Would you invest in something that has a failure rate of 46 percent? If you've recently acquired a customer relationship management (CRM) system, then whether or not you realize it, that is what you have done.
That 46 percent is the high end of the failure rate range for these systems. At the low-end, there is an "optimistic" 16 percent chance of failure, according to a white paper by C5 Insight, which analyzed the various studies on CRM failure.
C5 Insight itself believes the failure rate is 38 percent.
Failure to Deliver
That CRM has a high rate of failure, though, is not news. For the past decade or more various consultancies have chronicled the ways and the rates at which these expensive software applications do not deliver.
The reasons cited over the year include low user adoption, costly change orders, complaints from users that CRM slows them down, the necessity for add-ons, project halts or delays, platform changes and the failure to produce a measureable return on investment, according to C5 Insights.
Indeed these are legitimate factors that could bring down any project. There are others as well, of course.
"In the end, success or failure rests squarely upon the people who are expected to use the system," Mark Purnell, technical sales architect for Dynamics CRM at Neudesic told CMSWire. "However, these users are usually not the ones who evaluate, select and buy the CRM solution that is being implemented."
"Time and again, these people are not involved in the design or configuration of the product," he continues. "There is no vested interest in the solution. These individuals often feel like something was foisted on them."
Just a Perception?
Then again, one can’t help but wonder if CRM is merely being perceived as a failure, especially as it is compared to other, more playful applications with a far lighter footprint.
That is a theory posed by Folke Lemaitre, CEO and founder of Engagor. "Typical CRM systems are complex and require vast cross-departmental communication and collaboration," he said. "On the other hand, social, mobile and cloud are at the other end of the spectrum in terms of scalability and commitment. They are far simpler to adapt into a company's strategy and require less cooperation between various tiers."
Thus, Lemaitre continues, when you compare the time spent, resource allocation and cost of CRM to things like social, mobile and cloud, it's easy to see how clunky and time consuming some CRM systems can be, he explained:
Social, mobile and cloud easily adapt to new trends, multiple ideas and perspectives and can be easily adjusted with little fuss. CRM systems are complicated and many people still disagree over their finer points. Simply put, these systems are not lean and easily maneuverable in such a fast-paced digital landscape."
In other words, it's complicated.
Still, there are signs of CRM failure of which every company using these systems should be aware. You know your CRM system is failing you if….
It is not creating better relationships between buyers and sellers.
"When CRM technology was first introduced, sellers believed that with this technology alone, they would have better relationships with their customers, which would lead to new and organic growth," Qvidian CEO Lewie Miller tells CMSWire.com.
"Yet the best sales reps understand that for a truly fruitful sales-customer relationship, a two-way conversation must exist." The problem is a typical CRM system does not support this conversation, he said--sales reps need context to make CRM data actionable.
It is not helping sales reps close more deals.
Again, Miller said, for sales reps on the front lines, additional assistance is needed when speaking to customers. "As such, the sales execution market is now working to boost CRM's capabilities by filling in the gap between what it can do and what is needed."
It is not forecasting any better even though there is more data.
Justin Shriber, vice president of products at C9, also drills into CRM's ultimate role as a data-gathering system with this observation.
"CRM systems are very efficient at centralizing customer data from internal sources," he tells CMSWire. However, "external sources and data residing in other tools, such as email, don't always translate find their way into the CRM. As a result, despite the proliferation of customer and industry data, there’s been a decline in sales forecast accuracy."
The bottom line is that companies have ever more data in their systems, but their ability to forecast and drive sales is stagnant.
"CRM solutions alone fail to meaningfully translate internal and external data into insights that directly impact sales teams' abilities to identify deals and accelerate their close," Shriber concludes.
It is causing the company to focus too much on tools and technology – and not on the over-arching business problems.
So said Nancy Emsley, national director of Enterprise Enablement at Neudesic.
"Social, cloud, mobile are being presented to organizations and their users as 'tools' without thought as to 'why' the tool is beneficial to the organization and, more importantly, to the end user," she said. "As long as the primary focus is technology and tools, and the business and individual user drivers are secondary, CRM systems will continue to fail."
Lack of vision within the organization is another culprit, she adds – namely that management often misunderstands the value that a flexible CRM solution brings to the enterprise. "CRM systems are often implemented to force compliance to various rules and processes, considering only the 'how' of the system, and not the 'why' behind it," Emsley said.