Why do 75% of CRM implementations fail? And what can you do about it?

Why is this still happening when we all know technology is at the heart of enabling our businesses?

It’s incredible that after 32 years of the concept of CRM, with ACT being the first CRM system in 1987, companies still do not have a model on how to build, implement and maintain a CRM successfully.

We have just done a survey and only 40 per cent, which is higher than I thought would love their CRM. The rest range from deeply disliking it to tolerating it.

I want to quote Steve Andriole, who wrote a brilliant article about technology implementations and their failure.

He says, “What other business initiatives with a failure rate above 75% would be acceptable?? Would you proceed with a new factory construction if you knew there was only a 25% chance of success?? Would you allow residents who fail most of the time to become full-fledged doctors?”

Where does this problem start?

We believe it starts with how the software is bought and sold, followed closely by the build and implementation. Let me quickly touch on the buying and selling piece and then jump to the main content of this paper.?

When you are buying CRM, there are two journeys: a buyer's journey and a seller's journey.

Starting with the vendor journey

We find that most sales processes rotate around selling licenses, not how they can help the client successfully implement and keep the client long term. They might say they are client-centric, but you only need to sit and observe a software sales meeting; it will usually be about the quota and are you hitting it? Not enough is around what we know about the client, who are we talking to, have we engaged stakeholders concerning can we deliver the end product to the client? It's almost always all about selling and how can close the sale. This is because most software companies focus on a quarter by quarter sales target, and all conversations come back to targets being hit.?

Clients are also to blame

Maybe even more so, they usually buy the wrong way; they often focus on negotiation and demo far too early. The outcome is that the Software companies end up discounting the services. Software companies seldom discount the monthly fees; these are far more valuable than services revenue. The outcome is a discount on services, which is a primary cause of failure. In a simple analogy, you would not go to the surgeon and start talking about costs and the operation in the first meeting. You want the surgeon to assess, dig deep, know the issues and then give a recommendation. The cost comes last.?

There is an easy fix for this.

The sales team need to guide the customer through the process correctly; they MUST run the discovery properly. Make sure they understand the client, their technical capabilities, the calibre of people and the stakeholders. If the client does not engage, then pull out. You can only do an excellent job with the correct information. Most clients, when you stand your ground, will let you engage. Discovery is the key and must be done early, correctly and with the right people.?

I analysed a software company pipeline a few years back in Europe, with 70 high-value cases in the pipeline, nothing less than 100k per annum recurring revenue, and only four had discoveries done appropriately with the right people. The message here is that you, as the salesperson have to understand the client, don’t short cut and don’t let the client hijack you into doing a bad job.?

Oops, I got sidetracked by the sales process and not the implementation

This, although critical, is not what we are here to discuss. CRM implementations fail, and we need to look at why vendors and buyers let this happen. Both parties ultimately lose if it fails.?

Firstly, what do you look for to see if your system is failing??

1. Few in your organisation will be using it well.
2. Dashboards are not fit for purpose, and you are using excel to track.?
3. The primary contact database is incomplete and out of date.
4. The use of the system is not built around clearly defined processes.
5. On reflection, implementation initially was poorly done.
6. Ongoing onboarding is not being done rigorously.?
7. If there is one, the person owning it is not capable of driving it the right way.?
8. The process for each part of the sales model, i.e. Account management, BD, Pipeline management etc., is not correctly documented.
9. Finally, senior management is not using the CRM on a day to day basis.?

What causes these issues?

1. Technology teams do the initial build around the senior management team vision. They keep them happy. It's usually built around monitoring and pipeline management with very little consideration for process and who is using it.
2. CRM is generally not used to manage processes. CRM usually we find is used to manage the last part of the pipeline to track revenue and forecast.?
3. The initial database is usually too extensive, inaccurate, and not updated consistently.
4. The initial project is done as a big project, rather than breaking into small tasks, aligning them and working through them one by one, reassessing as you go.?
5. The preparation for the build is not done correctly; the build of the database, the definition of the process, stakeholder engagement etc., are never done with the depth they should be.?
6. CRM is not built to make the user's life easy; the user is engaged not correctly; there is an expectation that they will just do what they are told. I have never seen proper stakeholder engagement in a build. David Peter Stroh talks about this in “systems thinking for social change” and it is deadly if you underestimate the importance of genuine stakeholder engagement.?
7. A project manager is usually a technology person or a manager, often not with a sales background. They do not ever understand the importance of the tool and never engage with the stakeholders the right way. For me, this team is another deal-breaker. Think about how you build a team for any other project. How would you approach this if you knew there was a 75 per cent chance of failure??
8. The CEO, senior management team, and managers mostly do not like technology; they are scared of anything new. This means no reinforcement from the top of use. Suppose the CEO sees insufficient data daily and manages his direct team through the CRM. It will get fixed.?
9. There are never enough licenses. Anyone involved in the sales process needs a license.?
10. Finally, onboarding and ongoing management is always the last thing on people's minds, and the wrong person with a lack of behavioural change skills runs it. Is there any wonder the implementations fail??

Where do you go from here if your CRM is not working??

You need to assess your CRM system, how it’s being used, who uses it well, and who does not. What is the quality of data? Is it up-to-date and useable? I would then step into a conversation with your sales teams, marketing, and management and get their genuine thoughts and frustrations. Stakeholder engagement is the start of your process. Do not underestimate the importance of this, or you will be making all the same mistakes you made in round one and wonder why you failed. I would also add that business culture is not autocratic anymore; you cannot tell people to do things and expect that to work. Nowadays if people don’t like something, they will disengage at an even deeper level than before. We live in a very different society; the great resignation reflects this. Remember the mantra, 75 per cent failure is the norm. Dunning and Kruger talk about our blind spots. There is a reason for the failure, and you have to address it, or you will be in the same boat.?

Ok, you have identified that you are one of the 75%. What do you do now?

Come back to basics, project manage it properly, the same way you would if you were rebuilding your safety model, if you were designing a piece of software, or going through a change management process. Assess the issues, engage the stakeholders and create a clear goal with a series of mini-projects within the process. The projects at a minimum should cover the following:

1. Rebuild your database. Good data is at the heart of a good CRM model
2. Define your processes around sales and how CRM will support teams
3. Rebuild the use cases for the CRM
4. Rebuild fields and pipeline
5. Test the working models
6. Rebuild your dashboards
7. Retrain everyone, starting with senior management, who will be your biggest challenge in this process. They usually are secretly terrified of technology and almost always are late adopters.
8. Onboard all new people properly, ensuring they use the system correctly over time.
9. Review how the system is being used on an ongoing basis and adjust it to new working best practices
10. Monitor usage, look at who is using and who is not, and support the struggling people.

Summary

Getting your CRM right looks like a monumental task. It's a lot easier than you think if you do it right from day one, engaging the stakeholders properly, building for the users, pulling an accurate database, importing it the right way, setting out best practices and training teams pedagogically well, will allow you to reap the benefits.

1. You will manage your clients more effectively
2. Increase your LTV
3. Your sales and BD teams will be happier, more productive and there will be less turnover of sales and sales support
4. Forecasting will be far more accurate
5. Your back office also will engage far more effectively with both clients and new business
6. Ultimately, you will drive more new business and more revenue from both your existing clients and new clients

There is a reason that 75 per cent of implementations fail. It is naive to think that you will be or are different.?