The hidden costs in a CRM Implementation

“So… what’s this CRM gonna cost us?”

Ah, the dreaded budget question. When it comes to CRM implementation, this question can seem impossible to answer. They almost never cost face value. There’s the initial cost, cost per user, customization, and…

“C’mon, gimme a ballpark.”

Wrigley Field.

But in all seriousness, what does a CRM implementation cost? How do you begin to calculate and set a budget for one?

The true cost of a CRM implementation is rarely understood when the process begins. Because of this, improper funding is one of the main reasons for CRM implementation failure.

CRM implementation costs fall into 1 of 2 categories:

  • Transparent
  • Hidden

Within these categories, you’ll pay for them in 1 of 2 ways:

  • Money
  • Time

This leaves us with 4 types of CRM implementation costs:

  1. Transparent fees
  2. Transparent time investments
  3. Hidden fees
  4. Hidden time investments

This post will go through each variety of CRM implementation cost – and where you can expect to find them.

Transparent costs

CRM vendors are upfront about some costs for implementation. And some of the implementation steps clearly take up some of your time.

Transparen-SEE? …alright that was bad.

These costs are the easiest to spot and include in your budget. These are the ‘main’ costs of a CRM implementation.

Transparent fees fall into 4 categories:

  • Subscription costs
  • Service level costs
  • Cost per user
  • Implementation fees

Transparent time investments correspond to the 5 stages of the CRM implementation process

  • Discovery
  • Selection
  • Data preparation
  • Implementation
  • Training

Transparent fees

In the CRM implementation process, the first transparent fee is your subscription cost, or the price you pay to have access to the system. There are a few types of CRM subscriptions.

You’ll have to decide between cloud CRM or an on-premise CRM.

Cloud CRM vs. on-premise CRM

cloud CRM is a system that lives online –you pay a subscription fee to get a license for your business. Cloud CRMs give you more flexibility in customization and payment options, are easier to scale up, and offer remote-access for all of your devices.

An on-premise CRM is a system you purchase up front (for a whole lot of money). You own it. It exists on your servers. The maintenance, updates, and uptime are your responsibility.

Cloud CRMs are popular because of their ability to scale, adapt, and be accessed remotely

Cloud CRMs are rapidly replacing on-premise CRMs. Cloud CRMs take less upfront investment and offer more options for subscription.

You might choose an on-premise CRM if you manage sensitive data, or need complete control over the system (often for reasons related to compliance with regulations).

Cloud-based CRMs usually offer a few options:

  • Monthly subscriptions (these are the most common)
  • Annual subscriptions (usually available, and often comes with a discount)
  • Quarterly subscriptions (rare, but sometimes possible)

Service level costs

Your service level cost is determined by 3 factors:

  • Plan level – the service package you purchase from the vendor
  • Volume – the number of records, contacts, or data points you can store for a certain price
  • Add-ons – the premium features, integrations, or capabilities you can add after the fact

In the software-as-a-service (SaaS) model, CRM vendors offer various ‘levels’ or ‘tiers’ of a CRM platform. Each plan level contains a particular bundle of features and capabilities.

Each plan builds on the previous plan, offering more features. These higher level plans are accompanied by a higher price level as well.

As your business grows, so will your CRM needs. Cloud-based CRMs are able to grow and scale with you and provide the tools you need.

Another cost factor in the tiered service model is volume. As your CRM use grows, so will the number of contact records, organizations, and the total amount of customer information you need to keep track of.

Contact-based CRMs enforce a limit on the number of records you can store for a certain price. Once you approach that limit you might be notified (or you might not). Then it’s decision time:

  • Upgrade your contact/record limit
  • Clean up your list and create some room
  • Find out you’ve been billed for an upgraded plan without being notified, surprise!

SaaS CRMs make it simple to upgrade (or downgrade) your plan-type or limit within the platform, further highlighting the benefit of scalability.

What if there’s just 1 or 2 features that you really need but can’t justify the price jump from your current plan to the next?

Some CRM vendors will offer add-ons to give you just that. Add-ons can be free or come at an additional charge.

