Research conducted over the past 10 years exhibits startling figures for CRM implementations that did not bring about the expected outcomes. In
America, over 50% of CRM projects do not manage to meet their
objectives – says a recent study. In Europe, this figure touches a whopping 80%.
AMR Research projected an annual cost of almost 15 billion US dollars spent on Cloud CRM software's globally. Regardless of the spending, projects fail from time to time, studies show that the CRM industry is still continuing to show a growth rate of 45% making the obvious indication that it is not the Customer Relationship Management ‘Professionals’ who are suffering, but it is the employees and customers who are falling prey to the web of bad and unsatisfactory systems.
1. Commercial mortgage company does not clearly identify CRM users
A leading organization specializing in real estate loans and proudly showcasing a mortgage portfolio of more than 1.5 billion US dollars had the best technology systems in place, which enabled them to build and expand business without unnecessary staff multiplications. Their up-to-date technological systems also helped keep their costs per loan decently below regular industry averages. 5 years after inception, the company decided to implement a CRM system. Surprisingly, it fell flat and never achieved its goal.
What went wrong?
The primary goal of the Cloud CRM software was to raise productivity, efficiency, automation, and quantum of borrower information available to staff at their call centers.
However, user goals were not paid attention to and the system failed to define who exactly the users would be in the first place. This turned out to be an expensive error.
The consultants hired decided to install an automated IVR system, where clients calling to gain loan information had to dial a certain number and punch in their account numbers. However, if they wished to talk to a live representative, the system assumed the user already knows which department to ask for. The consultants never cross checked whether the existing systems were aligned with the prevalent user experience. Also, the IVR responses from customers were not captured in the CRM software leading to fragmented customer data.
Almost ALL customers were hitting ‘0’ to get live assistance.
Unclear definition of the intended user’s objectives caused lost opportunities, wastage of financial resources and angry customers, resulting in customer attrition.
Poor service led to frustrated customers and finally to a loss of deals. Investments in the CRM system had reached a 7 figure mark, but real losses suffered were much more – since they were in the form of frustrated employees and customers, customer churn, trust lost, convincing customers to come back, and replacing bad systems. The cost of opportunities lost during the gestation period when faulty systems were being repaired, modified and replaced was another story altogether.
Not incorporating a user-centered design was the first mistake. This company had a diverse customer base with clients enquiring about loans ranging from $ 10,000 to $ 1 billion. Obviously, having a system which treated all users equally was a big blunder.
Secondly, task analysis to comprehend user tasks and mental models could have helped. Lastly, a small test run could have thrown light on the fact that most users prefer live interactions rather than engage in a conversation with the so-called state-of-the-art automated system. Only when the whole project went live was this clarity gained.
2. European media firm encounters low user adoption
A media firm in
attempted two complete CRM implementations but did not meet with success even
once. Whenever meetings were held with the sales personnel to figure out
reasons why CRM usage was close to nil, the sales people would present a long
list of reasons, needs and wants; following which systems would be modified in
accordance with the concerns they would express. However, even after repeated
modifications, adjustments and further investments to train and develop the
sales reps. their usage of the CRM system remained exactly the same as earlier
- very low. London
An in-depth analysis brought to surface two basic problems. The first was related to how complex the system itself was, due to which it was time consuming for the sales people to navigate from one record to another. Considering that a sales force's daily routine demands instant information and minimal non-core activities, the system was not quick enough to match up to their time bound requirements. As a result, it left them frustrated and led to a decline in usage.
The second problem was more deep rooted. On investigation it was discovered that the management had not spent enough time to correctly plan and understand what was fundamentally required from the system. This firm primarily needed to manage leads by tracking their progress through the sales process via a good sales process management system, but they instead ended up purchasing an unwieldy contact management database. As a result, no productive analytics were available on the sales process, and this obviously resulted in an unhappy buy-in from the sales team and no value addition for the management either.
