Constantly interacting with customers has never been more important, and this comes with an associated cost for the brands.
As a D2C brand, every investment you make needs to be evaluated for its return on investment (ROI), right from running marketing campaigns to evaluating the ROI on software used by sales.
But how do you measure the ROI of something that's all about improving customer experience?
The answer lies in understanding the impact that a specific product, a CRM in this case, has on key business metrics like sales, customer satisfaction, and retention. By tracking these metrics over time, you can see how your system is helping you achieve your business goals.
Studies show that businesses can see a significant return on their CRM investment, with an average ROI of $8.71 for every dollar spent.
This translates to a whopping 789% return on investment!
Of course, there are more sophisticated ways to measure ROI, such as calculating the cost per lead or the customer lifetime value (CLV). But even simple tracking can give you valuable insights into the effectiveness of your CRM investment.
So, don't just assume that your CRM is working – measure it and see for yourself.
In this blog, we’ll help you evaluate how well your Omnichannel CRM is performing.
What ROI should businesses expect from a CRM?
Imagine you're a business owner who wants to make sure every dollar you invest is worth it.
You’ve heard a lot about a CRM system being a valuable investment for businesses of all sizes, but what kind of return on investment (ROI) can you expect for your D2C brand?
With a CRM system generating returns over 800%, have you thought about how is it able to do so?
If not, here are some of the ways a CRM can help your business grow:
- Increase sales
- Improve customer satisfaction
- Boost productivity
- Deeper customer insights
- Informed decision-making
- Engaged employees
With an Omnichannel CRM like Pragma, your team can automate sales, marketing, and customer support teams - helping you increase marketing and sales-qualified leads, and at the same time freeing up your team's time for more critical tasks.
How to measure the ROI of CRM
Remember you were that business owner who was planning to invest in an Omnichannel CRM?
Imagine that now you've put in the time, money, and effort to implement a CRM system, but how do you know if it's making a difference?
To measure the difference, e-commerce brands can simply take into account the revenue and expenses post the introduction of an Omnichannel CRM. This is called Return on Investment, or ROI.
ROI is a crucial metric for e-commerce businesses, as it measures the profitability of their marketing and sales efforts.
In simpler terms, ROI tells you how much money you're making for every rupee you spend on acquiring and retaining customers.
Calculating ROI for e-commerce
To calculate ROI, you'll need to track your revenue and net expenses which are described as:
- Revenue: This is the total amount of money you've generated from sales.
- Expenses: This includes all the costs associated with running your e-commerce business, such as marketing, advertising, product development, and shipping.
Once you have these numbers, you can use the following formula to calculate your ROI:
ROI = (Profit / Investment) x 100
For example, if you have generated ₹1,00,000 in profit from your e-commerce store and spent ₹20,000 on marketing and advertising, your ROI would be:
ROI = (₹1,00,000 / ₹20,000) x 100 = 500%
This means that for every rupee you spent on marketing and advertising, you earned ₹5 in revenue.
Let’s understand the different stages involved in ROI analysis based on the customer journey:
Stage 1: Awareness
The goal of the awareness stage is to get people to know about your e-commerce brand or product. This is the first step in the customer journey and helps in making a good brand recall value.
- Key metrics: Website traffic, social media engagement, brand mentions.
- Examples of marketing activities: Advertising, public relations, and social media campaigns.
- Tips for improving awareness: Create high-quality content, target the right audience, and use a variety of marketing channels.
ROI calculation for Awareness stage: If the revenue from new visitors on the website is ₹1,50,000, with ₹50,000 spent on social media campaigns, then the ROI would be:
ROI = (₹1,50,000 - ₹50,000) / ₹50,000 x 100 = 200%
Stage 2: Consideration
Once people are aware of your brand, you need to convince them that they should consider buying from you. This is where you need to educate them about your products or services and address their concerns.
- Key metrics: Leads generated, website traffic from organic search, time spent on the website.
- Examples of marketing activities: Content marketing, email marketing, and search engine optimisation (SEO).
- Tips for improving consideration: Offer valuable content, provide excellent customer service, and make it easy for people to learn more about your products or services.
ROI Calculation for Consideration stage: If ₹1,000 customers purchase a product post interacting with your email/content with an average order value of ₹500, the revenue generated is ₹5,00,000. The cost spent on email and content marketing software is ₹50,000.
ROI = (₹5,00,000 - ₹50,000) / ₹50,000 x 100 = 900%
Stage 3: Conversion
The conversion stage gets people to take action, such as buying a product, signing up for a newsletter, or downloading a white paper. This is the stage where you need to make a compelling offer and make it easy for people to convert.
- Key metrics: Sales, conversion rate, customer lifetime value (CLV).
- Examples of marketing activities: Landing pages, calls to action, and website optimisation.
- Tips for improving conversion: A great checkout page, make your offer stand out with better benefits and evaluate different conversion elements.
ROI Calculation for Conversion stage: Supposedly you invest ₹50,000 in adding heatmaps and other tools for website optimisation, and conversion has increased on those pages to generate ₹4,00,000. ROI would be:
ROI = (₹4,00,000 - ₹50,000) / ₹50,000 x 100 = 700%
Stage 4: Post-Purchase
The post-purchase stage is an opportunity to build customer loyalty and encourage repeat purchases. This is where you can provide excellent customer service, offer loyalty programs, and ask for feedback.
