subject: The Top 3 Reasons Crm Initiatives (still) Failand How To Avoid Them [print this page] In spite of global economic challenges, many businesses continue to make investments in customer relationship management (CRM) systems a high priority, recognizing that strong customer relationships are vital to their business success. These organizations seek higher profitability, improved productivity, lower costs, stronger customer retention, and greater insight into customer and prospect behavior. These companies confidence in CRMs value confirms the business communitys consensus that the early age of bloated CRM projects and high-profile failures has been superseded by an era of success stories and widespread evidence of CRMs ability to generate returns on investment.
Yet, although it is true that major improvements have been made in CRM technology and outcomes over the past two decades, it is also true that many companies still struggle to implement their CRM system effectively and achieve the results they expect from these powerful information systems. In fact, in response to a recent Forrester survey, only one third of enterprise-class organizations indicated that their CRM applications significantly improved their end users productivity. And only half responded that their CRM vendors professional services team could offer significant technical skills to help move the implementation forward.
This same survey documented over 200 specific problems companies had with their CRM implementations. But the real attention-getting finding concerned the types of problems it uncovereda finding that sheds some interesting light on the true challenge of CRM implementation. Only 33% of the problems companies experienced had anything to do with technology. The lions share focused squarely on problems concerning people, process, corporate strategy, and other non-software types of issues.
These results warrant further investigation. Could it be that companies implementing CRM could improve their success by focusing less exclusively on the software and more on managing the organizational change necessary to implement it? This white paper will focus on exactly that: the top factorscompletely above and beyond the software itselfthat cause companies to struggle to reap the rewards of their investment in CRM, and what they can focus on to improve their odds of success.
The Most Overlooked Factor in CRM Success: People
As you would expect, CRM providers spend a lot of marketing effort promoting the technological features of products. Nothing gets their prospects attention faster than a distinctive product feature their competitors cant match. But discussing features and functions is the easiest part of CRM. When it comes to the actual features of CRM software, there are only a limited number of variables that come into play, and in fact platform and architecture are probably bigger success factors and differentiators between CRM solutions than the features themselves.
However, when you look past the ones and zeroes, you start to see the truly complex side of CRM: the human side. Diverse and sometimes vast teams of individual users have to be considered for a company to reap the full benefits of CRM. At that point, the number of variables a company must account for in CRM selection and implementation can grow exponentially.
The key issue at the heart of the human side of CRM implementation is user adoption. Even the best CRM system will fail to deliver significant ROI if the end users arent able or willing to use it correctlyor worse yet, if they dont use it at all. Many organizations select and implement a terrific software solution, only to struggle with getting their employees on board with the new system, not to mention the customer-centric culture required to support it, which in many cases is also a major change for the organization.
Change management is clearly an associated key issue. Theres only one thing more difficult than getting a person to change the way he or she works, and thats getting entire teams of people to change the way they work. Changeeven the positive kindis challenging and requires astute planning and leadership to gently guide it though to fruition, especially in larger corporations.
These people issues are just as importantif not more sothan the technology issues CRM customers face, and they can as easily cause a project to fail. So it makes sense that CRM providers should not only offer a solid software product, but also a world-class professional services team and full complement of supporting services to help their customers deal with these very complex user issues. With the right mix of technology and services, the human factors of CRM can be effectively managed with profitable results.
Sadly, many CRM vendors completely overlook this critical aspect of CRM. Their organizations are designed to sell software licenses and (often costly) technical implementation services, not to manage a customers overall transition and ongoing success. When a greater range of CRM services is available, the customer is often rightfully wary that CRM vendors and consultants may be determined to prolong and over-complexity a CRM project simply in order to generate the greatest number of billable hours.
Such short-sighted tactics do little to genuinely ensure CRM success. The critical nature of human factors at work in a CRM initiative demands that you focus as much attention on the people using the system as you do on the software. Its not the software that will give you the ROI you want; its the people who implement it, use it, and manage by it.
With this in mind, lets take a look at some of the top reasons CRM implementations fail, even when they involve excellent CRM solutions and are driven by savvy, well-intentioned technology and business professionals
Strategic CRM implementations are often major projects, requiring significant corporate commitment. Given this, it is reasonable to suppose that all companies pursuing CRM initiatives have sound and well-articulated goals and rationales for their CRM projects. Yet almost 20% of Forresters survey respondents cited strategy and poorly defined requirements as significant barriers to return on their CRM investments.2 The unfortunate result is that most executive leaders have no way to prove their CRM systems have produced the ROI they had hoped foror any ROI at all, for that matterbecause they neither defined their targets in advance nor determined how they would be measured. If you havent agreed on a definition of success, how will you know whether youve achieved it?
