If used correctly, CRM can improve productivity by 30%. – Salesforce.
This productivity boost can be offset by a number of issues that come with ready-made CRM:
- Costs that spiral out of control;
- Too much time spent on onboarding;
- Costly integration with other products (especially if you use custom solutions);
- Poor scaling;
- Insufficient automation;
- Data migration issues;
- Lack of custom features and workflows, etc.
Now, let’s see how custom CRM solutions stack up against these issues.
Most of CRM systems are SaaS products with monthly subscriptions. The amount you pay depends on the number of users in your organization and the available features.
Starter plans cost as low as $12/month per user but come with a number of limitations.
They suit the smallest of businesses and can be used to demo several products.
However, such plans quickly become insufficient as your business grows.
You might find that they only support up to 3 users or miss some critical features. The vendor might later push some of the essential capabilities into more expensive plans. And without sufficient automation (seldom available in cheap plans), your employees may quit using a CRM as they may find using it overwhelming.
Most enterprises will, at some point, have to switch to a more expensive plan.
But CRM costs will still grow over time. Each salesperson you hire will need daily access to the system. Marketing, customer support, management, logistics, and other departments will need to occasionally check into the CRM.
You’ll either have to pay for all of them or limit the effectiveness of your system.
That’s why enterprises end up paying on average $150/user/month (which is, coincidentally, the price of most popular Salesforce Enterprise package).
CRM is a long-term investment, so its cost comprises of:
- The price of software over 2-10 years;
- The price of hardware (in case of on-premise CRM);
- Hidden costs that aren’t displayed on pricing pages (e.g. fees for setting up sandbox/testing environments in Salesforce); and
- Price of training, implementation, customization, data migration, upgrades, etc.
To calculate the costs of a ready-made operational CRM, count the number of people that will use the system.
Marketing and sales departments will need daily access to track leads, plan activities, develop advertising campaigns and gauge their effectiveness.
Management would occasionally like to view reports to get an accurate overview.
And customer support would like to access tickets and customer info.
Even mid-size enterprises can easily reach 30+ users.
Number of CRM users by department; source: capterra research
Now let’s calculate the cost of subscriptions for 30 employees over 3 years:
$150 x 30 users x12 months x 3 years = $162,000
But is it cheaper to develop a custom CRM?
The costs will depend on the number of features, their technical complexity, developer experience and location, as well as your non-functional requirements (e.g. security, reliability).
As such systems vary greatly depending on company needs and internal processes, it’s impossible to come with exact numbers. We can, however, get a rough estimate based on the time it takes to develop typical features.
*Note: These are very approximate numbers assuming the average developer rates in Central and Eastern Europe at $35.
|Standard features||Time to develop||Cost*|
|Pre-development activities (requirements analysis, selecting tech stack and architecture, etc.)||100 hours||$3500|
|Address book and lead management (manual entry)||40 hours||$1400|
|Calendar with notifications and reminders||60 hours||$2100|
|Task management||200 hours||$7000|
|File sharing||80 hours||$2800|
|Dashboard and reporting||200 hours||$7000|
|User access levels||200 hours||$7000|
|Total||Up to 880 hours||Up to $30,800|
Building a fully functional CRM will cost you around $30,800. But if you need a custom system, you most likely want some of the more advanced features.
|Advanced features||Time to develop||Cost*|
|Invoicing module||200+ hours (depends on the number of payment channels, subscriptions or one-time invoicing)||$7000|
|Lead scoring||100 hours||$3500|
|Social media integration||120 hours||$4200|
|Sales pipeline||200 hours||$7000|
|Integrations (G Suite, ERP, invoicing, custom software, etc.)||180+ hours (depends on the number of integrations)||$6300|
|Automated lead generation||120 hours||$4200|
|Email marketing||60 hours||$2100|
|Chatbot integration||120 hours||$4200|
|Call center management||80 hours||$2800|
If you have a lot of employees, a custom CRM system can be cheaper than a ready-made solution. For example, Salesforce Lightning Enterprise for 30 users will cost you $162 000 over 3 years vs. ~ $75,000 for a comparable custom system.
You can use an out-of-the-box CRM within a few days of its purchase.
With custom CRM software, you’ll have to wait for developers to complete the system. From our experience, this will take at least 3 months. After that, you can use the system for as long as you need without any subscriptions.
#2 Lengthy onboarding
Employee training is another “hidden” cost of CRM adoption. While CRM for small businesses offer intuitive UI, enterprise applications are often bloated with features and have an outdated feel.
Top CRM software according to Softwareadvice research, February 2019
Training tens of your employees to use an enterprise application might take several months and require hiring a certified coach.
While adjusting to a new system, people will inevitably make mistakes affecting your bottom line. They could miss calls from clients or lose promising leads while their productivity suffers from switching to new workflows. This why fast onboarding and simple UI are crucial.
A custom solution only includes the features you absolutely need for your business cutting down training expenses. Moreover, such systems are usually based on existing workflows making the transition easier for your employees.
By offering familiar flows, a custom CRM will decrease the number of mistakes made during the onboarding period. For small companies, it makes more sense to choose an out-of-the-box CRM with an intuitive interface.
Off the shelf CRM offer extended functionality via paid add-ons or include them in more expensive packages.
Their APIs often come with a hefty price tag. For example, Salesforce API is only available in $150/300 plans
Integrating an off-the-shelf CRM with Gmail, invoicing systems, Office 365, telephony and other frequently requested apps is far from a trivial task. You’ll likely need to hire developers with extensive knowledge of the chosen CRM.