- Key metrics: Customer satisfaction, customer retention rate, net promoter score (NPS).
- Examples of marketing activities: Customer service, loyalty programs, and surveys.
- Tips for improving post-purchase: Provide excellent customer service, offer incentives for repeat purchases, ask for feedback and make improvements
ROI Calculation for Post-Purchase stage: If you spent ₹10,000 on cashback during a period on a loyalty program, and the new sales from repeat customers added up to ₹80,000, then:
ROI = (₹80,000 - ₹10,000) / ₹10,000 x 100 = 700%
Stage 5: Advocacy
The advocacy stage is when customers become advocates for your brand. This is where they can refer friends and family, write positive reviews, or participate in social media campaigns.
- Key metrics: Word-of-mouth marketing, social media shares, customer reviews.
- Examples of marketing activities: Referral programs, social media campaigns, customer appreciation events.
- Tips for improving advocacy: Make it easy for customers to share their experiences, encourage customers to participate in your brand community, and thank customers for their loyalty.
ROI Calculation for Advocacy stage: If you spent ₹20,000 on referral programs to earn ₹60,000, then
ROI = (₹60,000 - ₹20,000) / ₹20,000 x 100 = 200%
So overall ROI with the ROI of each step can be calculated by:
Overall ROI: (200% + 900% + 700% + 700% + 200%)/5 = 540%
This means that for every rupee invested, they generated about ₹5.4 in return across all stages of the customer journey.
What types of industries should invest in a CRM?
Practically any company with regular customer interactions or sales can benefit from using a CRM system.
As we mentioned the steps in the above section, if you think your growth plan has an outcome that is oriented to any one of the above benefits, we think you should invest in a CRM system going forward.
Generally, CRM systems are popular and useful in the following sectors but not limited to:
- E-commerce
Believe it or not, customer relationships are the backbone of success for any e-commerce brand.
A CRM system in an e-commerce industry helps you nurture these relationships by providing a centralised hub for all your customer data, from purchase history to preferences and interactions.
This data allows you to:
- Personalise marketing campaigns
- Provide targeted customer service
- Identify cross-selling and upselling opportunities
- Sending personalised product recommendations based on past purchases
- Resolving customer queries, etc.
A CRM makes these interactions seamless and effective, boosting customer satisfaction and loyalty.
- Retail
Whether you're running a brick-and-mortar store or an omnichannel retail experience, a CRM empowers you to bridge the gap between online and offline interactions.
By integrating data from various sources like:
- POS systems
- Loyalty programs
- Online and offline stores,
You can understand your customers' behaviour and preferences. This unified view allows you to offer personalised product recommendations, targeted promotions, and seamless customer service across all touchpoints.
As an example, imagine a customer walking into your store, and the sales associate already knows their preferences, purchase history, and any outstanding issues.
That's the power of CRM in action, creating a cohesive and personalised customer experience.
- Consumer Packaged Goods (CPG)
For a brand in the CPG industry, a CRM system helps them with insights into:
- Customer purchase patterns
- Brand loyalty
- Product reviews
- Historical data, etc.
This data allows you to tailor your marketing efforts, develop targeted product offerings, and identify potential customer segments.
A great way to put this to work is by analysing sales data to identify popular product combinations or to create personalised coupons based on purchase history.
- Manufacturing
Manufacturing businesses often deal with complex customer interactions and supply chain dynamics. A CRM system streamlines these processes by providing:
- A centralised platform for managing customer orders
- Tracking production schedules
- Coordinating with suppliers
- Efficient production planning
This helps the brands send real-time updates on customer orders, identify potential production delays early on, and proactively communicate with suppliers to ensure timely delivery.
Top CRM features that drive ROI
With those being the nitty-gritty of the CRM systems, we think as a D2C brand, there is a lot on your table when you choose a CRM system.
But remember, all that glitter is not gold!
What we mean by the above sentence is that the basis of the product you sell, the scale of your brand, the demographics of your customers and other factors, every feature that a CRM can offer might not be useful for your use case.
This is where a CRM system that can customise features based on your brand requirements becomes the need of the hour.
So before you start your hunt, we’ll mention some of the most common features that your CRM system should have:
- Contact and lead management
- Sales forecasting
- Reporting and analytics
- Help desk and customer support facility
- Marketing automation - Cross-channel communication
- Integration with other marketing and sales tools
Boosting your business with the right CRM
With this exhaustive guide, we’ve done our bit to help you understand how you can measure the ROI of your omnichannel CRM investment.
But how do you get the moving parts in place?
How do you identify that Omnichannel CRM which can track your daily operations, and help you analyse your hundreds and thousands of users all from a single dashboard?
This is where a platform with customisable features like Pragma’s Omnichannel CRM becomes useful and helps you reach your customers on their favourite communication platform, resolve queries instantly, offer personalised sales, and craft a delightful experience - all from one platform.
Not only this, but with Pragma, you can configure Quick Replies and keyboard shortcuts to save valuable time and manual effort and even offer multi-lingual support in 16+ languages while following up smartly with our powerful NLP.
Remember, with omnichannel engagement, brands can retain 89% of their customers.
If you are a D2C brand, we highly recommend you learn how you can start doubling down your sales funnel to hit the quarter target.
Let Pragma help you unlock the true potential of an Omnichannel CRM.
Until Next Time!
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