Does Purchasing a CRM Multi-Year Subscription Make Sense?
There are several schools of thought when it comes to CRM multi-year software subscriptions. One is that the company doesn’t want to be locked into a subscription for more than one year unless they are absolutely sure that in a year from now they will still want that software. They want to be able to just stop using it or switch to another subscription software.
Is this a reasonable perspective?
Companies Generally Stick with Their Current CRM
According to the Capterra CRM Industry User Research Report, 60% of companies still have the same CRM as when the company started using a CRM. Of the 40% that switched to a new CRM, over one-third said it was because the CRM provider was no longer supported / went out of business.
What this says is that companies are unlikely to switch CRMs except in very limited circumstances. Why do companies keep their current CRM?
CRM Implementation Time
The time to implement a new CRM is very high. According to the Capterra Industry Report, 60% of respondents said that the actual time to implement their CRM took 6 months to a year. According to the same Capterra Report, 40% of respondents reported that it took over a year to implement a new CRM.
This is a tremendous investment of time, money & personnel.
Satisfied with Current CRM
According to the Capterra Report, 71% of users said that they were satisfied or very satisfied with their CRM. Another interesting statistic is that users become more satisfied with their CRM the longer they had the CRM. This lines up with users being able to use the CRM more effectively.
Changing Technology is Very Expensive
Changing to a new CRM is a costly and personnel intensive endeavor. Your CRM is usually the center of your company and integrated into your accounting, marketing automation and ERP systems. To decide to change to another CRM is not made lightly but with the knowledge that it is a big commitment for your business of time, money & resources.
Advantages of a Multi-year Subscription
Before you decide whether to get a one-year subscription or a multi-year subscription, let’s investigate some of the ways getting a multi-year subscription can benefit you.
One-Year Subscription Annoyances
While getting a one-year subscription may seem better at first, with it having the illusion of being more flexible, this is not always the case. In fact, going with one-year subscriptions can cause a lot of headaches and end up costing you more money in the long run.
This is because not only do you have to keep track of when the subscription ends and renew it every single year, but you also are subject to paying more if the price increases from year to year.
By signing up for a multi-year plan, you can set your company up for the long-term and not have to worry about renewing your subscription for however many years you wish. It also allows your company to invest in training, customization & process redesign.
Lock in a Lower Rate
If you purchase a multi-year subscription, you will be locked in at that price for as long as your multi-year plan lasts. This means you don’t have to worry about price increases and can continue paying the same rate. So, if money is a concern, then going with a multi-year subscription will end up saving you the most in the long run since you will be safe from price increases.
Multi-year Software Discount
Additionally, you can usually get the subscription at a reduced cost when you sign up for multiple years. The reduced cost of the subscription can be a substantial amount and is usually more than the amount needed to pay for any financing of the entire subscription purchase including hardware, consulting and training costs.
With the right financing, you can convert the subscription to monthly payments including the implementation & training costs, the maintenance costs and the hardware & IT costs.
This reduces all of your costs to a fixed monthly payment with the additional cost of financing being paid for by the reduction in the cost of the subscription because of the multi-year purchase.
Allows for Customization
While you will need to decide as to which method is better for you and your company, going with a multi-year subscription has been shown to have its advantages. Namely, they are more convenient as well as more cost-effective. Also, most companies keep their CRMs for many years and only change when the CRM no longer offers the features that the company needs or because their current CRM is no longer supported. As stated above, the longer that a company has its CRM, the happier the company is with the CRM. This is probably at least in part because it allows the company to invest in customization, redesign and training. If you are only keeping a CRM for a year, it doesn’t make sense to invest in customization.
But there are still legitimate reasons why a company would prefer to manually renew their plan on a yearly basis, such as the ability to end their subscription sooner if they feel like it’s not working out. So, it’s important to consider all of the benefits and disadvantages of both before making a final decision.
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