Conditions for CRM Failure
The three key reasons:
CRM today has to do a lot of heavy lifting. From sales and marketing, to finance and support, everybody is seeking a dynamic window into the state of play surrounding individual customers.
At Workbooks however, we’re always ready to argue it’s the ‘R’ of relationship that’s the most important element of CRM – and the letter that often receives the least attention.
Relationships bring with them their own connections, expectations, and value. Without this focus, CRM can become a commodity offering. A fact that helps explain why half of the SMEs we surveyed have already switched CRM apps at least once.
Dialling up the relationship side of CRM also places specific demands on the way the technology is sourced and deployed. In this guide, we cover off three of the biggest factors impacting the failure of a project:
Whether the focus should be product-led or outcome-led
The implications of front-loading versus right-sizing
Engaging with multiple suppliers versus a single supplier
As experience teaches, mastering these areas can make for a far smoother CRM journey – and by reading on you’ll understand exactly why.
The way the SaaS market is currently structured – and CRM software in particular – is that software vendors sell licences and then third-party partners sell services to implement the software.
1. PRODUCT-LED VS. OUTCOME-LED
The first issue is that this structure supports a product-led approach to CRM, which puts a substantial burden on the buyer in terms of both cost and risk.
No organization sets out just to buy software – they set out to achieve one or more business outcomes that they then buy software to support. But it’s easy to get lost in the process of buying software, particularly when it’s a significant investment in a complex product like CRM. As a result, it’s all too easy to lose focus on the business outcomes that they’re investing in CRM to support.
A product-led approach by the vendor encourages a product-led approach by the buyer, which makes it more likely that the buyer shifts their focus to features and functionality instead of why they’re investing in CRM, how it’s going to help achieve their outcomes and what capabilities they need to support those outcomes.
This increases the risk that the CRM will fail to support those business outcomes, which leads to a wasted investment. This also makes it more likely that, over time, either the CRM will act as an anchor on the business instead of an engine, or that it will need to be replaced a few years from the date of implementation – at which point the cycle begins again.
The second issue is the way in which buyers have been trained to buy software by both the market and their organization. In terms of software, buyers tend to have budget for a CRM project in a single year and either do not want to or cannot go back to Finance to ask for more money the following year or the year after that.
Part of what makes CRM software so effective – but also so complex and expensive – is its ability to support virtually any aspect of an organization’s processes. But that flexibility can work against what organizations are trying to achieve, both in terms of cost and risk.
In terms of cost, buyers can end up paying for software that they then only use a part of. This is often compared to using a Ferrari to go to the supermarket, but it’s more like paying for a mansion and only living in one room – the software isn’t right-sized for their organization because that’s what the buyer thinks they need or what the vendor has sold to organizations like theirs.
In terms of risk, if buyers don’t know what they want to achieve with the software, then it may seem easier just to implement everything. Also, if they have a deadline by which they need to do everything, or a budget into which everything must fit, then just implementing everything that the vendor has to offer may seem like the easiest choice at the time.
As a result, many organizations front-load their software implementation with everything they think they might need in the next couple of years and then they try to implement it all in the first year, which significantly increases the cost of the project, together with the risk of failure.
The third issue is that, where software and services are provided by two different suppliers, neither the software vendor nor the implementation partner is sufficiently invested in making sure that the CRM project is a success.
Each has a different objective to the other, as well as to those of the buyer – the vendor’s objective is to maintain and increase licensing revenue, while the partner’s objective is to maximise service revenue.
Because each has a different objective, the vendor and partner lack a shared understanding of the outcomes that the buyer is trying to achieve, which makes an outcome-led approach difficult, if not impossible.
Buying from both the software vendor and the service provider increases the cost of the CRM project and, with two separate relationships to manage, also increases the time and effort needed to manage the project.
Not only that, but they must do all of this while still running the business day-to-day, all the while putting a significant change management process in place.
