Implementing a CRM system in higher education is an investment that promises significant benefits, from improving student engagement to streamlining administrative processes. However, to fully understand its impact and justify the investment, institutions must calculate the ROI (Return on Investment). This metric helps schools and universities evaluate how effectively a CRM for higher education improves performance and contributes to institutional goals.
In this complete guide, we will break down how to calculate ROI for a CRM system in higher education and explore strategies to maximize the benefits of such systems, ensuring a tangible return for your institution.
Understanding CRM and its value in higher education
A CRM (Customer Relationship Management) system is a tool designed to manage and analyze interactions with current and prospective students. In higher education, it helps institutions optimize recruitment, enhance communication, and improve retention rates. The value of a CRM in higher education lies in its ability to streamline these processes, allowing institutions to tailor communication strategies, track student progress, and improve overall student engagement.
Measuring the ROI of a CRM system requires understanding both the initial investment and the returns generated through cost savings, enhanced efficiencies, and increased student recruitment and retention.
Related article: CRM for universities: using CRM data for university decision-making
The formula for calculating CRM ROI
To calculate the ROI of a CRM in higher education, institutions typically use the following formula:
ROI = (Net Gain from CRM – Cost of CRM) / Cost of CRM
Let’s break it down:
- Net Gain from CRM – This represents the financial benefits gained from the CRM system. These gains could come from increased student enrollment, improved retention rates, or enhanced operational efficiencies.
- Cost of CRM – This includes the total costs of acquiring, implementing, and maintaining the CRM system. It may include software fees, staff training, IT support, and ongoing management.
For example, if your institution invested €100,000 in a CRM system and saw a return of €300,000 in increased enrollments and operational efficiencies, your ROI would be 200%:
ROI = (€300,000 - €100,000) / €100,000 = 2 (or 200%)
The challenge lies in calculating the precise financial gains the CRM generates. Below are key areas where a CRM can directly impact higher education institutions, helping you measure those returns.
Key areas of ROI for CRM in higher education
1. Increased enrollment and recruitment efficiency
One of the most significant benefits of a CRM system in higher education is improving the recruitment process. A CRM helps target prospective students more effectively by automating communication, streamlining admissions workflows, and managing leads. This improved efficiency can lead to an increase in the number of qualified applicants and, ultimately, a higher number of enrolled students.
To measure this, track how many additional students enrol after CRM implementation and calculate the average revenue per student. For example, if your CRM helps increase student enrollment by 10% and the average annual tuition is €15,000, the ROI can be directly linked to that increased revenue.
2. Enhanced retention rates
Beyond recruitment, CRMs also play a key role in enhancing student retention. By tracking student engagement, progress, and satisfaction levels, the CRM allows institutions to intervene early with at-risk students, offering support before dropout occurs. This proactive approach can improve retention rates, significantly boosting overall revenue.
Calculate retention improvements by comparing the retention rate before and after CRM implementation. For instance, if the CRM helps reduce dropout rates by 5%, the financial impact of retaining these students can be calculated based on the tuition they will continue to pay.
Related article: Higher Education CRM: A Strategic Tool for Long-Term Growth – Learn more about how a CRM can support long-term institutional growth and retention strategies.
3. Cost savings and operational efficiency
CRMs improve operational efficiency by automating tasks that would otherwise require significant manual effort, such as sending emails, tracking student applications, and generating reports. This leads to cost savings in terms of staff time and resources. Additionally, a CRM can reduce the need for separate tools and platforms, further cutting costs.
To measure these savings, estimate the time saved in hours and calculate the associated costs for tasks previously handled manually. For example, if staff saves 1,000 hours annually, and the average hourly wage is €25, the cost savings amount to €25,000 annually.
Steps to maximizing CRM ROI in higher education
1. Set clear objectives and KPIs
Before implementing a CRM system, it’s crucial to define the key performance indicators (KPIs) that will guide your measurement of success. KPIs may include metrics such as increased enrollment, reduced administrative costs, or improved communication efficiency. Tracking these metrics ensures that you have a clear understanding of the CRM's impact and its ROI.
2. Ensure proper staff training
A CRM system is only as effective as the people using it. Providing comprehensive training for staff is critical to ensure they understand how to utilize the CRM's features effectively. This guarantees that your institution is maximizing the system’s potential, increasing efficiency, and driving a higher ROI.
Related article: What is the best CRM for universities?
3. Utilize CRM data to drive strategy
CRMs provide institutions with a wealth of data that can be used to refine recruitment and retention strategies. Analyzing student engagement metrics, communication preferences, and application trends allows institutions to tailor their outreach efforts, improving overall efficiency. By leveraging this data, higher education institutions can make informed decisions that directly contribute to ROI.
Related article: Leveraging CRM Systems in Higher Education to Boost Enrollment – Discover how CRM systems can be leveraged to enhance enrollment outcomes and drive student engagement.
4. Monitor and adjust for continuous improvement
Regularly monitoring the performance of your CRM is essential to ensuring ongoing success. Use the system’s reporting tools to track key metrics and make adjustments as needed. If the CRM is not delivering the expected ROI, review whether the issue lies in training, implementation, or lack of integration with other processes.
By continuously refining your approach, you can enhance the effectiveness of your CRM in higher education, leading to sustained improvements in both performance and return on investment.
Conclusion: Unlocking the full ROI potential of a CRM in higher education
Effectively calculating the ROI of a CRM system in higher education requires a thorough analysis of how it impacts recruitment, retention, and operational efficiency. By setting clear objectives, tracking key metrics, and leveraging the full capabilities of the CRM, institutions can not only justify the initial investment but also unlock its long-term benefits.
If you're looking to maximize the value of a CRM system at your institution, working with an experienced partner like Latigid can help ensure your CRM strategy is optimized for success. Contact us to learn more about how we can assist with CRM implementation and ROI optimization in higher education here.
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