but you may be able to purchase much more cost effectively by looking to newer, less established vendors, where you aren’t paying a premium for the brand.

The next ten tips to reduce the cost of your CRM project will be in the next post.

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