Examples of free add-ons are:

  • Native integrations with other tools
  • Basic dashboard customization
  • Basic reporting and analytics

Premium add-ons include:

  • Advanced reporting and analytics
  • Advanced dashboard customization
  • Artificial intelligence or machine learning capabilities
  • 3rd party integrations

Add-ons are a great way to increase your CRM capabilities without breaking the bank. But you should always make sure about the cost of an add-on, as they’re a common way for CRM vendors to sneak additional fees into your bill.

Cost per user

Some CRM plans or service levels may only allow for a set amount of users. Other CRM vendors allow for adding individual users (seats) for a set amount more per month.

The number of users for any given plan will be denoted within the plan’s description.

There are other scenarios where a fee may be needed to access particular features or add-ons for a plan.

Implementation fees

Once you’ve decided on a vendor and plan level, it’s time to roll your CRM out. Unless you’re someone with extensive developer skills, you’re going to need some help with implementation.

Vendors offer setup and implementation services, and these range in cost according to the scope of the implementation.

Here are a few of the implementation services you could be offered:

  • Building customized dashboards
  • Automated workflow creation
  • Template creation
  • Consulting services
  • Data migration
  • Contact import
  • Workflow export/import

If you do all of this, it can end up costing you a lot of money.

Implementations are a bit of a gray area. Some vendors don’t tell you how much these services cost.. Always check with the vendor directly –you’ll avoid the surprise of an unknown fee.

Implementation fees can pile up in a hurry. Expect to spend $1 on implementation for every $1 you spend on an annual CRM subscription.

Even this rule can be a conservative estimate. Some estimates range from $1,200 to $5,000 in implementation fees.

We recognize that your organization needs a CRM that can be set up and used quickly, without breaking the bank. That’s why:

  • We recognize that learning a new system or switching over can be daunting. To help you with this, we offer training sessions, 1on1s, and in depth onboarding

Your CRM exists to improve your customer relationships and your visibility into them. This should start with the relationship you have with your CRM vendor.

Transparent time investments

Setting up your CRM takes time – but not everyone realizes that time is an important cost of implementation. Time is money. So if you underestimate how much time you need, you’re going to spend way more than you wanted to.

The larger the team, the longer the CRM implementation

CRM implementation can take 0 weeks, 15 weeks, or years – but a lot of companies still don’t spend enough time on it!

There’s a cost of time, but the cost of cutting corners will come back to bite you (when you can’t find the crucial information you need to close a deal, or you discover that your sales forecasts were dangerously inaccurate).

What would you actually use a CRM for?

“The deeper your team goes into defining requirements before selecting a CRM system, the more successful your CRM implementation will be.” – Steve Chipman

A thorough CRM discovery has 5 areas:

  1. List of feature requirements
  2. Business requirements
  3. Non-functional requirements
  4. Functional requirements
  5. System design

List of feature requirements – Create a list of ‘need-to-have’ and ‘nice-to-have’ features. What do you need each feature to do for you?

  • Contact management
  • Email marketing and automation
  • Opportunity management
  • Sales analytics & sales reporting
  • Workflow automation
  • Account management

Business requirements – What problems do you have? Which processes feel chaotic and messy? Where do you start losing leads? Who needs to communicate – and what information are you losing?

Non-functional requirements – How fast are you growing? How much information are you adding? What would it mean if the system went down? How important is your stored customer information? Things to consider here are:

  • Uptime
  • CRM scalability
  • Backup & disaster recovery
  • Cost (of course)

Functional requirements – What specific things must the system do for your business processes? What specific use cases do you have? What are the steps of each process? Where does account ownership change? What does your prospecting process look like? Your sales process? What about onboarding?

Drill down deeper than just features.

Be sure to think about this question from the perspective of each team who will be using the tool.

Each team or department that will use the CRM should be part of the discovery conversation.

  • Sales
  • Marketing
  • Executive leadership
  • Support
  • Operations
  • Finance

System design – What’s it going to look like? Will different teams need different dashboards? What information will be shown in each dashboard? How will that information be displayed? How will users interface with it?

Do yourself a favor and invest the time. The process gets easier when the goal is clear.

When you choose a CRM…

When you have a list of what you need your system to do, give that list to the CRM vendors.

If a CRM doesn’t meet 60% of your requirements, look elsewhere.

If you can’t find anything that meets 60% of your requirements, you have a few options:

  • Build a custom CRM
  • Give up some less important features
  • Customize an existing CRM

Once you find a CRM that meets an acceptable level of your requirements, try it out. Many SaaS CRM vendors offer a free trial so you can test the system.

