Consider this:
55% of all CRM projects don’t produce results, according to Gartner Group, a research and advisory firm.
In 2017, CIO magazine reported that around one-third of all customer relationship management (CRM) projects fail. That was actually an average of a dozen analyst reports. The numbers ranged from 18% to 69%.
So how do we define CRM?
CRM aligns business processes with customer strategies to build customer loyalty and increase profits over time. (Note the absence of the words “technology” and “software” in the above definition.) CRM is not a software tool that will manage customer relationships for you. The CRM software is just a conduit that connects an organizations customer strategy and its processes with the goal of improving customer loyalty and increased profitability.
5 Critical Reasons why CRM projects fail
- Lack of a Robust Customer Strategy: For a CRM program to succeed, you first need to create a robust customer strategy. Identify which customers you want to build relationships with and which you don’t. Every customer is unique and has a different current and potential value to your company. The outcome of your customer strategy should be customer groups spanning from the most profitable to the least profitable. For the most profitable customers you need to identify ways and methods to broaden and deepen the existing relationship and for the least profitable you need to decide if you really wish to serve them at all. This segmentation is crucial and it is done to achieve specific marketing goals.
- Poor Business Process Design: Without business process improvement, you’re just creating another place to enter data. The predictable result is that users will be unimpressed, software utilization will be low and user adoption will steadily wane as users work outside the system using spreadsheets, shadow applications and manual methods. Staff productivity is enabled with technology, but not achieved with technology alone. Business process automation is the #1 contributing factor to increased employee productivity. Some common business process themes to consider along with your CRM strategy would be Quote to Cash, Lead to Customer and Procure to Pay or Record to report. It’s important that an organisation performs process optimisation before cataloging their CRM requirements. The new business processes will introduce new CRM requirements that will otherwise be missed if the CRM requirements are drafted looking at only the existing processes.
- Too Much at Once: Trying to do everything at once guarantees that you won’t do any of it well. You end up with chaos and confusion rather than the more efficient business processes you imagined at the outset. Divide your CRM implementation into phases to make the project more manageable. You can work on multiple aspects of your implementation at the same time. Just don’t try to complete the entire enterprise-wide implementation all at once.
- Business and tech teams don’t work together: Every department in your company plays a vital role in the overall success of the business. At the same time, these departments also have their own priorities, considerations, and ideas about how to tackle any given problem. When a project comes along that crosses through multiple departments — like a new CRM — one of the biggest hurdles to success is often getting these teams on the same page to reach a mutually beneficial solution. This often means breaking down departmental barriers, freeing data from dedicated department silos, and creating uniform (or at least consistent) processes for accessing and using customer information. Your business and tech teams will need to work together in new ways to make sure that everyone is getting the most from the CRM software.
- Lack of user adoption: It can be challenging to accept change, especially when it comes in the form of a new CRM, with new processes, responsibilities, and a steep learning curve. Implementing a CRM means shifting the way your sales team organises its contacts and prioritises its work, which means there could be quite a bit of resistance to this type of change. Users need to be convinced that their old data will still be available, that the new product is easy to use, and that training will be provided. Let them know that you understand that there will be a transition phase and that it takes time to get up to speed. You also need to articulate the problems the CRM solves for them as well as the benefits it offers to them. Users don’t care how a CRM system benefits the management so leave those out. Focus on how your chosen solution will automate their processes, save them time, and generate bigger deals. In short, focus on operational productivity rather than management productivity because in the end its operational productivity that drives management productivity.
Conclusion
Even a relatively successful CRM implementation followed by stagnation will result in a steady decline in CRM usage over time. It won’t take long until users and managers begin working without or around the system.
Therefore it is imperative to understand that like business, CRM is a journey, and successful CRM programs leverage continuous process improvement cycles to constantly refine and optimise the business software system.
Last but the not the least, for a successful CRM implementation, an organisations focus should be in the following order
- Customers.
- People.
- Process and
- Technology.