have remained high during the last ten years, indicating that many organizations don‟t receive full benefit from their CRM initiatives. Let‟s examine important reasons for this unfortunate situation. Related: CRM failure rates: 2001-2009 Although relatively few projects become complete write-offs, partial failure is common. Most often, a project delivers some expected benefit, but still leaves users unsatisfied and business sponsors wondering what went wrong. This list describes three major pitfalls that plague many CRM initiatives. While not a comprehensive inventory of potential problems, many projects succumb to these big causes of failure. Failure 1: Installing technology without a business strategy. Many organizations fall into the trap of deploying tools and technology without creating a proper CRM-related business strategy. For most organizations, customer relationships involve a range of interactions that together achieve (hopefully) positive results. Creating and executing a business strategy is difficult because CRM initiatives typically involve numerous components and moving parts. A Gartner research document describes the importance of strategy: A unified CRM strategy is absolutely critical to CRM success, but developing and implementing such a strategy is a complex, difficult and intensely political process. Baseline magazine discusses the wide-ranging impact a full CRM strategy can have across an organization and its customer ecosystem: [A] root cause of CRM failure is looking at the projects as software deployments when, in order to take full advantage of the systems‟ capabilities, a substantial reorganization must be performed on virtually every operation touching customers. A somewhat cryptic comment from Marketing Management magazine makes a similar point: CRM mandates a synergistic combination of inter-departmentally construed strategies, programs, and processes. It is the weakest link in this combination that will determine the ultimate success or failure of CRM. In other words, successful CRM initiatives focus on business objectives and use technology as a support to help reach those goals. Think about CRM as a business strategy to help you organize plans and activities around better serving customers; although technology can help, it’s not the goal. Forget this lesson at your peril. Failure 2: Paying insufficient attention to user needs and benefits. Engaging users is critical to the success of any enterprise software deployment, but particularly so in the case of CRM, where users can sometimes sidestep the technology and still accomplish their job function. A research note from AMR Research explains why this aspect of CRM is different from other enterprise software categories: In applications such as ERP, supply chain, or financial management applications, the users have much less flexibility or choice in whether or not to adopt an enterprise application standard. And when was the last time you heard someone question why financials were implemented? A quick search reveals that many observers believe poor user adoption is a key driver of failed CRM projects. In a SearchCRM interview, SugarCRM‟s former CEO, John Roberts, links adoption to end-user perception of value (emphasis added): In a lot of cases, companies deploy CRM, and there‟s a lot of euphoria over it for the first couple of months. Then, people stop using it. They look at it as „Big Brother‟ watching them. CRM is sold as a tool to make an organization more effective and efficient; but the end user doesn’t see CRM as making them more efficient and effective. In my view, poor user adoption is not the direct cause of CRM project failure. Rather, it‟s a symptom the organization has not anticipated obstacles that may interfere with users embracing the new system. Adoption may lag for many reasons, including: Software that is complicated or difficult to use Sales people that don‟t see adequate value in the new system Poor communication of benefits to users Get users to adopt a new CRM system by focusing on the WIFM (What‟s In It For Me) factor. I asked independent analyst, Erin Kinikin, for her thoughts on engaging users: The sales person is quarterback for the customer team. Give the sales people good reasons to login and use the system. If the sales person feels the system saves time, makes money, or helps „keep score‟, he or she will be much more likely to use the system — and enter customer data. One banker involved with CRM efforts told me: Frontline users, particularly the most effective “top-producers,” will adopt the system only on the basis of real or perceived value. Engage users early and often during the system planning and implementation phases, so they understand what’s in it for them. When users do not adopt a system as planned, seek their honest feedback on how to make it more usable, helpful, and valuable. Failure 3: Using ambiguous (or non-existent) measures of project completion and success. Successful CRM projects are rooted in a clear trajectory aimed at achieving specific goals and objectives. Projects without concrete goals and a plan to measure both progress and results are distinct candidates for failure. During a phone conversation, longtime Gartner CRM analyst, Gareth Herschel, described this issue succinctly: One of the most common reasons for CRM failure is starting a project without first establishing a clear definition of success. To solve the problem, articulate specific goals and create a targeted measurement plan designed around your organization‟s business objectives. Paying attention to the right metrics can help ensure your project produces the results you seek. I asked independent analyst, Erin Kinikin, to describe the importance of measurement: If CRM is the ultimate destination, the measurement plan is what tells you where you are now and points to where to go next. For example, it‟s not enough to decide to increase sales. Using a measurement plan, concrete metrics — such as number and quality of sales leads, lead freshness, cycle time and win/loss rates by sales stage, and repurchase or upsell rates — can help assess current strengths and weaknesses, measure CRM gains, and identify areas for further improvement. Doing CRM without metrics is like driving without a roadmap — who knows where you‟ll end up? Forrester CRM and customer service analyst, Natalie Petouhoff, is an expert on using metrics to align technology initiatives with business goals. She commented via email: You get what you measure. Although the analytical part of CRM offers the real gold, most companies have barely deployed “operational” CRM, which is a functional, relational database to keep track of customer information. These