CRM — An Industry In Distress

-- for sale in hot air popcorn maker — for sale in hot air popcorn makerCRM Herrrreeee, Get your CRM… Sounds like you’re at a ball game and listening to the peanut & popcorn vendor doesn’t it? You’re not.  This is the new sound of an industry in distress.  Just a few years ago Industry analysts had stated that Customer Relationship Management would be one of the fastest growing sectors of the software industry, and software manufacturers listened.  There are now several hundred providers of CRM software vying for your business and many of them will do almost anything to get it.   Most people would agree that increased competition is always good for the consumer, but in this case, I’m not so sure.

Some CRM providers are offering their software free, while others offer lengthy trials or money back guarantees.  Some are even offering the ability to get started immediately by simply entering your credit card over the Internet and voila, instant CRM.   Are these low cost, get your instant CRM marketing programs working?  I think so, but for whom?  Most of the vendors are struggling financially and industry statistics continue to indicate that more than 70% of CRM solutions fail to get properly implemented or utilized. This statistic has gone virtually unchanged in the past ten years, even though web-based CRM solutions were supposed to address the difficulties associated with traditional desktop CRM software, which were labeled as too hard to implement and too hard to use.  So what’s the problem?

What’s causing the failure?

I have been engaged in the sale and implementation of CRM software in dozens of small to mid-size companies and I believe there are three components that are responsible for so many failed implementations and poor utilization.

  1. The Traditional Selection Process is Flawed
  2. Lack of Executive Management Involvement
  3. No Sales Leadership -Failure to understand the Core Competency of the Staff

1) The Traditional Selection Process is Flawed

Most companies continue to select software products the same way they did twenty years ago. They gather a small team of people to survey different departments and document what each department requires in their CRM system, and then create their master list of features.  Some highlight the ‘must have’ features from the ‘nice to have’ or optional ones.   Then they research and contact a number of vendors, watch a product demonstration, and place a check mark next to each feature the vendor offers.  At the bottom of the checklist they total the score and “lo and behold”, the vendor with the most points has the best CRM solution for their business.  If there is a tie in the number of points, then the lowest cost provider wins.  Seems simple enough, but this is a flawed process for the following reasons.

2) Lack of Executive Management Involvement

The executive management team knows better than anyone else the challenges they face.  They must take an active role early on in the selection process and properly communicate the core business requirements to their team. On numerous occasions I have experienced situations where the executive management comes to the table very late in the process with a uniquely different prospective on what the business is looking to achieve with the implementation of a CRM system.  This only serves to embarrass if not alienate the selection team who has wasted valuable time and may have narrowed down two or three vendor selections based on completely different criteria.  In several instances management did not get involved in the selection process at all at all except to approve the expenditure.  The process should start top down not bottom up.

3) No Sales Leadership – Failure to Understand the Core Competency of the Staff

Software does not run your business — people do. Management must take into consideration the maturity of their business processes and the core competency of their staff before embarking on the selection and implementation of CRM software.   This is especially important when it comes to the sales organization that traditionally consists of people with various levels of experience.  The successful implementation of a CRM system requires the engagement of the entire management team and the leadership of an experienced sales executive that is committed to the implementation of a structured sales process and the reinforcement of that structure.  This has nothing to do with the actual software selected and everything to do with a commitment to build an internal infrastructure with mature business processes, mature systems and mature people.  I believe this is one of the single most important factors in determining the success or failure of a CRM implementation and its proper utilization.

Before concluding, if you are considering the implementation of a CRM solution for your business I would like to suggest that you think about CRM software in the following way:

  • CRM is Not a Toy – you’re not going to address significant business challenges with a free CRM offering or one that you can buy over the Internet for a few dollars a month. Anyone who believes this is just foolish.  If you are truly committed to improving your internal business processes, such as building brand recognition via marketing programs, implementing a proven sales methodology and creating a support structure for delivering world-class customer service, you need to look at your CRM provider as an integral partner in this process and engage them as your partner.   The vendor’s experience and core competency in mastering the use of their solution is perhaps more important then the solution itself and will serve to ensure that you realize the maximum benefit from their offering.
  • Software does not run your business, people do.  I mentioned this earlier, but it is worth repeating. The software should be viewed as simply a tool to automate and streamline your internal business processes.  In order for you to realize a high return on your investment you need to have mature business processes in place, and understand the core competency of your staff.   The implementation of a CRM system should result in a significant level of change within your organization, that’s why you are investing in the process.  It’s paramount to ensure that management is committed to making a change and in reinforcing new internal processes and procedures.  If you do not have this level of commitment you may struggle to realize a return on your CRM investment and fail to become a more efficient sales and service organization.

About the author: Larry Caretsky is the CEO of Commence Corporation, a leading provider of CRM software which can be deployed in a web-based, cloud-computing environment or on premise. Caretsky is considered an expert in Customer Relationship Management and has written numerous white papers on the subject, which may be accessed via the company’s web site at www.commence.com.