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Five Top Reasons Why CRM Initiatives Fail

“CRM just isn’t working.” We can’t count how many times we have heard that lament, from companies that have, ostensibly, done everything right to make their CRM initiative a success:

  • IT acquired the “best in class” CRM technology and data solutions
  • Marketing had their team integrate “CRM” into all the marketing plans
  • Finance signed off on the business case that showed how the investment would pay off over time
  • HR made sure training programs were developed and launched at kick-off
  • Senior management was a visible champion, making it clear this was going to be a new way of doing business

Despite the kickoff workshops, training sessions and rah-rah meetings, these companies do not really see any material change in their business, leaving a wake of organizational frustration and damaged reputations.

Sound familiar?

At Merkle, we have been asked many times to help clients figure out what went wrong and help companies realize their original vision of CRM success. In the process of helping them, we have identified some common culprits for why many CRM initiatives fail:

1. A technology platform is not a CRM solution

In an age where we think technology and the internet can solve all of our problems, there is a perception that simply installing a CRM technology platform is a turn-key solution to becoming customer-centric. There are amazing tools out there, but without building an operational plan around them, they will not perform to their true potential. This would equate to buying a Ferrari only to be to driven to the corner grocery store.

2. Old processes + new technology = same old marketing

New technologies allow companies to market to and understand customers in a completely new way. But if you simply bolt on that technology to your existing, old marketing processes, you are unlikely to see a major change in how your organization does marketing. New capabilities require a new approach to how you do marketing. New tools require new roles, new skills, and especially new processes. Otherwise, most people will fall back into their old way of doing things and your new CRM platform will sit in the corner gathering dust like the waffle maker you got for your birthday.

3. Underestimating the cultural readiness for change

Many clients say their organization is ready to embrace change — eager to take on new technology, and new ways of doing things. The fact is, sometimes that change may require changing that very culture that is supposedly embracing that change.  

If you want to become customer-centric and aren’t today, things will need to change.  In the short run, that change can be uncomfortable at a minimum, and painful and disruptive in the extreme. Companies going through transformations must thoroughly think through the cultural ramifications of change and plan accordingly. While it is usually better to implement change sooner rather than later, you may need to consider a more phased approach that aligns more with the degree of change the culture can realistically absorb. You will reap the benefits less quickly, but perhaps that is worth the cost of organizational disruption.  

Companies that have successfully implemented major CRM initiatives are those that took the time to understand their existing culture and put a plan in place to evolve it to the new vision. They developed a path and established timing that was right for their situation.

4. Lack of leadership supporting resources and financing

Often leadership views a customer-centric initiative as a side project that can be managed within a functional group, and most likely it is marketing. Secondly, leadership believes the group should be able to manage this transformation with their existing team, and with similar budgets as some sort of a side project to their existing, day-to-day responsibilities. The reality is that people will focus on their existing day-to-day responsibilities, unless they have the resources and incentives to do otherwise. This type of mindset leads to CRM initiatives that do not really have an owner or a driver and, expectedly, the initiatives stall out and eventually die. So while there will be increased costs to transitioning towards customer-centricity, the alternative is an underfunded, under-resourced and unsuccessful CRM initiative.   

5. CRM KPIs credibility

This brings us to the fifth culprit, which is how your KPIs are going to measure the effectiveness of your new CRM capability. Too many times, a new CRM initiative uses KPIs that are CRM oriented, but are not linked to business results, thus, leaving the program open to criticism that it is not really driving the top or bottom line. We call this performance alignment. CRM performance KPIs must align to the success of the business and their practical value needs to be apparent across all functions of the organization. While measures like banner campaign ROI may be useful for managing within a campaign, it needs to have some attributable linkage to sales and profit, or the entire CRM initiative will be viewed with skepticism, and support the argument of returning to ineffective processes. In the end, the performance KPIs that are used need to clearly and consistently align towards attributable value so that ultimately, finance can bless their use and vouch for their credibility. 

If these five factors are addressed proactively as part of the planning process, you will greatly improve the odds of your customer-centric initiative being successful.