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Where Goes Wrong 8 Reasons CRM Fails to Deliver
Due to extensive marketing by companies like SalesForce.com, RightNow Technologies, SAP, and Microsoft,
the term CRM has become synonymous with success in the business world. Many companies have begun their
search for both improved business processes and sales results by looking to implement Customer Relationship
Management (CRM) first. However, as many frustrated managers know, CRM is often not the one-size-fits-all
solution that the media portrays it to be.
Most reports cite that more than half of CRM software systems suffer from at least a partial system failure,
with unqualified success rates being no higher than 34%. A whopping 42% of CRM systems go
completely unused after purchase, a sobering statistic given that CRM sales topped 9 billion in 2008.
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2. It is critical to understand that what CRM can do, and what actually needs to be done are two entirely different
things. Granted, a well designed and managed CRM system can do many things, including the ability to track
marketing success, predict trends, stay in contact with customers, automate sales forces and manage call center
activity, but at what cost? A poorly managed CRM system that does not fit the needs of your business is a recipe
for disaster. In sales, “having more” is not synonymous with “better.” Useless features simply get in the way of
efficiently making a sale.
This whitepaper examines 8 reasons why CRM fails to meet expectations, and provides an easy way to assess if
CRM is right for your business.
With figures this bleak, there is good reason to think twice before paying a lot of money for something that may not
perform to expectations. “Will it do what we want?,” “what are the risks of failure?,” and “Will the money we spend
be worth the investment?,” are all questions that your company needs to ask. These questions may be difficult to
answer, but doing so is ultimately far cheaper than realizing you made a mistake on the other end of the process.
To help, here are 8 points to consider before investing in CRM software:
1. CRM IS COMPLICATED. Though the idea behind a CRM software system is a simple one, the ability to track
and organize contacts with current and prospective customers is anything but simple. No matter how well it
has been marketed, a CRM software system is not a quick-fix solution, nor will it ever be. When it comes
to the age-old credo of “Keep It Simple,” few CRM systems can or do.
2. CRM IS LABOR INTENSIVE. CRM systems are invariably high maintenance in terms of time, effort and
expense. They frequently require large, specialized staff services with extensive, individualized training. They
also run a high risk of mismanagement without constant, companywide diligence in system upkeep and
database currency. Companies that take a “do it yourself” approach in both the set-up and the maintenance
of a system—especially if they haven’t had prior experience—are asking for trouble.
3. BUYING MORE THAN YOU NEED. For many businesses, especially growing ones, CRM Systems are
overkill. They are designed with far more features than your company may need right now or ever. If you’re
just looking to solve a few problems, such as lead generation and management or the ability to quantify
sales results, a CRM may be more hassle than it is worth. CRM systems are designed for large corporations
that have personnel, operations, sales, service, marketing, multi-tier support, account management, and
other functions. Does this sound like your company? If not, CRM may not be right for you.
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3. Most businesses use less than half the functions that come with the standard product, yet what they truly
need must be added through customization – crmadvocate.com
4. TURN-KEY CRM DOES NOT EXIST. With a tool that is supposed to be as comprehensive and omnipotent
as CRM software, it is never as simple as plugging it in and turning it on. It is important to remember that
CRM software is an extremely complicated tool—using it is not as easy as using a hammer—and it
will always need customization in order to fit the unique needs of your company; this is the CRM paradox.
5. CRM IS MORE EXPENSIVE THAN YOU THINK. Thanks to the realities of customization, prices that sound
attractive in order to close a sale almost never reflect the actual cost of a CRM software system. Expect
to spend money on trained consultants to implement and manage the system, or expect to allocate your
own precious recourses to do it, which can cost even more. Add in the compromises you’ll end up making
to finally go live, and the costs can really get out of control.
All too often, hidden costs drive the purchase price 3-5 times higher than expected and opportunity costs
from re-allocation of existing resources compound that. - crmadvocate.com
Additionally, CRM does not have easily identifiable acquisition and operation costs. It’s not like a piece of
machinery where purchase price, plus maintenance, plus an electric bill equals an accurate forecast in productivity
gain. Even after launch, CRM has uncertain cost categories and no standards for valuing funds flows.
6. IT IS HARD TO QUANTIFY SUCCESS. Unreasonable expectations and unclear parameters of what makes a
successful CRM implementation invariably lead to problems, and this happens all too frequently. If you can’t
answer the question: “What does CRM success look like for my business and what constitutes failure?,” you
are probably going to struggle.
