20

Dec

What is the reason behind high CRM implementation failure?

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CRM Implementation Failure

Customer Relationship Management (CRM) is often misconceived as an extension of the sales team’s address book. The few progressive enterprises (make an exception) by using CRM software to manage customer service calls as well. However, most organizations (surprisingly both big and small) assume that the CRM alone will miraculously ‘fix’ their business. But then is this perception right? And most importantly is CRM only a software application?

In the words of Mark Sauter, president and CEO, GTP Associates Inc – ‘’ CRM is more than just software – it’s an ethos. It's a behavior called CRM, not a technology"

The question whether the perception of the business leaders about CRM is right or not has come under focus after the increasing rate of failed CRM implementations.

CRM software failure

According to industry studies, CRM implementations continue to fail at an alarming rate. Forrester Research suggests that close to half of all CRM projects fail to deliver the expected benefits.

 

This table stated below lists the year, different organizations conducted the research, and reported CRM failure rate.

  •        2001 Gartner Group: 50%
  •        2002 Butler Group: 70%
  •        2002 Selling Power, CSO Forum: 69.3%
  •        2005 AMR Research: 18%
  •       2006 AMR Research: 31%
  •       2007 AMR Research: 29%
  •       2007 Economist Intelligence Unit: 56%
  •       2009 Forrester Research: 47%

 Is high CRM failure a case of CRM vendors overstating the potential benefits, or do people wrongly assume that the CRM software alone will miraculously ‘fix’ their business? Why do CRM software implementations continue to “fail”?

Throwing light on this context, here is what Bill Band, Principal Analyst at Forrester Research has stated – ‘’Many businesses, post implementing an online CRM software solution immediately assume that their sales and efficiency levels will rise. They operate their business operations as usual, waiting to see what happens. After a few months when the expected results fail to materialize, CRM is dismissed as a failure. It falls into neglect, or becomes an over-glorified address book.’’

’What businesses fail to realize is that they have missed the point of the exercise. They have simply implemented CRM software, rather than adopting it as an ethos.’’

How to get CRM software implementation right?

20% of CRM implementation problems are related to strategy and deployment - Forrester Research.

For a successful CRM software implementation, it is essential to carefully analyze internal business processes. Business owners/entrepreneurs need to answer questions like:

    • How does each of your business unit value its customers? Are they the focus of all their efforts?
    • What is the overall organizational focus - Long-term customer retention or short-term profit?
    • Are you ready for the new “social” business model?
    • What change you need to bring in your business?

In regards to this context, Peter Weedfald, vice president of strategic marketing and new media at Samsung Electronics America stated – ‘’Without answering to the above-mentioned questions, an organization cannot undertake the next step of the CRM software implementation process. For example my goal is to [use CRM to] suck the air out of my competition and to do so it's necessary to unify the company under one CRM vision.’’

Next…

1.Establish and communicate vision, strategy, purpose and goals. Communicate specific goals and expectations to  your employees.Let them know that CRM requires a new corporate culture and mindset and not just software training.

2.Streamline sales, marketing and customer service processes before implementation so that processes can be automated and data can be shared across the company.

3.    Establish processes for dealing with change management. Failing to adapt business processes to meet changes will make CRM software implementation fail. There are two key changes required:

Cultural change:  to place the customer at the centre of every business operation.

(The senior management needs to first adopt cultural change before implementing it downwards throughout the organization.)

Adam Honig, CRM consultant and strategist – ‘’If executives aren’t committed to the CRM project, don’t expect middle managers to buy in. Likewise if the head of sales or service won’t lead by example — and make employees work differently — don’t expect CRM project success.”

Process change: to ensure business activities are undertaken with a focus on meeting customer needs.

4.    Provide full training (through classroom, web-based lessons and live webinars) to ensure staff is using CRM to the full potential.

5.    Set incremental goals, create incentives and mark achievements. Make your employees excited about the CRM project.

Also remember:

CRM software helps underpin cultural change – and to bring about this change:

  • Reframe processes that do not focus on customer needs.
  • Adopt, implement and enforce customer-focused policies.

Patricia Jones

Patricia is a full time CRM consultant at ConvergeHub and part-time blogger. She has earned herself quite a fame as a specialist and market expert in CRM software. In the last five year she has worked with various companies as CRM consultant to help them move their businesses to cloud. Her expertise lies in offering cloud CRM consultation, CRM customization and integration solutions to small enterprises. For last one she is engaged in building ConvergeHub, cloud-based CRM solution for SMBs, as a consultant.Follow her at Twitter: @jones_converge


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