Test out the potential solutions and see which one works for you.

If you’d like some guidance, many companies will have someone give you a demo of their software.

Keep in mind that a trial version of the software may include or exclude certain features of the CRM. Clarify the details with each vendor.

Is your data ready?

Make sure your data is clean and ready for the new system. A regular data audit should be part of your CRM maintenance, but it’s especially important before you move to a new system.

Follow these 7-steps to make sure your data is ready:

  1. Locate all information
  2. Prioritize the information by value to your business
  3. Remove any duplicate or incorrect information
  4. Resolve any conflicting information
  5. Add data where it is missing
  6. Create a uniform system for data entry
  7. Repeat audit process at least once every year

Data is the lifeblood of your CRM. The quality of your customer information impacts every role that is customer-facing. Invest the needed time to get your data right.

Ok, time to actually set this thing up

There are 5 steps in the CRM implementation process:

  1. Choose your toughest problems to solve
  2. Keep your data clean and organized
  3. Migrate your customer information into your CRM
  4. Set up automations and integrate other tools
  5. Train your team (and yourself) for better CRM implementation

More data = more time (and sometimes more money).

Training (aka, does your team know how to use this thing?)

You put all this work into finding the perfect software – the tool that’s going to handle all your customer info and follow up problems.

And then… no one uses it

If your team doesn’t know how to use the system, you’ll still have all of your problems – and an expensive CRM covered in dust and wasted potential.

Rule of thumb: Half a day to a day of training for each major software tool your employees will be using.

Hidden costs

“No hidden fees!”

“You get what you pay for!”

“No extra charges!”

Sound familiar? Maybe you heard it from that guy with the mustache in that one used car dealership commercial?

Hidden fees exist. The price you see isn’t always the price you pay.

Same goes for CRM.

What kind of hidden costs could you run into?

  • A service fee no one told you about
  • A premium add-on you thought was included
  • An afternoon spent figuring out why your workflows don’t work (or flow)

Hidden fees

Hidden CRM fees happen for 2 reasons:

  1. Vendors aren’t totally honest about their prices
  2. Customers don’t ask enough questions

If you don’t ask outright, the vendor won’t tell you. They’d rather get you to pay them more (and find out the hard way).

These surprise fees hide in the details. If you want to avoid them, ask clarifying questions.

Common hidden fee hiding places include:

  • Adding users
  • Customization
  • Data migration
  • Staff overtime during implementation
  • Minimum contract terms
  • Ongoing training and customer support
  • Premium add-ons

Adding users is an easy place for a vendor to insert a hidden fee. Sometimes the ‘cost-per-user’ is stated directly. Sometimes the plan includes a set amount of users. If you can’t find either, ask the vendor.

Customization means different things from vendor to vendor. It’s important to know what is considered premium customization and what is not. What you talked about as an included feature may all of a sudden become an added service.

Some things to clarify with your CRM vendor:

  • Custom dashboards
    • How many dashboards can you create until charged?
    • Are there limits on what you can include?
    • Do you get training or support?
  • Custom pipelines
    • How many pipelines can you create?
    • Is there a limit on the size of a pipeline?
  • Custom fields
    • Is there a limit on the number of custom fields you can add?
  • Custom workflows
    • How many workflows can you create?
    • Are there limits on size or steps?
  • Custom user permissions
    • Can you manage the access of your team?
    • To what extent?

Data migration and information import is a service people often offer. Before you sign up, ask if this service is included or premium. If it’s a premium, it gets expensive fast!

Staff overtime during implementation comes into play when the CRM implementation process requires hands-on support from the vendor company. This staff could take their time and end up charging you 1.5 – 2x the price to get it done.

Minimum contract terms almost never come out during the pricing or negotiation talks unless you specifically ask. Some common CRM contract pitfalls include:

  • Named user vs. Concurrent user
    • Is the fee based on the number of CRM users or total employees?
  • Renewal cycle
    • Is there a minimum on renewals?
    • Is your contract set for automatic renewal or upgrade?
  • Security
    • Who is responsible in the event of a breach?
    • Are there minimum security measures you must provide?

Ongoing training and customer support can get costly if you run into problems. In the buying process, a vendor might conveniently forget to mention the steep hourly rate.