7. SUCCESS IS DRIVEN BY YOUR COMPANY FIRST AND YOUR SOFTWARE SECOND. To implement CRM
software successfully, a business needs to become wholly customer-driven. Businesses that don’t recognize
this fact will need to take a giant step backwards and re-think things. Ask the question: “Are my company’s
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4. decisions ultimately being made in the best interests of the people who buy our goods and services?”
This is the real place to start improving sales. Fundamental change requires passion and commitment on
behalf of everyone in your company. Ultimately, that takes a cultural shift before a software implementation
can be effective.
8. KNOW THE PROBLEMS YOU ARE TRYING TO SOLVE. It sounds simple to define your problems before
researching solutions, but this step is often overlooked.
It’s estimated that 85% of companies that buy CRM software to automate sales efforts don’t pick the right
tools because they fail to define business objectives or develop processes for meeting objectives.
- smallbizcrm.com
If you don’t know what problems you are addressing, it is easy to lose sight of the main objective. Buying into the
myth that CRM software will solve all of your problems is the first step toward failure. In the same way that you
must transform your company, it is also up to you to identify what it is that you really need from the software that
you choose.
Fortunately, all is not lost. While there may be no such thing as a magic bullet, CRM software, as well as a number
of other solutions, can be very helpful for your business. We encourage you to start by thinking about rule #8 from
the list above, and actually ask yourself:
What problem is your
company trying to solve?
If asking yourself this question is the only thing you take away from this whitepaper, consider that a win. Even if
you are trying to solve many problems at once, you will be well on your way to breaking the task into manageable
pieces. Assuming you do not stop there, the next step is to prioritize the problems that you need to address first.
What is the biggest issue your company faces?
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5. More often than not, the answer to this question is: “How do we both track and manage sales leads more effec-
tively and maximize potential sales revenue?” If this applies to your business then consider it as your first and most
important challenge.
Many companies find that implementing a Lead Management System instead of CRM can address their primary
challenges, without bogging their company down with extensive overhead, customization, and implementation is-
sues. In fact, you may find you don’t need CRM after all. In order to determine this, it is critical to understand the
Speed-to-Contact
differences between CRM and Lead Management Software.
CRM is exactly what it says it is—Customer Relationship Management. Most CRM systems do not effectively
address what happens before a customer becomes a customer. Lead Management focuses on the process of
converting leads into customers. Lead Management software solutions are designed to maximize the likelihood
that a lead will convert to a qualified opportunity and then to a satisfied new customer.
When you think that major global corporations now lose, and must replace half their customers in five years,
and that a typical company’s customer base leaves at a rate of 10 to 30 percent a year, new sales are some-
thing no company can afford to ignore.
Here are a few other things to consider when comparing CRM to Lead Management:
• CRM software solutions typically cost $150 to $1000 dollars per user, Lead Management Software
starts at $40 per user
• It is easy to integrate your Lead Management solution to a CRM if you decide later your primary
challenge is no longer generating new customers, but retaining the ones you have already converted
• Implementation time for CRM is five times that of Lead Management Software and you will gain
valuable insight into software implementation by starting with an easier Lead Management solution first
If you are still convinced CRM is the right solution for you, then you should begin to research which provider
fits your needs and budget. But, if you are thinking twice about implementing CRM in your business, consider
this statistic:
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6. 90% of the leads that are sent to sales staff are never even acted upon 1.
Your number one priority is to ultimately increase sales as quickly and easily as possible. A solution from Leads360
offers you the ability to not only meet this goal, but to exceed it. Leads360 provides enterprise lead management
solutions for every size company. Contact Leads360 at 1-888-508-4462 or visit our website at
www.leads360.com.
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Based on analysis of over 15 million leads within Leads360
Stats
1. Most reports cite that more than half of CRM software systems suffer from at least a partial system
failure, with unqualified success rates being no higher than 34%. (crmlandmark.com / Standish
Group Report)
2. A whopping 42% of CRM systems go completely unused after purchase. (smallbizcrm.com)
3. CRM sales topped 9 billion in 2008. (tmcnet.com)
4. Major global corporations now lose, and must replace half their customers in five years. (Frederick Reichheld
– The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value)
5. A typical company’s customer base leaves at a rate of 10 to 30 percent a year.
(Frederick Reichheld – The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value)
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