CRM: A History of Failure?
Are customer relationship management (CRM) projects prone to failure? ZDNet reviewed analyst firms’ reports to chart general CRM failure rates for 2001-2009 [1]:
- 2001 Gartner Group: 50%
- 2002 Butler Group: 70%
- 2002 Selling Power, CSO Forum: 69.3%
- 2005 AMR Research: 18%
- 2006 AMR Research: 31%
- 2007 AMR Research: 29%
- 2007 Economist Intelligence Unit: 56%
- 2009 Forrester Research: 47%
Failure is defined broadly, covering projects that didn’t meet expectations (at best) or failed outright (at worst). Because these statistics come from different research firms using dissimilar research methodologies, you can’t accurately compare year-on-year trends. But to pick just about any given year, my immediate reaction is: There’s no need for CRM failure rates to be this high.
Will project success rates improve? In fact, I predict that sales force automation (SFA) project failure rates are going to increase even more. (The majority of CRM implementations today are for SFA.) Why is that? Simple: Companies are shooting without aiming, just like it was 1999 all over again. The only difference is that instead of implementing on-premises CRM software, they’re using SaaS.
SFA Success Starts With a Plan
What can companies do to ensure that their SFA—or broader CRM (encompassing not just sales, but also service and marketing)—projects meet expectations?
For answers, let’s flash back to 1999, when Lee Iacocca [2], then CEO of Chrysler, was still a well-known business figure. In those days, he talked a lot about planning as a way of saving money.
Here’s the great thing about planning: you don’t need to spend much money to get a great return. For example, say you spend less than 1% of your expected return on a one-week—or, if you like, two-week—exercise [3] to identify the objectives of your SFA system, as well as what your two-year plan will be to achieve those goals.
As a result of having that plan, you’re probably five times as likely to achieve your objectives, versus just implementing this or that software. And really, what did the planning cost? If your returns are over 100 times that initial planning exercise investment, wasn’t the planning more than justified? In fact, why would you neglect such a foundational step, given the potential returns?
Is SaaS Short-Circuiting Our Brains?
If you follow the Freakonomics [4] camp, you know that psychologically speaking, we humans approach financial matters not from a rational perspective—though we think we’re being objective—but rather with our emotions. And perhaps that’s the answer: SaaS offers the opportunity to have something up and running in days or weeks. It’s the latest and greatest. You want it now. Why bother pausing for even a week or two, to plan?
Just as we’re not naturally adept at rationally analyzing financial patterns, when it comes to CRM projects, we also need to check our innate tendencies at the door. Meaning, sit down and figure out what you really want to do, and how you’re going to do it. Unless you want to fail?
Planning Is Cheap
Based on our experience, and—organizationally speaking—having lived through the dot-com bust as well as the boom that preceded it, we’ve continued to emphasize this theme: Want to succeed? Then don’t just implement software. First, plan.
The good news is that over the past 12 years, we at Innoveer have codified what people should be doing in terms of their CRM planning, and have developed best practices to very quickly help people determine what their plan should be. So whereas a decade ago, planning may have been relatively expensive, today, it’s much easier and less expensive, because we already know the best practices for sales effectiveness [5], marketing [6], or customer service [7].
As a result, creating a plan doesn’t require starting from scratch. Rather, to create an SFA plan, one excellent starting point is to benchmark your company’s sales capabilities—in such areas as relationship management, territory management and pipeline management—against other companies to see understand where your organization excels or needs work.
We’ve found that companies often continue to invest in what they’re already good at. In fact, we recommend investing in what you’re not doing well, because that weakest part of your SFA—or wider CRM—program is what holds you back. Of course, you won’t learn that from just having SaaS CRM software. To find out, you need to build a plan.
Learn More
Innoveer offers a brief workshop to help organizations identify the cost, time and business benefits [8] associated with achieving new and more advanced—meaning, more effective—SFA capabilities. During the workshop, Innoveer examines the five core elements of an organization’s field sales program, identifies the optimal enhancements, and produces specific, technology-agnostic recommendations for building plans and budgets, with detailed estimates of the required project time and costs to improve specific elements of your sales program.
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