Your CRM Contract: The Most Important Thing You’ll Ever Sign

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Your Customer Relationship Management (CRM) tool is in many ways the bedrock of your organization’s operations. It should be a single source of truth – not just for your sales and marketing teams but also for customer service, finance, fulfillment, and everyone else! These tools are a long-term, expensive commitment, so you should make sure you understand every aspect of your CRM contract.

Doing your research upfront and getting the contract right means you’ll have fewer headaches in one month, one year, and ten years down the road.

Here are our expert tips from more than 20 years of contract management, on what to look for in your CRM contract.

Types of CRMs and How They Impact Contracts

Most CRM implementation projects spin up out of the needs of sales and marketing teams. But the tool research, selection, and contract negotiation processes should invite representation from your entire business operation. One department’s nice-to-have can be another department’s dealbreaker – and implementation is not when you want to find out!

CRMs fall into three categories – on-premise, cloud-based, and hybrid – and each precipitate different contractual obligations.

On-Premise CRM

In the past, this was the only choice. For companies with unique security, regulatory, or customer data needs, on-prem may still be a good option, since it gives you much more control over your equipment, data, and security. However, there are considerable drawbacks, including the high cost of setup and ongoing maintenance. It’s difficult to scale up or down when required, and remote access can be difficult.

In your contract, look for clauses that deflect responsibility to your company rather than the CRM provider for on-premises problems like equipment failure and connectivity issues. Anticipate changes in how the CRM operates that might require server upgrades or retrofits.

Cloud-Based CRM

A brash newcomer just a decade ago, cloud-based CRMs have come to dominate the market and they now account for three-fourths of the $42 billion worldwide CRM market. There are huge upsides to managing your data in the cloud, including reduced (or outsourced) hardware and software costs, easy remote access, and scalability.

However, since most cloud CRMs run as a Software as a Service subscription model, your contract may have hidden costs for customizations, uptime, and user limits. There’s also more potential for complex third-party relationships since your data isn’t usually stored by the CRM but another company entirely.

Hybrid CRM

It sounds like a middle ground – and it is – but what hybrid looks like differs dramatically from operation to operation.

Companies tend to be drawn to a hybrid CRM model when they’ve made an extensive on-premises investment that they’re not yet ready to abandon; when security or compliance issues require some onsite data retention but access is still needed by remote teams; and when most but not all employees work from a single site or campus.

Make sure your CRM provider can commit to one environment and seamless experience for your teams.

What to Look For in Your CRM Contract

Once you’ve found your perfect match, it’s time to once again pull the whole team together to make sure the contract represents what you want in a CRM and that you understand which party is responsible for which deliverables.

Your CRM provider will be the one producing the contract, and they know all the things that can go wrong (and write themselves out of liability). Anticipating your business needs will help you identify areas you can cover yourself.

Support During and After Integration

The implementation phase alone takes an average of 4 months.

Throughout that time, your CRM provider should be a trusted partner and consultant, who is helping you customize and integrate your new tool.

These vary in scope but can include templates, user training, workflow development, data management and migration, and the development of dashboards. Expect to spend as much on integration as you will on an annual CRM subscription.

Here’s the rub: Implementation fees frequently do not appear in the CRM contract itself. Request a complete breakdown of fees for the services you need, and consider them along with your contract.

Costs Over the Expected Lifetime of your CRM

Pay special attention to both the transparent and hidden costs. Over the 2-10 year lifespan for a CRM, these costs can easily add up to hundreds of thousands of dollars. In our experience, there are three important elements to review.

1. Ongoing Subscription and Seat Costs

Review your subscription fees. What’s included? What seems to be missing? Is there a minimum on renewals? Is your fee based on CRM users, total staff, or something else? What training and support are provided as part of the package and what costs extra? What are the add-ons you’re paying extra for? How many of those are you likely to need? It’s really important to ask a lot of questions and understand what your contract actually covers and what’s out of scope.

For example, when someone joins your sales/support team, it’s obvious you will want to add them as a CRM user. However, adding additional users after the initial implementation is a very common hidden cost of CRMs. Ask for a clear breakdown of per-seat or user management fees and account for those costs or negotiate your projected use.

2. Customization Fees

Your company is special. It has its own way of operating, and your CRM should support and enable that, not dictate it. That means it’s pretty unlikely you’ll find a CRM that does what you need without the need for customization. Each change costs money.

Being oversold out-of-the-box features is listed by Hubspot as one of the biggest CRM mistakes companies make but likewise, customizations can get expensive. Every custom workflow, pipeline, dashboard, and user permission should be itemized or estimated. You should get clarity on when and how the extra fees kick in.

3. Exporting and Offboarding to Another Tool

It seems counter-intuitive to be thinking about the end of a relationship when you’ve just started courting a CRM provider but trust us, it’s worth thinking about where you want your company to be in 2-10 years when you offboard your new CRM. Look in your contract for penalties and costs associated with migrating your data out of the CRM into another.

Consider How You Need Your CRM to Scale

Review your contract for your CRM provider’s ability to scale up and down to your anticipated needs. If your company has a peak season, you might be able to negotiate scaled access one or more times a year. Translate your business needs into the likely impost on your CRM, and look for overage and add-on fees that reflect your levels of usage.

Commitment to Security

Who is responsible in the event of a data breach? Does your CRM provider require you to have specific security measures in place? Does your CRM tool have the security features you need, such as GDPR applications? Review your contract in collaboration with your security team.

Will Your CRM Grow With You?

Finally, you want your CRM provider to have a commitment to innovation and adding features that you need. Request a product roadmap or ask for details about their business strategy.

If you’re committing to a relationship that could last up to a decade, you want to know that the company is headed in the same direction you are.

Also, if you chose it because it was a small fish, you should get a heads up that it is in talks to be gobbled up by a large, uncaring corporation. If you want a provider that specializes in FinTech, you deserve to know if it recently changed its focus to medical device companies.

CRM migration is an expensive, complex, large-scale undertaking. In a project this complex, there are bound to be surprises. But if you know your business well, anticipate your future needs, and review your CRM contract thoroughly, your company will be well-placed to negotiate the best deal for you and build a long-term, fruitful vendor relationship.

When you’re considering a CRM contract, you need input from the whole team. Anapact is a contract management lifecycle platform that supports the needs of the whole organization. Get a demo.

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- About the Author

Picture of Louis Balla
Louis Balla
Louis is the Co-Founder of Anapact and partner at Nuage, a top rated ERP consulting firm based in Venice Beach, California.