Executive leaders must take the time up front to decide what successful ROI would look like for their specific situation. They must know what their customer relationship processes are today, as well as how they hope to change them for the future and how they will evaluate their progress against these goals. Laying the groundwork for CRM success in 3 key areas can help ensure you get the ROI you expect:
1. Craft a Clear Business Case
Crafting a solid business case may sound simple. Its not. Many companies try to shortcut the process by assembling a business case from basic rules of thumb or by simply mirroring another organizations CRM initiative. This almost always proves to be a costly mistake. Every organization is unique, with unique processes and considerations, and thus every CRM implementation is unique. Executives must recognize the idiosyncrasies of their organizations that might affect the outcome of their CRM initiative. Having a clear problem statement goes a long way toward keeping the implementation on track. And while constant steering corrections will still be required, those navigational changes will be much more effective when guided by the proper executive vision of the problem to be solved.
2. Document the Current CRM Condition.
Business process engineers know that in order to adequately calculate the value the enterprise will gain from a new CRM system, they must establish a baseline measurement of what current CRM processes are, whether they are implementing their first CRM system or replacing one they have outgrown. Then they will have a valid way to measure the enhancements the CRM system will bring. But because many executives feel like they know their company so well, they tend to disregard this very important practice. Just because there is a documented customer relationship process in place today doesnt mean its being followed properly, and seldom does a company have an accurate record of the rate and costs of errors and redundancies, or of the time it takes to perform certain tasks or processes. But without this information, measuring the efficiency, productivity, and accuracy gains from CRM can be very difficult. Documenting current CRM processes can take extra time and effort, but you will never know if your CRM practices have truly improved unless you can document what those practices look like today.
3. Establish Success Metrics.
When executives have a clear picture of the current state of their CRM practices, the improvement goals become much clearer. So do the metrics they should use to objectively measure their progress toward those goals. And because no single metric can adequately measure ROI from a complex CRM system, executives must decide which metrics would have the biggest impact on their companys strategic goals. There are input metrics that measure the accuracy and validity of data entered by system users. Also available are process metrics, which measure the execution of individual sales team members on a more qualitative scale. Finally, outcome metrics measure the desired outcomes of the CRM process: customer calls, presentations, demonstrations, and orders, for example. Top managers should use a mix of these metrics to gauge their companys overall performance toward meeting their CRM goals. Because these metrics have differing levels of granularity, it will become clearer where managers need to spend their time to correct CRM problems early in the process. There is no single right answer in prioritizing CRM goals and metricsin fact, many companies find that the qualitative soft returns are infinitely more meaningful to their business than the quantitative hard returnsas it is all dependent on the companys unique goals and strategy.
No CRM system will deliver significant ROI without a clear, overarching strategy to guide its implementation and use. That means everyone in the enterprisefrom top management down to the end users of the systemmust clearly understand what they are trying to accomplish with the tool.
This direction must come from the top. Executive sponsors must develop a clear business case for their new CRM software. They have to agree on strategic and tactical goals for what they hope to accomplish and a realistic timeframe for getting it done, then work to gain buy-in throughout the organization.
Reason #2: Companies View CRM as an IT Project, Rather Than a Business Initiative
Armed with an effective business case and a clear problem statement, your enterprise can generate a great deal of CRM momentum. The corporate vision and core company values set the course for a successful implementation. Yet we still see many CRM systems end up as little more than a management reporting tool, leaving the actual customer experience virtually unchanged.
Why is this? It has very little to do with the software. But it has everything to do with the focus of the organizations who implement the system.
When evaluating a CRM system, most executives start out asking exactly the right questions:
How can the system make doing business with us more positive?
How can we use the system to drive repeat sales and encourage customer loyalty?
How can the software streamline our processes and increase business insight?
These are very good questions to ask. And if they stay at the forefront of the actual execution, they will guide the enterprise toward a successful implementation and positive ROI. However, once these questions are answered to top managements satisfaction, thats where their guiding force tends to lose steam. For at this point, many executives mistakenly assume their job is done. So they take their hands completely off the steering wheel and hand it to the IT department for selection and implementation. Now CRM has been demoted from corporate strategy to IT project.