Premium add-ons are things like integrations, analytics, reporting, or intelligence-based features that are advertised in the buying process but then hidden behind paywalls once you purchase.

This is typically done by giving you a taste of a feature free – and then charging you for full access.

For example:

  • You might be able to link your email address and view the email history with a contact in their CRM profile, but sending them an email directly from the CRM comes at a price
  • You can see the total number of new leads as they come in, but it costs extra to see their source
  • Basic metrics like, ‘number of emails opened’ and ‘win-rate’ are given for free, but seeing the individual email addresses or ‘average sales cycle length’ come at a price

One hidden fee that you won’t avoid with these questions is training. Training is certainly a time investment, but also a hidden monetary cost.

Why?

A team that doesn’t know how to use your CRM gets less done.

When you have someone run the CRM training for new hires, it takes away from them doing their actual job. Unless you have a CRM administrator, in which case it would be their actual job to train your employees.

However filling this role requires paying an annual salary. A CRM admin has a median salary of about $63,000 a year.

How do we avoid hidden fees?

Hidden fees suck. So we don’t add them, and do a bunch of things to help you avoid them:

  • There’s no limit to the number of pipelines, custom fields, or automations you can build
  • Our customization capabilities are clearly stated
  • Free migration services
  • Ongoing support options & complimentary on-boarding services
  • Clear about what is included within each plan
  • Directory of certified consultants for additional services

Hidden time investments

What happens if you don’t realize how big a project is until after you’ve started?

Steps that you didn’t even realize existed can eat away at your time – and create expensive setbacks.

“Why is this taking so long?!” – Someone you don’t want to be

Where do the time-sucks happen? Mostly these two phases:

  1. Discovery
  2. Data clean up & migration

Mapping your requirements is tedious. It might seem like overkill. But when you really understand exactly what you need, you won’t waste time setting up features that you ultimately won’t use.

Poor discovery bleeds into everything that comes after it, making each phase longer than the last:

  • Choosing a CRM becomes a guessing game
  • Your trials and demos are wasted on aimless exploration (not focused evaluation)
  • You bump into problems you never knew existed
  • The customization process is takes forever because you don’t know what you’re trying to build
  • The tool doesn’t do everything your team needs it to – so they wind up not using it

If you set up your CRM poorly, you might have to set it up again. From scratch.

The thing is, none of this needs to happen. With a proper discovery:

  • Choosing a CRM is straightforward because you know exactly what you’re looking for
  • You use free trials to study each feature on your wishlist
  • You know exactly which questions to ask during a demo
  • You know which problems you might run into – and you have plans to deal with them before they happen
  • You already have a blueprint for how you’ll customize your CRM
  • Your team’s use cases and pain points are addressed, and people actually use the CRM

Data migration is the second area that’s vulnerable to hidden time investments. In fact – it usually takes longer than people think it will.

As a business, bad customer information is your enemy. Don’t underestimate:

  • The amount of customer information you have
  • The time it takes to locate incorrect information
  • The difficulty of finding correct information
  • The importance of good data to your business

Conclusion: the true cost of implementing a CRM

Whether you’re a team of 2 or 2,000, implementing a CRM for your business is a big deal. It takes time, money, and effort.

Too often a CRM implementation will go off the rails. How?

  • It goes over budget
  • Months past the deadline, implementation still isn’t finished
  • Failure to meet expectations (even after set-up)
  • Minimal user adoption

When you understand where the costs are, you can keep your project on track. Your budget and deadlines will be more accurate. You can more effectively set expectations for the tool and deliver a CRM that solves the problems most important to your business.

There are 4 types of costs in implementing a CRM system:

1. Transparent fees:

  • Subscription
  • Service level
  • Add-ons
  • Cost per user
  • Implementation

2. Transparent time investments:

  • Discovery
  • Selection
  • Data preparation
  • Actual implementation
  • Training

3. Hidden fees:

  • Adding users
  • Customization
  • Data migration
  • Staff overtime during implementation
  • Minimum contract terms
  • Ongoing training and customer support
  • Premium add-ons
  • Training

4. Hidden time investments:

  • Discovery
  • Data clean up & migration

When you see that the cost of CRM implementation is more than just a dollar amount, you can spot the hidden costs – and plan for them.

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