Why CRM Projects Fail

Why CRM Projects in B2B Fail and How to Make Them More Successful

Many studies over the years have shown a very high failure rate for Customer Relationships Management (CRM) systems. Already in 2001 Gartner estimated this rate to be at about 50%.

Despite improvements in technology and CRM increasingly becoming a commodity, this dark rate doesn’t seem to have changed much in the last two decades. The CIO magazine reported a 30% failure rate in 2017.

This high failure rate is partially the product of longstanding misconceptions businesses have about CRM solutions. It is also partly is also due to managers making purely operational choices and not clearly defining their objectives.

In some companies, particularly larger ones, it’s merely a case of ‘everyone’s darling’. Various departments are vying for attention and want their needs catered for, often to the detriment of each other.

Why do CRM projects fail? Let’s review together some leading causes.

1. Poorly Defined Business Objectives and Expected ROI

According to Scott Edinger, writing in the Harvard Business Review recently, today’s CRM solutions need to serve many departments within a corporation. He recently worked with one business to help choose a CRM provider:

“By the time everyone weighed in on their must-haves, we had identified 23 unique objectives. With such a diluted focus, it’s virtually impossible to succeed.”

When objectives are poorly defined, you will quickly discover that some departments are satisfied while others are not. Usually, the department with the most weight or louder manager gets most, while others suffer in varying degrees.

That some companies already have a general pre-conception of a CRM and its usage usually interferes with the definition of business goals. Many businesses see their CRM solution as a data gathering tool or reporting software. No mention of a sales acceleration tool or expected measurable ROI.

Therefore, companies need to set clear business goals at the centre of their CRM implementation. If you are trying to make everyone happy and you do not have a clear objective, you have a clear receipt for failure.

If you are trying to make everyone happy and you do not have a clear objective, you have a clear receipt for failure.

Change your focus, and you will discover multiple opportunities to improve the ROI of your CRM and to strengthen your sales processes. CRM isn’t just a software solution. CRM is a flexible and adaptable tool. Companies should use it to improve relationships and maximise the lifetime value of their customers.

2. You’re Missing Intelligence

Companies miss out on valuable information because they ignore what is already possible or have wrong ideas about data mining in CRM.

Artificial intelligence can boost the usage of a CRM by giving your sales team value back. Furthermore, if they use it and feed it properly, data quality will improve and so will the intelligence.

A successful CRM system depends on people using it, regardless of how good their data-entry is. It should be intelligent and give more to your sales team than what it takes.

According to Talk Business:

“Too often, people perceive data as something to feed into a system like logs into a woodchipper: they don’t consider how others in the company might use it. This can affect a user’s ability to access vital client information on demand, which can, in turn, affect their relationships with these clients.”

A smart CRM allows your sales team to implement predictive sales analytics. They can apply these methods to improve customer lifetime value in several ways:

• Cross-selling analytics: Understanding more deeply where cross-selling or up-selling opportunities lie is essential for any business, but many fail to take advantage of how CRM and ERP integration can help in this area.

• Churn risk: Most companies want to avoid losing sales if they can, and customer churn prevention is a big part of this. While churn prevention software is useful, if your sales or marketing teams aren’t acting on that information, it can be catastrophic for your business.

• Pricing analytics: Understanding the relationship between pricing and profitability is critical for organisations nowadays.

Finally, companies need to understand how to integrate their CRM and ERP systems better to make better use of intelligence. Often these two systems cannot communicate with each other. In the few exceptions where they do, they do not do it for a specific business purpose, as explained in the previous point.

3. Not Making Your Sales Agents Smarter

Too often, companies that implement an account management solution aim to make their salespeople faster order-takers instead of making them smarter.

In other words, some companies do not give their sales teams a solution to make them more successful, only a tool to make them repeat ineffective tasks faster.

In other words, some companies do not give their sales teams a solution to make them more successful, only a tool to make them repeat ineffective tasks faster.

Lacking intelligence will not help you to maximise customer lifetime value. Modern salesforces need insights and recommendations to work proactively. Ideally, your salespeople should adapt to new information and implement strategies to both win new customers and make the most of existing ones.

Sales analytics software, for instance, enables you to predict customer behaviour, establish benchmarks such as sales KPI, build sales intelligence and streamline processes. It only works, however, if your sales team are onboard and have the skills to engage with the system.

In the right hands and with the appropriate strategy, artificial intelligence systems are powerful tools that enable customer prioritisation, better negotiations and fact-based decision-making.

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Why CRM Projects in B2B Fail and How to Make Them More Successful – Summary

Businesses still haven’t learned the real value of the CRM system. Poor implementation and a lack of vision are usually crucial factors in the many failures that take place each year. With many CRM products on the market nowadays, it can be challenging for businesses to make all the right choices.

Companies need to stop looking at their CRM as a simple data collection service and start thinking of it in terms of what it is – a ‘customer relationship’ tool.

To avoid the failure of a CRM implementation, the CRM must be used to deliver on customer needs and provide sales teams with all the information they need to make smart decisions that make a difference to the company bottom line.

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Further Read:

Kirkby, J. & Nelson, S. (2001) “Seven Key Reasons Why CRM Fails”. Published in Gartner Research am 20.08.2001

Edinger, S. (2018) “Why CRM Projects Fail and How to Make Them More Successful”. Published in Harvard Business Review am 20.12.2018

Linas, P. “5 Common CRM Mistakes”. Published in Talk Business

Heck, F. “Warum CRM Projekte scheitern”. Published in Vertriebsmanager.de

Pütter, C. (2018) “Woran CRM-Projekte scheitern”. Published in cio.de am 26.01.2018