Why CRM Systems Fail and How to Make them a Success

Contents

Part 1: Why CRM systems fail

1. Poorly set objectives
2. Scope creep
3. User adoption
4. Wrong CRM vendor
5. Overcomplicating requirements
6. Not getting management on board

Part 2: How to make CRM systems more successful

1. Rethink CRM as a revenue tool
2. Integrate your marketing with sales
3. User training: Coach to improve
4. Build an implementation team
5. Clean and migrate your customer data
6. Test your new CRM extensively before launch

Introduction

Let me not steal the vendor's thunder. CRM holds true potential to be a game-changer for many businesses. However, be aware that most CRM system implementations fall short of their objectives, and it could be argued that many fail entirely.

“In my work with clients, when I ask executives if their CRM system is helping their business grow, the failure rate is close to 90%.” Scott Edinger, Harvard Business Review

CRM’s today serve many masters, from executives in the C-suite, management, sales, marketing and IT. In our discussions with clients around the success of their current CRM, we commonly get a kaleidoscope of answers.

1. The CIO tells us he is worried about the rapidly increasing size of the contact database and its integrity.
2. The CMO is happy she can track the assignment of every lead.
3. Sales management are happy because they can monitor activity and sales targets on a dashboard.
4. The sales team are desperately unhappy because tracking all their activity is taking time away from selling.

If sales - or anyone using the CRM - have no incentive to keep up with the data, the data quality deteriorates and become less reliable as time passes. Sales as the centre of revenue must be happy and in alignment with the CRM. If they are not, we have an impending CRM failure looming.

So how do we avoid this failure? First, we identify the most common reasons CRM project fail.

Part 1: Why CRM projects fail

1. Poorly set objectives

There’s no rule that says CRM system objectives must include revenue improvements. However, by definition, if you can't measure revenue impact, you can't calculate CRM ROI.

If increased revenue is not a key driver of CRM objectives the success of a CRM system is subjective. ROI goals for a CRM project create objective goals for the CRM project that everyone can understand.

Examples of CRM objectives that are easily related to ROI are:

• Increased customer acquisitions
• Decreased customer acquisition cost
• Increased revenue per customer
• Increased customer tenure
• Shortened sales cycle

It addition it is important that your CRM objectives align with and support the company’s business strategy.

Customer Relationship Management is not software, it’s a business strategy aimed at growing and rewarding profitable customer relationships.

Your CRM strategy needs to show how strategy, people, processes and software are orchestrated to directly impact the business's customers and revenue objectives.

By setting measurable objectives and having a clear strategic vision of where your company should be after successful implementation, you will have a clear guide to follow.

2. Scope creep

We all know that scope creep kills all projects, so we must actively manage scope in;

1. a disciplined way and;
2. at a detailed level.

Remember that if the project incurs significant budget and time overruns, it won't be because certain scope items were underestimated. It will be because certain scope items were omitted in the planning and costing process.

Scope omissions are the major cause of project overruns, not poor costings.

Each CRM system implementation plan has its own scope dimensions. Failed plans have often overlooked and failed to micro-manage the scope in the following areas:

• True licensing requirement and cost
• Application/integration development
• Data migration
• System integration
• Software customisation
• Staffing
• Change management

3. User adoption

A new CRM system brings new processes, automation, information, roles, responsibilities and control. Notably, a new CRM system oftentimes brings an actual or perceived loss of control.

Even if well implemented and well planned, CRM software is always a tough task for end-users to adopt. Often in order to conduct a quick implementation, organisations ignore proper user training and communication to their staff.

• There may be a few staff who may feel it will take their jobs;
• some staff might not like change;
• sales staff may feel like it will be used to spy and monitor their activities;
• and some staff may not understand why a CRM is needed in the first place.

Poor user adoption will create an unpleasant atmosphere where management or project owners drive adoption but CRM is resisted. Resistance to change is a given in most CRM implementations, but it needs to be managed effectively. When it fails to be quickly and properly addressed resistance will result in a less than 100% productive CRM. Wrong data entry is highly expected in these cases, 40% of the CRM failures happen due to wrong data entry.

4. Wrong CRM vendor

Estimates are that 50% of the CRMs fail due to signing the wrong vendor.

To implement a CRM system on a lower budget, and blinded by an attractive price point, businesses often make the mistake of not doing proper research on the vendor. In addition, businesses sometimes err on the other side and over-spec the CRM by paying for features that they don’t want or even need.

Consider your current business processes. Make sure that you don’t have to entirely retool your business processes and current software to implement a CRM.

When talking to the different vendors, set a list of questions, and go through them point by point.

Here are a few examples that you can adapt to suit your circumstances:

• Which of the CRM features are absolutely must-have?
• Is the software flexible and adaptable enough for us to customise in-house?
• How scalable is it? Will we outgrow it too fast?
• How easily does it integrate with our existing tools?
• Can we get started easily? Does it need complex training?
• Can you give us a full demo?
• How much help will you provide to us within the price?
• How long have you been in business?
• Which other businesses like ours have you supplied with a CRM?

