Nearly one-third of customer relationship management (CRM) software deployments end in failure, according to new research from AMR Research Inc.
The bottom line is that sales representatives and, to a lesser extent, marketing professionals, just aren't using the technology, and that nonadoption is leading to failure.
The Boston-based research firm recently surveyed 190 IT and line-of-business executives and found that 29% of CRM projects fail. That's slightly better than the 31% failure rate AMR Research uncovered in 2006, but it's much worse than the 18% rate discovered in 2005.
Last June Cambridge, Mass.-based Forrester Research Inc. reported that less than 50% of the 94 business and IT executives it surveyed were fully satisfied with their CRM deployments. When Forrester asked those executives to list their best practices for improving their CRM implementation, 66% said promoting user adoption was a top priority.
Bois said sales and marketing professionals reject CRM mainly because it's just not easy to use.
"That's all relative," Bois said. "What you and I might think of as a fairly simple user interface might not seem as simple to a salesperson who spends as much time as possible on the phone with customers and doesn't have time to be fooling around with a piece of software."
Bois said sales representatives also reject CRM because it just doesn't offer any value to them. CRM and sales force automation systems will ask sales representatives to enter a lot of data, but the technology doesn't always help them do their jobs better. Instead, much of the data they enter into these systems offers value to only managers who are trying to track and forecast sales activity.
"CRM and sales force automation as discrete software categories were initially designed to appeal to sales management, not the sales user," Bois said.
The root of the problem
Jim Prevo, CIO of Green Mountain Coffee Roasters Inc., said poor user adoption is a symptom of a problem, not the root cause of CRM failure.
"You need to have enough value in the system for end users to make it irresistible for them to use it," Prevo said. "If you put in a system that is primarily about monitoring their behavior rather than putting in a tool that is about maximizing their behavior, they are not going to see those tools as absolutely essential. Once you do that, you'll get adoption. And adoption is critical."
Prevo said his company has adopted CRM technology from PeopleSoft Inc. in Pleasanton, Calif. When he was preparing to roll it out, he made sure the company's sales organization was a part of the process.
"We pulled the salespeople into the room with someone from PeopleSoft and made sure it was a business process intervention and not a technology startup," Prevo said. "Sales forces don't think of business process. It was very helpful to have someone who really understood the tool in the room.
Another CIO, who asked for anonymity, said his company's first attempt at using CRM technology was a failure. He said he adopted sales force automation technology from Salesforce.com, using features such as account and contact management, opportunity tracking and Web reporting.
"Our CRM implementation has been rocky and, in my opinion, is still not where it needs to be to justify the expense we've put into it," he said.
Senior managers thought they could bypass key managers who weren't supportive of the initiative and simply float the technology out there without getting hard-nosed about compliance.
"The results were, at best, uneven," he said. "Most importantly, one of the people bypassed was the vice president of sales. This was a key strategic error. Managers and reps could tell that their leader was not on board, and thus figured that compliance was optional."
His organization also failed to consider the realities of his company's salespeople, leaving them with a program that didn't fit their needs.
While his first try at CRM failed, his CEO was still supportive of the project. With that backing, he took a new approach.
"The vice president of sales became the sponsor and advocate for the system," he said. "We had to overcome a lot of false perceptions and hurt feelings to get him there. But now he's a believer. We re-launched the product, addressing key complaints the field had about the system, including new equipment and increased training. And the message was sent, loud and clear, that this is a required part of doing business. If you don't like it, you might need to consider employment elsewhere."
Things have improved with the company's second go-round, but he has yet to get 100% compliance from his sales force.
Bois said the CRM market is reacting to this problem by shifting its approach to offer more value to the end user.
"The most common thing you'll see is they're starting to put performance metrics in so the salesperson knows how they're performing against their quota. 'If I'm gong to close this deal in the next 30 days, what would that mean for my quota?' Ultimately, it is giving them better visibility into their ability to meet their quota."
Bois said CIOs need to get sales executives more involved in the procurement of CRM technology. And CIOs should resist just accepting the latest CRM offering from their ERP vendors. Instead, they should try a third party for this technology. In fact, they should consider letting the sales executive take the lead. This isn't such a hard thing to do with the emergence of Software as a Service vendors such as Salesforce.com. The sales executive knows his staff better than the CIO does. The CIO can take on a more consultative role to make sure the implementation and any necessary system and data integration go smoothly.
Let us know what you think about the story; email: Shamus McGillicuddy, News Writer