The compelling financial case for gamification · 2014-12-17 · THE COMPELLING FINANCIAL CASE FOR...

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The compelling financial case for CRM gamification A BUSINESS CASE JUSTIFICATION

Transcript of The compelling financial case for gamification · 2014-12-17 · THE COMPELLING FINANCIAL CASE FOR...

The compelling financial case for CRM gamification

A BUSINESS CASE JUSTIFICATION

The compelling financial case for CRM gamification

A BUSINESS CASE JUSTIFICATION

It is likely that you are currently realizing just one-third of the predicted benefits that your original CRM business case justification suggested you would.

However, for a small percentage of your current CRM costs, gamification can unleash your CRM system’s true potential, allowing you to access over 80% of the originally predicted benefits.

A bold statement, but by re-visiting your original CRM business case justification, we can demonstrate how, by using gamification to motivate the right behaviors and so increase user adoption and engagement levels, you can deliver the boost in business performance that will bring you much closer to your original business case outcomes.

THE ORIGINAL CRM BUSINESS CASE: THE “REVENUE EQUATION”

You may recognize the following justification approach for CRM; it is a trusted and robust method that has been used for many years by CRM vendors to calculate and justify an investment in a well-tuned CRM system.

Fundamentally the justification revolves around generating a series of 5% productivity gains that in turn generate a 22% overall revenue increase.

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G4S CASE STUDYBy deploying gamification to motivate their sales

teams G4S realized:

• 86% increase in sales performance• 60% growth in “active” (well qualified) pipeline• 35% increase in the capture of new contacts• an increase to 98% user adoption

CRM vendors performed detailed analysis of their customer base and identified 83 potential benefit areas across the sales, marketing & customer service functions. These can be broadly grouped into 10 categories:

1. Improved Account Management2. Increased Sales, Marketing & Customer Service Operational Efficiency3. Improved Sales, Marketing & Customer Service Effectiveness4. Increased Forecast Accuracy5. Increased Customer Loyalty6. Improved Opportunity Management7. Increased Speed and Response Time8. Reduced Sales, Marketing & Customer Service Expense9. Improved Sales Management10. Increased Employee Retention

These benefits are then further aggregated into four key components that comprise the “Revenue Equation” (shown in the above graphic) which is then used to justify an investment:

Measure Explanation

Revenue Sales closed monthly

Lead Conversions Average number of qualified leads per month that are converted to opportunities

Win Rate Ratio of opportunities won to total opportunities per month

Average Deal Size Average size of an opportunity per month

Average Sales Cycle Average length of a sales cycle from when the sales representative creates the opportunity to when they close it

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Revenue = Lead Conversions * Win Rate * Average Deal Size

Average Sales Cycle

The proposition is that the efficiencies and effectiveness gained from the use of a CRM system will:

• increase your number of qualified leads• increase your win rate• increase your average deal size• decrease your average sales cycle

When the use of a CRM system moves the needle in each of these areas by say 5% then, according to the “Revenue Equation”, you would see the following revenue increase.

1.05 * 1.05 * 1.05Revenue = __________________ = 1.22 or a 22% increase! 0.95

So, for example, the introduction of a well-tuned CRM system should elevate a sales representative currently selling $500K per annum to sales of $610K per annum.

THE DAY-TO-DAY REALITY OF CRM ADOPTION

This logic is very easy to buy into, however unfortunately it fails to take into account one important factor - the impact of human behavior!

The revenue equation above demonstrated that there was a 22% revenue gain to be made from deploying a well-tuned CRM system. However, this gain is not accessed unless the end user first adopts the technology and then, after adopting, uses it effectively.

The all too common reality is that most organizations do not end up with a well-implemented, well-tuned CRM system that drives best practice sales, marketing and customer service processes.

For example, sales reps often mistrust CRM systems seeing them as a management tool that offer little personal benefit. As a result adoption rates are much lower than desired. Worse still engagement rates (the breadth of the system being used in a best practice fashion) are even lower, meaning that the gold standard processes you designed to drive sales and delight customers are almost certainly not being attained.

Consequently data quality suffers, as only partial information is being captured, resulting in wasted marketing spend and making forecast accuracy almost impossible to achieve.

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All of which conspire to mean that the “Promised Land” of a 22% revenue gain is never achieved.

In fact, if we assume:

1. a typical user adoption rate of say 66% (i.e. only 66% of users are actively using the CRM system)

2. of those users only 50% are fully engaged (i.e. 50% are using the CRM system in a best-practice way)

then the stark reality is that only 33% of the expected CRM benefit is actually being realized (i.e. only a 7% revenue uplift instead of the 22% expected uplift).

Due to poor adoption, a whopping 66% of the expected CRM benefit (representing a 14% revenue uplift) is currently being left on the table.

THE GAMIFICATION BOOST

Let us re-visit the G4S case study. G4S are one of many organizations that are using gamification to motivate user behaviors to increase adoption and best-practice engagement. The results are pretty impressive and demonstrate that positive motivation will drive users to perform the tasks that you have identified will lead to success.

We can clearly see from this case study that G4S have experienced a rise in user adoption to 98%.

Of the 98% who are now actively using the system, 86% are now engaged in best practice sales performance processes. This means that 84% of the available benefits are now being realized. A 50% increase from the 33% starting point.

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G4S CASE STUDYBy deploying gamification to motivate their sales

teams G4S realized:

• 86% increase in sales performance• 60% growth in “active” (well qualified) pipeline• 35% increase in the capture of new contacts• an increase to 98% user adoption

This case study highlights that by introducing gamification and so increasing user adoption and best practice engagement you can rapidly unlock more of the expected benefits that a CRM system can deliver.

SUMMARY

To put it into perspective, let’s take a simple example of an organization that has revenues of $100M. By using a CRM system to its full potential the original CRM business case suggested that a revenue uplift of 22% (i.e. $22M) would be achievable, boosting revenue to $122M.

However, due to poor adoption and low user engagement most organizations will only see at best 1/3rd of this benefit i.e. a $7M uplift.

By introducing gamification there is a rapid and low-cost way to unlock 84% of the revenue benefit available, increasing the revenue uplift from $7M to $18M; representing an $11M increase on todays picture, boosting the overall revenue to $118M.

$0

$22,000,000

$0

$18,000,000

$0

$7,000,000

CRM Revenue Impact

Current CRM Revenue ImpactCRM + Gamification Revenue ImpactOriginal Business Case Revenue Impact

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Interested to learn more? Read some of our other white papers:

• CRM 10 Steps to Success• Gamification 101• The Real Guide for Using Gamification to Boost Business Performance

Read more about SuMo for Salesforce

Alternatively try SuMo for Salesforce free with our 30-day trial

ABOUT CLOUDAPPS

CloudApps increases business performance by motivating and measuring behavioral change.

SuMo for Salesforce accelerates achievement of CRM KPI’s and increases user adoption using the power of game mechanics.

SuMo motivates user behavior through concepts that include in-line nudges, points, badges and leader boards for individuals & teams.

SuMo is the only solution built 100% on the Force.com platform that is delivered with pre-built CRM best-practice behavior nudges & marketing communications content.

CloudApps is already in use by 250 customers, including blue-chip organizations such as Lush, Tesco, AMEC, EE, ERM, LA Fitness, Sears, TUI Travel, Brooks and Salesforce.com.

People Powered Performance.

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