5. Overcomplicating requirements

The people using the CRM system will not necessarily all be technically-minded. If the new CRM is not easy to use, it may be disregarded as a useful tool. Keep the CRM simple and only buy into features that you really need.

There is a large temptation during the vendor selection process to deliver to the vendor an exhaust list of features that covers a range of departments and functions at the business. Don’t make this mistake.

Working sessions with teams of executives looking to select a CRM provider typically identify 10 - 20 unique objectives. With a diluted focus, it’s difficult to succeed, and the vendor is destined to be licking their lips at the potential of years-long CRM implementation process with a fat sticker price.

Define the business outcomes before you begin to meet with CRM vendors.

Lastly, go for the most user-friendly and intuitive interface. Hitting your team with a new CRM system, and with a difficult to use interface all in one go - much of which is not required - will only put them off from day one.

6. Not getting management on board

The executive leadership team must be on board with the CRM project. With leadership committed, collaboration between departments such as sales, marketing, finance and customer service can begin to take place.

If you don’t have this support, major problems are bound to occur. If executives seem reluctant, refer to your CRM strategy and its alignment to the business strategy and its bottom line.

Executives will get on board if they can see that the CRM will produce growth including:

• Lower costs
• Increased sales
• Improved marketing
• Higher customer retention rates
• Accountability between departments

Take CRM out of the technical arena and move it into a language that they want to understand.

When going through your CRM vendor selection process get management involved. Don’t do it alone. In the future, management buy-in will be needed to drive the adoption across the various departments.

Part 2: How to make CRM Systems more successful

1. Rethink CRM as a revenue tool

It is important to re-think CRM as a tool to increase revenue. The reason investment is made in CRM is to yield a return. Revenue must be the primary driver of CRM success.

Educate and drive this message with the CRM implementation team, the CEO and sales leadership.

Your sales team needs to understand that they drive the execution of your strategy every time they interact with a client or prospect.

Your implementation of a CRM system is not about the technology, and it is not to fulfil an administrative reporting requirement, which is how too many sales teams view it.

The CRM is a tool to help them sell more, access support resources during sales cycles, achieve targets and manage territories better.

If the sales team recognises the value of this tool, you’ll get all the metrics and forecast information you desire. If not, you’ll be back to data analysis and best guesses in Excel spreadsheets.

2. Integrate marketing with sales

Seamlessly integrating marketing efforts with sales efforts is a leading indicator of CRM success. CRM vendors in the last few years have made massive strides to extend CRMs into the marketing realm connecting it with sales. Eg. Salesforce Pardot and HubSpot Marketing.

Experience shows that marketing and sales functions collaborate very poorly on CRM implementation. Marketing tends to blame sales for not following up on the leads produced. And sales points out that marketing is producing poor quality leads that are not qualified to buy.

Overcoming these differences requires a collaborative effort by both sales and marketing teams throughout the sales process.

Early in the sales cycle, marketing and sales have roles to play in identifying and qualifying opportunities to nurture and pursue.

As the sales cycle progresses, sales and marketing should have a shared understanding of lead stages and other factors indicating which leads should not be pursued.

These factors include:

• Lead
• Marketing Qualified Lead
• Sales Qualified Lead
• Personas
• Ideal Customer Profiles

Later in the sales cycle, marketing works with sales to create materials that can be customised to client objectives. This includes custom case studies and presentations - instead of the generic collateral that sales teams often see as low value.

Finally, working together on win/loss analysis provides an active feedback loop for joint planning and addressing future needs.

This kind of integration, using your CRM as the glue, will improve marketing’s efforts to create gravity with prospects, and sales’ ability to accelerate sales cycles.

It’s an advantage for the business if you can use at least some of the same metrics to evaluate the success of both departments.

3. User training: Coach to improve

CRM is growing quickly as an industry, but its actual benefits after rollout aren’t keeping up. The majority of CRM rollouts deliver only limited benefits. Why? Customers aren’t taking advantage of all the features CRM offers.

Even if you manage to onboard your end users, you won’t get much out of the system if they can’t or won’t use the features you predicted would deliver a good ROI.

Managers need to coach to improve CRM usage

The pivotal role in driving CRM success is not individual sales and customer-facing people. It is their management. Sales management will determine how the sales team uses and experiences the CRM.

If sales managers use it solely to check on the amount of activity, call volume, or other measures of efficiency, it’s of low value to the sales team and will likely be rejected or filled with fictional data.

• Use it as a tool to jointly create strategies for major opportunities.
• Help the sales team to maximize opportunities by coaching them throughout the sales process. Specifically for sales, coaching can provide high impact, but it’s rarely done well.
• Use CRM as a powerful mechanism to support coaching for individual sales calls, as well as opportunity, account, and territory management.

