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Rick Cook Three Reasons CRM Fails

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 By Rick Cook

The Customer Relationship Management software implementation success record is pretty depressing. Over the last decade, multiple studies have shown than anywhere from 20 percent to over two-thirds of all CRM software efforts have either failed to live up to expectations or failed outright.

It’s important to note that most of these projects weren’t complete failures. They produced some benefits, just not all the benefits the implementors used to justify the project undertaking.

However it’s also important to note that while the “failure” rates vary significantly from study to study, they haven't tended to decrease over time. One of the first well-publicized studies, by Gartner Group back in 2001 disclosed a failure rate of 50 percent. A 2009 survey by Forrester found a failure rate of 47 percent.

While the trend isn't hopeful, the underlying facts and root cause analysis reveal common factors which suggest preparation and planning can mitigate failure. Repeated studies over the decade have shown that most CRM failures result from a very limited number of causes. All those causes are preventable if they are prepared for and recognized at the earliest occurrence. If you understand why CRM fails you can take proactive measures to make sure your implementation succeeds.

1) Lack of Focus

Customer relationship management strategy and application software can deliver a powerful combination to achieve strategic objectives, tactical goals and effective customer facing processes. But for sustained success, a CRM effort must first focus on, and be aligned with, the enterprise’s most strategic imperatives.

At the highest level CRM strategy isn’t so much an answer as a question. The question is “How do we use these techniques to accomplish our goals?”

That means knowing what your goals are – and being able to express them in clear, measurable terms. Are you trying to increase sales? Improve profitability? Grow customer share? Gain greater management insight into the customer management effort? Provide better customer service? Attract new customers? Serve existing customers more profitably? Obviously you’re not going to settle for just one of those goals, but you should be able to rank them in importance for your organization.

This also implies setting specific goals with measurable payback from the CRM software investment. As the saying goes “If you’re not sure what you’re trying to accomplish, don’t be surprised if you don’t accomplish it.”

2) Lack of Commitment

If you don’t have buy-in from all the stakeholders, you’re going to have a tough time realizing the benefits from CRM strategy or software. The most critical groups to engage and secure sponsorship from are top management, the sales staff and the collective group of customer-facing employees.

Successful CRM projects have those groups enthusiastically on board. Unsuccessful CRM projects don’t.

Corporate management has to be visibly and vocally committed to the CRM effort. That means they have to devote the budget and resources to it and have the commitment to see it through. Without this kind of commitment, any but the most limited versions of customer strategies are unlikely to succeed.

In addition to top management, the people who will actually use the CRM software system have to be engaged and committed to it as well. One of the most common forms of CRM system failure is challenged user adoption, or failure to simply use the system. This is particularly a problem with sales staff who often see sales force automation (SFA) software as something imposed on them that aids sales managers with improved performance visibility but hinders sales staff’s ability to sell.

Getting sales people and other users to actually adopt SFA software or CRM systems involves a three-fold approach.

First, it requires that you offer them a usable system. That is one that meets their needs and offers them tangible productivity or information advantages. And which actually works as advertised.

Second, it requires listening to the stakeholders and tuning the information system to meet their real needs. CRM systems are supposed to make things easy for workers and transparent for managers. If they do not meet this fundamental need, the users will tell you – and they won’t use the system.

Third, getting user buy-in requires selling the benefits to the stakeholders early and frequently. You can’t just rely on them to discover the advantages your CRM software will offer any more than you can expect customers to internally discover the advantages of your products. Successful software deployment takes a guided, comprehensive effort to show the users the most salient advantages.

In the case of customer relationship management software that means emphasizing the appropriate feature sets to each individual group of stakeholders (the sales staff do not much care about greater control over the sales process and management may or may not be concerned that the application makes life easier for the sales staff.), identifying champions in each group, advertising success, and constantly reinforcing your message in a long term campaign that doesn’t end when CRM “goes live” in your company.

3) Approaching CRM as a Technology (Only) Solution

Although software is important to making CRM work, customer management is not a technology. Customer relationship management is an ongoing effort to focus the company on its customers and their needs for mutual benefits.

One of the most common causes of CRM failure is to approach CRM strategy as a software project. Too many adopters have the IT department install the system, get it running and then wonder why the strategic benefits fail to be realized.

CRM must be a company wide effort that starts with customer strategies which are then automated with application software. You can't just concentrate on the software and ignore the rest. The software is an enabler, not the be-all or end-all.

Among other things, successful CRM implementations involve the improvement or possibly the re-engineering of customer facing (sales, marketing, customer support and more) business processes which are then integrated with the enterprise software in order to make them efficient, consistent and timely. Customer strategies and business process improvements require a willingness to change any aspect of the way your company relates to its customers.

All this is a major undertaking, but it is far from impossible, as the thousands of successful CRM implementations and executive adopters demonstrate daily.End

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Comments (2) — Comments for this page are closed —

Guest Craig Tulley
  I think most companies fail to achieve the benefits of CRM because they fail to put the customer at the center of their business. These companies are easy to spot. They're product focused companies that choose not to use empirical market research to design products, fail to survey their customers and have no idea what the lifetime value is for any of their customers. Until you create the strategy that orients your business around your customers, CRM software has little value.

Guest MNM
  I echo Wayne's comment. My prior employer was a company that implemented CRM software and then couldn't understand why they failed to recognize benefits. As obvious as it was, they couldn't understand why customers trump products, why promoting products around perceived needs often didn't work or why the sales team only viewed the CRM system as a micro-mangement tool - and consequently failed to properly use it or use it at all. I also didn't recognize it until after the fact, but we were one of those companies that tried to use technology without accompanying strategy.
 

 

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Repeated studies over the decade have shown that most failures result from a very limited number of causes. All those causes are preventable if they are prepared for and recognized at the earliest occurrence. If you understand why CRM fails you can take proactive measures to make sure your implementation succeeds.

 

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