Case Study Conclusions
Detailed investigations into why CRM systems fail bring to light a few crucial lessons. The first to keep in mind for companies is not to over buy a solution. It is often seen that simple and not-too-expensive SaaS solutions create more value if the actual users completely understand and adopt it, and are able to use it comfortably (Case 1).
The second vital teaching that comes to surface is that the management must have a clear idea about of the exact type of CRM system needed for the organization.
For companies having limited but stable and relatively static customer relationships, incorporating a contact management system with up-to-date data structure systems will be apt. But those companies whose primary objective is quick lead progression in the sales process will need a system where sales opportunities are right at the center of the system (Case 2).
11 critical factors to consider before a CRM implementation
It is a known fact that CRM success is elusive if the very basics are not in place. Even though a CRM solutions’ success is company specific and strongly connected to the overall objectives and CRM strategy employed, there are certain 'universally applicable' factors:
- Disintegrated business models, poor planning, unclear objectives and business practices, improper management of projects; all these combined with cloudy CRM strategies will make successful CRM implementation a struggle.
- Choosing the correct CRM vendor is often the area where companies make a blunder. It is critical to pick a vendor who not only provides a comprehensive solution but also thoroughly understands company requirements, objectives and plans, and incorporates all of it seamlessly into the solution provided.
- Failure to align existing departments and their aims, processes and culture with the system and the desired project outcome leads to contradictions.
- It is often seen that CRM initiatives are blindly handed over to the IT department because of the stereotypical thought process that CRM is just a ‘technological’ initiative. Not true. CRM implementation is, in fact, a massive business effort which needs top management backing from start to end.
- An erroneous belief that CRM software is the same as actual Customer Relationship ‘Management’ creates execution issues. It is crucial to understand that the two are merely interrelated but not the same thing.
- Organization collaboration, conviction in the CRM program, education and training is a must to ensure user buy-in; else the system will be infested with incorrect information and non adherence to schedules - ultimately leading to confusion and cost overruns.
- Highly stable network platforms and secure hardware are must haves, especially in case of SaaS CRM solutions.
- Excessive customization creates complications and leads to failure. For CRM systems to work, information capture must be simple and systems should display ease and flexibility in use. Also, existing/ old sporadic customer data must be transferred or converted for new systems to support the latest database architecture and thereby avoid strain and technical problems.
- When companies do not conduct a pre-implementation evaluation of key objectives, pinpointing the contributory factors to either failure or success becomes impossible, leading to repeated failures.
- Unclear metrics is a well-known cause for failure. The value of KPIs and ROI are deciding factors that should never be underestimated. It also makes sense to run a test project with clearly assigned metrics. This helps identify loopholes in the system, if any.
- Last but not least, customers are often ignored in the entire CRM process. To ensure heightened customer satisfaction and value, they should be kept in the loop before, during and after implementation of a CRM solution.
According to Gartner - Spending on CRM applications grew by more than 8% in 2010; but a subset called "social CRM," which represents only 5% of all CRM, grew at more than 50%.
Any company looking into implementing a new CRM system essentially needs bang on planning and implementation. Imparting necessary training to people will bring any possible disruptions down to a negligible figure, which can slowly be phased out.
The management needs to accurately analyze its organization and realistically focus on the components that sales personnel will comprehend, easily use, and gain maximum benefit and productivity from.
CRM systems should also have flexibility, and breathe and grow along with the company.
Also, bearing in mind that every business changes with time, breaking the entire project into manageable small components is wise, and running small test programs is sensible. However, the portion-wise roll out of the CRM solutions has to be done very carefully, because they are ultimately built in and around the larger end-to-end strategy.
Despite all the scary stories related to the high failure rates of CRM implementations, experts feel that that Cloud CRM Software does really work when combined with well defined objectives, correct planning, integration, and seamless execution. They believe that there are a lot of positive benefits (qualitative as well as quantitative) that are a direct outcome of smart CRM implementations.
To know more about Cloud CRM Software, visit: www.crmnext.com
To know more about Cloud CRM Software, visit: www.crmnext.com