User training is probably the most important step to implementing a CRM solution successfully.

Who needs training?

Anyone who will be using the system, and anyone who is supervising system users.

A common mistake is to skip management during the training process, but if they don’t know how to use the system, they won’t have the knowledge to efficiently supervise those who do use it.

The more knowledge management has of the system, the better job they can do of promoting proper use after initial training.

A month or so after the initial launch and training, have a refresher program to make sure your staff is getting the most out of the program.

4. Build an implementation team

You need to assemble a strong team to develop your CRM implementation plan. Make sure this team includes individuals who were part of the CRM evaluation phase.

It is essential that this team is well-balanced and includes representatives from all key stakeholder groups.

Your CRM team should include:

Senior management

Regardless of whether they will use the CRM in their daily tasks, senior management should be involved in the planning and implementation process. This ensures the results of the investment meet expectations.

End Users

Include staff from every area/department that will use the CRM. Planning to satisfy all end-users is essential. The CRM system will only be a success if everyone uses it.

Tip: Don’t make the mistake of taking the heads of a department’s needs as representatives of the entire department. Include frontline staff as well as those higher up.

Project Manager

One person should be responsible for the implementation process overall. They’re in charge of setting up meetings, organising the team, and making sure key goals are met. This doesn’t have to be someone from management. They must have the skills, knowledge, and enthusiasm to own the role.

The CRM Champion

An important member of your team will be someone who is really interested in the new CRM system. The CRM champion is someone who wants to learn everything about the system. Users can refer to them when they have problems or questions. This role isn’t the same as the project manager. The CRM champion can be a contact point with the vendor and help explain important features to the rest of the team.

5. Clean and migrate your customer data

Data migration for CRM is a lot more complicated than moving data from old fields to a new system. It’s very unlikely that your current contact management system will match the new CRM fields. This can make data migration the biggest task of the entire CRM implementation process.

Consider data exclusions

It might not be worthwhile to migrate all of your contact records to the new system. Make this decision upfront, so you and your team don’t waste time on unnecessary data.

Examples of potential exclusions you could consider:

• If your current CRM system is 10 years old, how many years of activity should you migrate?
• Should you migrate contact records that have been inactive for 5 years?

Make sure your current data is clean and accurate

Ask your client-facing staff to clean up their current client contact information. CRM will offer users improved access to customer data, but that won’t be the case if your current data isn’t accurate.

Take the time to fill in missing fields, ensure the information they already contain is accurate, and remove any duplicate data you find.

Things to look out for include

• Duplicate/outdated email addresses
• Contact information for those no longer at client companies
• Incorrect job titles for current contacts

6. Test your new CRM extensively before launch

Before your new system goes live, take the time to thoroughly test it. Problems at launch can affect overall adoption, so make sure everything works and your data is secure.

Here are the system areas you should test:

Data quality and conversion

Even though you managed to clean your data issues before and during migration, you should still double-check before launching the system:

• Is there duplicate data?
• Is your hidden data actually hidden?
• Is the data mapping correctly?
• Does new and updated data save correctly?
• Is there missing data?

Reporting and integration

How well the CRM solution passes data to or from external systems, including the accuracy of these reports:

• Do CRM data and reports match existing records?
• Do dashboards and data visualisation present data accurately?
• Are reports exported in the right format?
• Do the filters work properly?
• Do reports show the right headings and build versions?

Launch systematically with a phased rollout

Roll out the CRM in a phased approach. Information learned from early implementation stages can be applied to guide the rest of the process. There will be fewer issues as the implementation continues.

• Integrate your data in batches. Do the first integration with a small sample.
• Roll out to a small group of users for evaluation and testing before implementation across the organisation.
• Roll out to a small tech-savvy team first. Ask for feedback.
• Roll out to a small non-tech-savvy team next. Ask for feedback.

Regression Testing and User Acceptance Testing

Once you’ve addressed all these potential issues, you’ll be ready to start training end users in your organisation and test the system with them in real time.

• Does your CRM documentation meet all the needs of your end-users?
• Are customisations you’ve made to the CRM system easy to use?
• Are all features implemented correctly?
• Is system data reliability available for end-users?
• Are customer details kept confidential?

After addressing these user acceptance issues, you can ensure the application integrates well with other systems the end-user needs.

And remember, any time you fix a defect in your system, run these tests again to see if other areas were affected.

Final thoughts

If you think CRM will magically resolve all of your problems, you are going to be disappointed. CRM is a tool, and like any tool, it requires skilled hands to get the most out of it.

Make sure your CRM decisions are customer-centric. Ask yourself, will this translate to revenue for the company? If you do this regularly and consider the 12 points above, you’ll be well on your way to a successful CRM implementation.

I hope you found this post useful. I’d love to hear your feedback. You can find me on LinkedIn.

All the best,

Luke Marthinusen