Things are even more complicated if you need to integrate your CRM with a custom ERP or other in-house tech (especially, legacy enterprise management software).
With a Custom CRM, developers can use an API-first approach to simplify future integrations and make the process more reliable.
Custom integrations can turn your CRM into a central hub for all departments (including sales, marketing, HR, finance, logistics, manufacturing, distribution, supply chain management, etc.) and kickstart successful digitization.
“22% of companies in our survey that are looking for CRM systems also say that they are looking for specialized features like project management, billing, donor management, membership, student information, and even logistics.” – Selecthub
As your business grows, you’ll likely want to expand CRM functionality to other departments to propagate automation and information sharing.
With a ready-made solution, you’ll need to switch to a more expensive plan (which might not include all the features you need), install add-ons (which can also be expensive) or even build and integrate your own extensions.
With a custom system, you can add users at no cost. Plus, you can build advanced capabilities like automated lead generation, event management, or predictive analytics. As you are the owner of the product, you can make any modifications you want or even sell your CRM to other companies.
32% of sales reps spend over an hour on data entry every day – Hubspot
Many off-the-shelf CRM require sales managers to manually enter all customer information. With dozens of mandatory fields, this process is extremely tedious.
When sales reps feel like they’re wasting their time compiling data, uploading recorded calls, and pasting customer replies, they won’t use CRM to the fullest no matter how much you’ve invested in it.
With a custom system, you can automate what you need. For instance, integrations with social media, email, and messengers can help you automatically collect customer data and free your team from repetitive tasks.
When transitioning to a new CRM, you’ll have to move data from your old system (or Excel files) without losing any information.
This presents a major technical challenge and can cost you a penny.
Even if you go for a ready-made solution, you’ll need to extract the necessary data, parse it and standardize before migrating it into the new CRM (and this often requires hiring specialists).
With custom CRM software, developers can design the system to support migration without data loss or altering business logic.
56% of CRM users name system customization as one of the most significant challenges in working with their CRM. – Software Advice survey.
Most ready-made CRMs are designed for an incredibly wide range of companies. The result is an extremely generic solution.
Imagine a glove that has to fit both a man and a child, a glove that could protect you from freezing winds, scorching sun, and shark teeth while looking absolutely fabulous.
Such CRM would fit some businesses but what if you have special needs
Maybe, your workflows are unique or you need to store, retrieve, and structure your data in a way that fits your business processes.
In the best case, you’ll have to purchase a more expensive plan or pay for add-ons.
For more extensive customization, you’ll have to hire certified CRM specialists and pay handsomely. Salesforce developers, for example, charge 30-200 USD depending on their expertise and location.
Sometimes, it’s easier to create a custom solution that fits your business like a glove. This is especially true if you operate in a narrow niche.
One of our clients needed a system to help various associations throughout Norway manage their members.
Associations wanted to manage subscriptions and engage members with various courses, meetups, and conferences. By automating their workflows and using the CRM solution to sell courses and tickets, associations boosted their revenue as more members turned into paying customers.
Even though each of the organizations had unique needs and workflows, it was 100% possible to serve their needs with a custom solution.
The system we’ve built with our client evolved into a full-blown CRM for managing a large number of members, companies and departments. On top of basic CRM features, it now includes:
- BankID for secure login and single sign on;
- GDPR compliance;
- Customizable reports;
- Population and business register integration;
- Finance and accounting system integration;
- EVRY Multikanal invoicing and subscriptions;
- Facebook Messenger chatbot;
- Email integration;
- Custom modules for associations, etc.
Unlike a ready-made solution, a custom CRM is created specifically for your business. CRM development team analyzes your requirements, dives deep into business processes, and creates a solution that fully satisfies your needs.
There are no unnecessary features.
You’ll get analytics and reporting capabilities that make the most sense for your company. If you have unique workflows, they can be digitized without making any changes.
On top of that, you get a team of experts to take care of all the post-implementation operations.
There’s a proven way to learn whether existing products satisfy the needs of your business:
Define the goals you want to achieve with the new CRM and understand its value to the company.
2. Organize a brainstorming session with people who will use the new system. Invite a representative from sales, marketing, customer support and every other department that will access your CRM.
3. Together, determine the complete list of features your company needs from a perfect CRM.
4. Assign each of these features a rating on a scale from 0 to 6 based on its importance.
5. Send the list of features as a Request for Information to CRM providers. Depending on their answers, you can assign each of the features another score on a scale from 0 to 6 (see the table below).
6. Now multiply both scores. When you add all the features together, you’ll get a number that shows how close a particular CRM is to satisfying the needs of your business.
If no product on the market reaches 60% of max score, it might be better to develop a custom CRM.
If a ready-made solution satisfies all your requirements, you can calculate the expenses and potential ROI over 3-5 years and plan CRM implementation.
To help you select the best solution, you can request demos from 2-3 top candidates. Ask about frequently reported issues and notice how willing the reps are to talk about these issues.
You can start with a basic package to try out the available functionality and understand how they fit with your processes. This will help you better understand your requirements and decide whether you need a custom CRM.
After doing the calculations and research, you are ready to write a business case that justifies the purchase of the chosen CRM or decide to pay for a custom system.
With the latter, your journey only begins.
You’ll have to find CRM developers you can trust, compare their estimates, and chose essential features for a minimum viable product. Once your organization succeeds with a CRM pilot, you can add advanced functionality and expand the system to other departments.
Whichever path you’ve chosen, make sure to subscribe to our monthly newsletter and get more good on business and tech!