Why Do CRM Projects Fail (And How to Fix Them)
Customers are the lifeblood of any business, so it makes sense to have information in place that tells you as much as possible about your customer - their needs and experiences. With the advent of computerisation, it was expected that some of the earliest software applications manage customer data. These systems evolved from simple client lists to the sophisticated management systems of today that can store everything from client demographics and shopping behaviour, both instore and online, to data gathered from social media.. Obviously no company now can be without a customer relationship management (CRM) system, a critical business tool.
Since the introduction of CRM systems in the 1990s, the implementation failure rate has been disturbingly high. While you would expect that the failure rate would fall off as the products and the market matured, the same reasons crop up again and again as to why CRM projects fail.
Here are some statistics on CRM failures over the last 13 years.
These statistics may not reflect CRM implementations that fell short of expectations, where the companies live with below-par performance and little to no ROI. However, it is not all doom and gloom; there are companies who have achieved very successful implementations by avoiding the common pitfalls that can derail a CRM project. All of the companies listed in the graph above, identified why their CRM implementations failed, from this we can learn how to avoid or fix these common points of failure. For instance, Forrester (2009) mentions these four factors as key contributors in why CRM projects fail:
- Lack of a coherent CRM strategy
- Lack of attention to process
- Focussing on technology, rather than people
- Failure to adopt, once implemented.
Causes cited by other sources include:
- Lack of executive commitment
- Poor data quality
- Lack of alignment with the existing IT architecture
In fairness it must also be pointed out that most of the points above can also be applied to any IT software project. Today, even with the adoption of agile development and best practices such as ITIL, software implementations are still risky projects, and thus is a contributory factor to why CRM implementations fail.
What is more, few people truly learn from history. In 2004, Philip Bligh wrote a book called "CRM Unplugged", where Chapter 2 discussed why CRM fails and how to fix it. He illustrates a set of risk factors collected by Meta Group in 2001 ( acquired by Gartner Group in 2005).
What’s the recurring pattern? No strategy, no process improvement , and poor executive support. In case you think that this information is outdated, things get worse instead of better. In 2014 Success Accelerators and C5 Insight found, not only that over one-third of CRM projects still failed, but that some companies had experienced 2 or 3 successive failures.
Surprisingly, there is a key factor that none of the research mentions explicitly, although all the above points arise as a result of it, and that is the disruption a new CRM brings to the business.
A Good CRM Implementation is a Disruptive One
Any company that intends to implement a CRM that will replace one or more legacy customer databases or older CRMs generally underestimates what a major change this will bring to the business. When you consider that nearly every employee depends on customer information to perform their jobs correctly, the true impact becomes apparent. Now add in the double whammy of new digital and social features that made you select this product in the first place. You’ll need the buy-in and participation of everyone who interacts with customers directly as well as those who use customer data in the course of their work. They are going to require training, and once the new CRM is implemented, there will need to be some change management to ensure the implementation sticks and encourages adoption.
However after all that, we still have not gotten to the root cause of the problem. If you are a disciple of Lean thinking, here is one of the "5 Whys" for your root cause analysis.
"Why are you implementing a CRM in the first place?"
The answer to this is why CRMs fail; it is because you need to be customer-centric, and becoming customer-centric is hard, very hard, so many customer-centric initiatives fail.
The reason why changing from an organisationally-centred or product-centred approach to one where the customer is truly at the heart of your business is so difficult is because you have to turn your business model "Outside-In". Somehow, "outside-in" sounds much more of a stretch target than "customer-centric", and has been written about by others since Ranjay Gulati, such as George Day.
Why CRM Fails and How to Fix It
Develop your Strategy and Vision
Appoint Sponsors and Champions
In order to keep the project top of mind, you need some committed individuals to sponsor the project and be champions in each of the business units. This is a major business change and the CEO should step up to the plate for the best results. Lack of sponsorship and commitment is a guarantee of any project failure and not just a reason why CRMs fail.
While we are discussing commitment, make sure that the CIO is bought in too.