CRM Selection Insights
CRM Selection Insights from 30 Years of CRM Consulting
Insights are not data, facts or statistics; these are all knowledge. Insights are the reasons, behaviors or learning behind the data, facts or statistics. The dictionary defines an insight as "seeing below the surface". Insights deliver new learning or something that teaches. The following CRM software selection insights are some of my learning based on three decades of CRM consulting.
The CRM Software Market is Diverse and Competitive
Many CRM buyers believe that the market is dominated by only a few vendors. That's not accurate. There are over 200 CRM software vendors globally and over 100 that sell into North America. Almost all these vendors have credible products, growing install bases and happy customers.
According to Statista, the global CRM software market is about $43B in annual revenues. Salesforce is the CRM software market share leader with 16.8 percent share. The big 4 CRM software solutions of Microsoft Dynamics, Oracle, Salesforce and SAP collectively account for less than half of the total CRM software market. That means most of the CRM software market is held by much smaller but reputable vendors.
The availability of so many credible CRM systems is both liberating and overwhelming. Fortunately, most applications are designed for specific audiences and their target market fit varies by company size, industry, geography, technology, cost and other factors. It's neither feasible nor necessary to try to evaluate too many vendors, which is why we start with market research and then apply a structured CRM selection process to find the best CRM software.
The 30% Rule
Research from the CRM Benchmark Report shows that companies use less than 30 percent of their CRM software capabilities. For those of us in the industry that's not a surprise.
The CRM software industry is now about three decades old. The current cloud CRM systems are about two decades old. CRM software is a very mature industry where products have had decades to build the needed features, functions and capabilities. Sure, innovation continues and that's fantastic.
But for many companies, acquiring CRM software where the bulk of capabilities go unused makes the system harder to use, contributes to a more complex user interface and creates excess cost to manage, configure, test and upgrade more unused than used capabilities. The lesson here is to focus on the capabilities you will actually use and not get distracted with the much-hyped capabilities that will go unused.
The 80/20 Rule
The term "Customer Relationship Management" was officially coined in 1992 by Tom Siebel in the company's S-1 filing. Prior to that there were competing phrases, such as TERM (Technology Enabled Relationship Management) which was promoted by Gartner to similarly describe the integrated tenants of sales, marketing and service, but CRM was the one that stuck.
Since then CRM vendors have delivered a plethora of user capabilities and customer facing processes – to the point where about 80 percent of CRM capabilities are common across most CRM systems.
Recognizing that CRM software features and functionality adhere to the Pareto principal creates an opportunity for CRM buyers to bypass the vetting of routine or common capabilities and focus their time and analysis on the roughly 20 percent that yields differentiation.
CRM Software Rarely Improves Customer Relationships
It sounds kind of crazy to say that Customer Relationship Management software doesn't improve customer relationships. But when CRM software is installed without an accompanying CRM strategy that's what happens.
Customer Relationship Management is a business strategy aimed and growing mutually beneficial and profitable customer relationships at scale. CRM software is the technology that enables that strategy. CRM software provides the automation, information and repeatable processes to achieve the strategic goals, things like acquiring, growing and retaining customers.
CRM strategy is the linkage from the software to the business outcomes. It shows how the software will be designed and used to achieve the objectives. Without strategy that link is left to chance, and the business outcomes are very unlikely to happen.
CRM strategy and CRM software are symbiotic. Powerful together, but ineffectual apart. Without strategy, CRM technology is designed in a vacuum and CRM execution is aimless. A CRM implementation without a CRM strategy is a lot like watching a foreign language film without subtitles. A lot of activity, but you don't know where it's going.
CRM RFPs Rarely Work
Most CRM software Request for Proposals consume weeks or months of effort but fail to surface the measurable limitations and differences among competing CRM systems.
There are three methods to improve upon ineffective RFPs. For moderately improved results, you can fix them by adopting CRM RFP best practices. For better results, you can append them by including an RFI or other vendor collaboration events. Or for the best results you can replace them. Design Thinking has become the preferred alternative to the RFP as it focuses on what's most important, identifies measurable differences among competing CRM systems and is completed in a fraction of the time.
85% of CRM Implementations Fail for 1 or more of 5 Reasons
Alarmingly high CRM software implementation failure rates have been cited for decades. The results have gotten better in more recent years, but not much. The most recent CRM Failure Report found five root causes that contribute the bulk of failed CRM implementations.
- Management, not users, were the primary beneficiaries.
This cause was exemplified by CRM software being used as an activity based transaction system or sales pipeline reporting tool. Valuable for managers but not for users. - CRM objectives were not business outcomes that mattered.
In this case, the users recognize the CRM system is more pain than gain, and management ultimately recognizes the company is incurring more cost than business outcomes that matter, so the CRM software is eventually terminated or replaced. CRM implementations without meaningful benefits are not sustainable. - There were no prescriptive methods to achieve the goals.
This cause was the classic case of naively believing that installing CRM software was going to improve customer relationships or achieve business outcomes. Achieving outcomes requires CRM strategy and prescriptive methods. - Resistance to change.
Getting users to use CRM software is a goal but not a business outcome. User adoption is precursor task to business outcomes. - Implementation errors.
Failed CRM implementations are more characteristic of random deployment activities than prescriptive pathways. Also interesting, the research found that the CRM software itself was not cited as a cause of failure in more than three quarters of failed CRM software implementations.
Recognizing and proactively mitigating these causes of failure should begin during the CRM software selection project.