Small Business Customer Relationship Management

Why CRM Projects Fail To Deliver On The Promise

January 10, 2008

Frustrated With Project FailureFrustrated With Project Failure

CRM software project failure Why do companies spend the time and money to implement a Customer Relationship Management system? The reasons vary, but near the top of the list you’ll almost always find:

  1. Generate more sales.
  2. Get control of their contacts with a central database.
  3. Reduce operating inefficiencies and costs.

Companies get sold on how slick everything fits together and the flashy reports that will give magical insight into their business. CRM demos are designed to give maximum WOW factor and all of the scenarios used in the sales presentation are tailored to show off the CRM system at its very best and completely side step any product deficiencies. Those selling CRM systems get good at selling the “sizzle”.

However, the “steak” usually falls well short of expectations. And that’s because the sales process they’re using has been purposely designed to distract you from a critical fact.

More on that later…but first…

Most of the resources (time, money, patience and political capital) get burned up just trying to get a system installed and users using it in a minimal way. This means that very little enthusiasm for the project is left to get into the really meaningful and valuable aspects of a CRM system.

If you think of a mining company that has just found a rich gold deposit deep within the earth; they understand a very important distinction that makes all of the difference between success and failure. Once a gold deposit is found, most of the investment in the mine is to move equipment in, build the infrastructure and dig to where the gold is. Most of the time and money goes into developing the site without any gold coming out. Only after the site is ready does the business of mining gold begin. Successful mines do not confuse set-up with production.

With your CRM project, you need to understand that there is a set-up phase and a production phase. You need a clear plan for both phases. Most companies only plan around buying, installing and training and fail to have a plan for production.

Ask yourself: “How, specifically, are we going to use our CRM system to achieve our goals:

  1. How, specifically, is a CRM system going to generate more sales for us?
  2. How, specifically, is a CRM system going to give us more control of our contacts?
  3. How, specifically, is a CRM system going to reduce our operating inefficiencies and costs?

Your CRM project should not start until you have a very clear and detailed answer to that question.

Now, experience tells me that even when given this advice, companies are pressing ahead with their project without taking the time to answer that question. The warning to stop and think it through will go unheeded.

Most small, entrepreneurial companies that are used to running on lean budgets and making decisions quickly find it difficult to stop and ask questions that sound simple but are actually difficult to answer. It can be a very frustrating, very aggravating process to figure out exactly how a CRM system is going to pay-off. If you understand and accept that fact, then getting through it becomes much easier.

I call it the Leadership Challenge. And this is where all successful CRM projects must start. This is where CRM begins with philosophy and not software. This is where CRM is about organizing your business around the idea that:

“If all we do is born out of a desire to Identify, Attract and Retain our Most Profitable Customer, then we will be a successful company.”

Of course, this is not what the people trying to sell you a CRM system want you to hear. They want you to get signed-up on a trial period…they want you to defer this thinking until after you’ve got the system in. They want you to pay them now and think about it later. Of course they do…they make no money from you internal soul searching, mapping out processes and really understanding your customer and how it relates to your business. They make their money when you buy software and implementation services.

Their sales process is at odds with your buying process. And your buying process should begin only after you’ve got a very clear understanding of your relationship to your customer and how adopting a CRM system is going to help you achieve your business goals.

Comments

5 Responses to “Why CRM Projects Fail To Deliver On The Promise”

  1. Mike Boysen - Effective CRM Consulting on August 2nd, 2008 6:15 am

    >>Most companies only plan around buying, installing and training and fail to have a plan for production.<<

    I see where you are coming from. I too believe that most of my clients over the past 15 years have failed to plan for the life of the CRM initiative.

    CRM is not SFA. We figured out a long time ago that the sales organization should not drive the vision of the enterprise. That has to start at the top. And CRM is a customer-centric way of doing business so there is a lot of work to be done to understand your customers and how you will make the changes necessary to deliver what they want and need.

    This has nothing to do with software. Most software is the same and should not be purchased until the CRM strategy and business case is complete. You’re right, the CRM sales folks are pretty slick with the WOW stuff. But that shiny box on your shelf certainly won’t make you feel so good in a few months when you start wondering “when’s this software going to kick in and change my business?”

  2. Gloria Rubaine on January 22nd, 2009 5:47 am

    It’s people that are responsible for growth, customer service and higher revenues not the software. Before implementing any CRM software, management should target which sectors of the company are going to use it, and have a clear idea of what the system specifically is going to do. Customer information and details are of course a given. However if the users are sales people, then input and consultation with the sales team is a must so that the system is relevant to them, e.g. opportunities, closed accounts and additional information that the sales team will want to tap into. If the management does not do this, and implements a CRM for sales that only drives management reports, with too many fields, then it’s going to be garbage in and garbage out and no one especially management is going to get truly useful information. For larger companies, it will take years (2-5) to even get a sensible report. For operations departments, a somewhat different tactic has to be employed since the personnel are probably already using a main company operating system and they are focused on that . A lot of companies do not have stand alone Customer Service Departments, and the day to day operations provides this to clients, so in order to minimize the workload, the CRM software has to be integrated into the company system or if not, simplified and customized for specific departments so it’s not seen as a burden. Again consultation with that department is recommended so the CRM is perceived as a welcome tool .

    How a CRM is used is going to be decided by the users in the end, and management teams really have to sell the CRM internally without using a big stick.

  3. Sunoj on June 3rd, 2010 8:34 am

    Thanks for sharing valuable piece of information through this post. I’m a small business owner and I value the importance of maintaining a healthy relationship with my customers. Mantra of every business is that a satisfied customer brings more. One does not come across these lessons online. Another recommended site is http://www.karmiccoach.com. Blogs of http://www.mysticselling.com are interesting to read.

    -Sunoj

  4. Intelestream on August 3rd, 2010 4:47 pm

    Any system implementation can fail if expectations are not clear for both your business needs and what the system capabilities are that you are shopping for. Focus on what the system can do and then evaluate if it is sufficient for your needs. As long as expectations are attainable, results will come easily.
    The Intelestream Team

  5. Sjorcha on May 1st, 2011 8:14 pm

    Thank you for this wonderful and insightive information ( I have spent my entire weekend searching the net for a process automated CRM as opposed to a discipline orientated CRM.
    I am equally frustrated with the gloss sales pitches on how your company will look smart sleek and professional.
    Every business has its own CRM system either formal or informal. Ours has been built across many mediams as we have grown; accounting software, a self designed inventory of warehoused stock and Outlook express with Contact manger. The trouble is our state sales staff cant see what we have in stock, whats on back order and which clients NOT to take orders from. Many phone calls, text messages, so much lost time in contacting stockist with appologies or backorder times.
    Maybe in the future but right now we dont need ,a CRM that really hones in on leads or data, graphs or charts, but a real time web based system of sales capture with ready to view stock on hand and product images for clients and access to all client history from emails, orders or general comments such as feedback and credit status all from within one easily accessible central place.
    For our business to move forward we need to streamline our processes to satisfy our client base we already have with quick efficiency of turnaround
    I was going for Google Docs or access 2007

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