Naturally, IT departments are crucial to successful CRM implementations. But many top executives tend to forget that the CIO operates from a much more granular set of job concernsconcerns that focus more on software packages than customer relationships.
The CIOs questions sound more like:
What is our deadline for implementation and can we
meet it with current IT staff? How can I get our other 10 data repositories to talk to this new system?
And will I have to hire expensive outside consultants to help?
The CIOs concerns are every bit as valid as the CEOs. But the CIO is measured by technology concerns instead of business issues. Without constant steering corrections in the interests of the business goals of a CRM project, the final product is at risk of becoming an IT solution, but not a business solution. It may be on time and on budget and meet a range of technical criteria, but whether it aligns with corporate strategy is another matter entirely.
Reason #3: Companies Automate a Misaligned Process
As powerful and helpful as CRM software can be, at its root, it is not performing any feats of magic. Ultimately, like other forms of software, CRM simply streamlines and automates what would otherwise be time-consuming, challenging, or repetitive processes. If these processes are misguided or broken to begin with, automation will not fix them.
Therefore, in order for an enterprise to garner a significant return on its investment in CRM technology, its customer relationship processes must be sound, well documented, and precisely aligned with the mission of the enterprise itself.
Process alignment is an area in which most businesses have room for improvement. The majority of enterprises find it difficult to agree on what their current processes are, much less what they should be. Or worse: they discover their processes are misaligned only after a new system is implemented and end-user training has begun.
If your organization attempts to implement a strategic CRM system without having your existing or desired processes well aligned and documented beforehand, you will be in for a rough ride. Without process clarity and alignment, automation is unlikely to produce clear benefits.
In many ways, business process alignment is actually more important than the software itself. Once a process has been aligned, understood, agreed to, and well documented, the technology requirements tend to flow naturally from the process. Conversely, no software product can deliver business value from a process that was off-kilter from the start.
This is not to say that the software is unimportantin fact, the importance of process clarity and refinement underlines the value of having a highly adaptive and malleable CRM software solution that can precisely model your desired processesbut it does suggest that even the best technology will fail to deliver results if the processes themselves are misaligned. Approach CRM initiatives as an opportunity for greater process clarity, alignment, definition, and refinement, rather than an excuse to lay software on top of existing processesor worse, to allow technology to impose new cookie-cutter out of the box processes that dont fit your businessand you will experience far greater success.
The Solution: The 3-Legged Stool of CRM Professional Services
The three components that always impact a successful CRM implementation are people, process, and technologythe famous three-legged stool (if any leg fails, the stool collapses). People need to embrace and use the system in order for the company to achieve its goals. Process must be effectively defined and mapped within the system for it to generate results. And finally, the technology must be sound, with all the right features in place, the right fit to your business, and the right ties to other enterprise systems and data sources.
Many CRM implementations fail because both the implementing company and the CRM vendor assisting them focus too narrowly on the technology leg of the stool alone. In contrast, the most effective CRM software vendors build on these three principles jointly and never losing sight of the all-important people and process factors. They help customers build a stable three-legged stool by supporting and assisting in all three elements. With this robust, threefold approach to CRM services, they can advise customers not just on the technical elements of the implementation, but on every facet that might impact user adoption and ultimate success. CRM vendors that understand this principle will not just offer great software, but also provide a comprehensive portfolio of supporting services that can help companies succeed in all areas of their CRM implementation, including: A Comprehensive Communications Strategy.
1.Understanding your CRM goals and strategy is crucial, but communicating this to users is just as important. Thats why the most successful companies start communicating with CRM end users early in the process, preferably before they select a CRM system or even define its requirements. All stakeholders and eventual end users need to have some kind of role or representation in CRM planning and roll-out to have a sense of ownership in the projects success. Clear, two-way communication about a CRM projects goals and all efforts to incorporate and address the needs of diverse user groups must start early and continue throughout implementation and beyond. A vendor that understands the importance of CRM user adoption and buy-in will offer assistance with planning and implementing a comprehensive communication strategy to complement the software project.
2.Effective End-User Training.2. Training is an area where many CRM vendors tend to cut corners. In an effort to achieve an economy of scale, they standardize their end-user training with cookie-cutter materials and methods. The most effective CRM implementers realize how flawed this approach is. Because each companys business processes are different, their usage of a CRM system will always be unique. Generic training materials and courses will therefore always fall short. CRM vendors know this, and those who are genuinely committed to their customers success take the time to understand your unique needs and processes and design customer training programs a
