“Calculating the investment side of ROI is comparatively easy,” says Indraneel Fuke, Director of Bhea Technologies.

“One needs to factor in recurring costs, such as software licences and subscriptions, and onetime costs, like CRM implementation, hardware which are zero for Cloudbased CRM and training costs.” However, calculating the return side of ROI requires a little more effort. There needs to be clarity over the business objectives a retailer sets out to achieve through CRM these objectives could be set at increasing customer retention by 30 per cent through being more responsive to feedback; or increasing the wallet share of existing customers by a quarter by identifying cross-selling opportunities; or possibly increasing new customer acquisition by 50 per cent by reaching out to a new target audience. You can evaluate the effectiveness of your CRM by measuring the additional sales it generates.

“To demonstrate this, we use Test & Control methodology to measure the impact,” says Reddy. “In this process, a group of customers with the same characteristics are identified and split into two groups a test group containing most of them and a control group with the remainder. The test group is exposed to communication designed using an integrated CRM approach, while the control group does not receive any targeted communication and relies instead on conventional methods of messaging, like newspaper & TV ads, to influence their purchasing decisions. The purchasing behavior of these groups are then evaluated for a defined period on parameters like rate of response per campaign, frequency of visits, average bill value and basket size, and their contribution to total sales. This test can be conducted across a number of clients, and we have seen an average increase of 5 per cent in sales from the group exposed to integrated CRM.”