organizations are just not prepared to handle all the issues related to legacy systems, reworked business processes, management expectations, organizational change management, and so on. They get bogged down trying to deploy operational CRM so the analytics never get implemented. Without measuring, how can you know whether the business case used to sell the value proposition actually achieves results? This obvious point has somehow eluded most companies. Organizations should measure changes in business results arising from major software deployments. Fiduciary responsibility demands senior management report this information to the Board of Directors. Aside from IT, can any other part of an organization spend millions and not be held accountable for the results? Use metrics to drive results that support your business goals. In the absence of metrics, expensive CRM initiatives can drift into failure without ever delivering meaningful benefit. ——— During an irreverent phone conversation, CRM legend and fellow ZDNet blogger, Paul Greenberg, summarized the fundamental reason many projects don‟t perform as expected: Companies expect to be the center of attention, but successful CRM depends on listening and understanding the customer. Sadly, most companies are pretty stupid about this stuff. My take. CRM success arises from listening to customers, considering the needs of end users, and not substituting technology deployments for well-considered business goals. Top Reasons for Failure Depending on the source you're reading, as many as 50-70% of CRM initiatives fail to deliver as expected. Observing these situations, it's possible to discover some common reasons for failure. CRM Strategy Errors The right leadership is not in place A business leader needs to be in charge of the CRM effort, not IT. Successful CRM is a major business initiative, not a technology initiative. CRM Strategy not clear Your CRM strategy and vision need to define what customers experience at each touchpoint, and how will they be handled at each touchpoint. The vision needs to be clear to everyone. A major pitfall occurs when your business constituents have differing expectations of CRM's benefits. Sharing a common vision is key. The CRM strategy is different from the business strategy CRM is sometimes seen as a lower level automation step or patch, rather than a top level re-thinking of how customers are served. Your CRM strategy and business strategy need complete alignment. Processes not re-designed CRM is an expensive way to automate inefficient or ineffective processes. Companies get better results from CRM when they begin by focusing on sales processes: how do customers need to be approached, convinced, served and satisfied? Only when these questions are answered should steps be taken to plan software or process changes. By managing and measuring the sales processes („opportunity management?and "sales method?in CRM terms) it is possible to take full advantage of CRM's potential. The steps taken should include: Defining and developing new market segments Increasing the ability to: Cross-sell Up-sell Retain Acquire Reactivate Experience (Enhancement through better customer interaction strategies) Customers not consulted What do your customers think of your company before, during, and after the CRM implementation? What are they happy with, and what are their complaints? How are other suppliers serving them in ways that they like? Too often, surprisingly enough, the "C" in "CRM" is not consulted in all phases of the initiative. Unclear metrics It's critical to review your plan to measure key performance indicators, and ROI. Can your metrics truly determine the real business value of your effort? The quality of metrics has been a deciding factor in making or breaking many CRM projects. Implementation Errors Inability to link channels Have you considered ALL customer touchpoints and processes? CRM projects often have focused on some parts of the customer experience, but ran into trouble when they were unable to link with or serve well all parts of the customer experience. Lack of preparedness for continuous improvement Be ready for bumps in the road. Be ready to refine strategies, revise goals, re-set metrics, and learn from feedback. Successful CRM projects are rarely completely successful from the outset. People errors Introducing CRM to hundreds of employees at a time It's easy to want to do too much, too fast. Get it right first with a small team of employees chosen to represent a cross-section of your company. Choose an initial project that can make a dramatic difference, with clear key performance indicators. Strong pilot results will help you avoid the next pitfall: Changing the system, but not the people It's easy to focus too much on the new technologies and processes rather than focusing first on the people who will use them successfully. You need employee excitement about doing a better job for customers. You need employee feedback and overall buy-in. The entire company needs to own "customer-first." They need to see that the CRM vision you all hold takes them to a better place than where they are now. Process errors Instead of enhancing new processes, changing the CRM system to fit old processes To avoid the pain of revision, some companies don't take the opportunity to re-engineer and optimize their processes. They look to CRM as a patch rather than an opportunity from the ground up to increase customer satisfaction, revenue, service and overall productivity. Technology Errors Customer data is in more places than expected As implementation gets underway, key data can turn up in salespeople's PDA's, spreadsheets, handwritten notes, and legacy systems. To avoid surprise integration nightmares, the requirements gathering stage needs to be careful and thorough. Different CRM solutions are in place but do not work well together. Often marketing, sales and service departments already have different types of CRM software, from different vendors, to track the same customers. As a result, these departments can't share data, and have redundant support and administration costs. Customer Management Errors Customers do not experience new benefits The ultimate test is to be able to demonstrate increased satisfaction among customers, along with increased customer value to your business. This goal can inform every choice you make during planning and implementation. But just like the adage "watch the ball" in sports, it's a fundamental often overlooked. Your vendor's experience with CRM implementation is one of your best assets. See a selection of leading vendors. Home |Contact Us | Copyright 2010 CRM-Resources.net. All Rights Reserved.