The Top 5 Causes of CRM Software Failures
and the Strategies to Avoid these Risks
- Research identified the top causes for failed CRM implementations and insights that can be proactively applied as part of a risk management program.
- For example, the research found the top obstacle to success was a poor or missing CRM strategy. The strategy and the software are symbiotic. Powerful together, but ineffectual apart.
- The research shares the top 5 reasons for CRM failure so that you have the knowledge to prevent surprises that may suddenly or negatively change the course of your technology implementation.
If you have been in the Customer Relationship Management software industry for even a short period, you have heard the frequently bantered and highly publicized CRM failure rates. After more than two decades of disappointing results this is a problem worth solving.
Research performed for the CRM Failure Report was designed to calculate the failure rate and identify the challenges that most contribute to the downfalls.
In a prior post, we shared that when failure is measured as the percentage of deployments that did not achieve their planned objectives, the CRM failure rate is 55%.
Knowing the fail rate creates perspective. But knowing the causes of those failures, along with remediation strategies, shifts information from being interesting to actionable.
The research found many contributing factors to unsuccessful software deployments. To learn from these experiences and develop strategies to do better, we separated symptoms from root causes. Clustering the factors and performing a cohort analysis surfaced five root causes that most contributed to failed projects.
Survey participants were asked to cite up to 3 of the most significant obstacles to software deployment success. Their responses are show below.
Despite a troubling success rate and some big obstacles, the insights are not all gloom and doom. Below are the top challenges along with compensating strategies to prevent, mitigate or respond to hurdles that may threaten your implementation success.
Missing or Poor CRM Strategy
An overwhelming 91% of respondents reported that a poor or nonexistent CRM strategy was a significant contributor to their software failure.
The respondent data suggested that software implemented in a technology vacuum under delivered business objectives and led to time and cost implementation overruns.
The data show that business value is enabled with technology, but not achieved with technology alone. In the words of one survey participant, "Naively believing technology by itself will improve business performance is a fool's errand."
Installing software by itself isn't going to improve business outcomes any more than putting a new engine in your car will make you a better driver. A CRM strategy is needed to align technology with people and processes and achieve slated business outcomes.
The software must be integrated with prioritized and measurable objectives, aligned with customer journeys, joined with streamlined business processes and continuously measured and adjusted. These things don't occur by happenstance. They occur pursuant to a strategy.
Your CRM strategy should engineer business outcomes that align and support the company's business strategy. That may include revenue goals such as increased customer acquisitions, customer share or customer tenure, or cost savings goals such as lower cost to serve or higher staff productivity.
You can implement software without an accompanying strategy, but the effort becomes aimless, payback becomes incalculable, and you are never sure where the finish line is.
What often happens is the results slip from strategic objectives to tactical goals such as getting data into a system, measuring staff activities or producing a pipeline report – possibly valid goals – but do little to nothing to improve customer relationships or contribute to the company's business priorities.
And if your CRM system doesn't improve your customer relationships, well then, you miss the point of Customer Relationship Management. But when strategy creates the linkage from the technology to the most important business outcomes, it makes the software something the company can't live without – which makes it both wildly successful and sustainable.
Poor User Adoption
86 percent of respondents identified user adoption as a top challenge to success.
Many of the implementation failures were designed to satisfy managers and executives despite these groups being a minority of users. Two scenarios came to the forefront.
First were projects designed to produce management reports. The sales pipeline report was the most cited. Management reporting is essential but by itself doesn't deliver an outcome important to most users.
Second were projects that made the application look more like a tool to exercise compliance rather than increase staff productivity, improve customer engagement, grow customer relationships or anything else that users would find enticing. Using the application as a system of surveillance will neither satisfy users who are paramount for operational success nor achieve business outcomes that matter.
If the beneficiaries don't include the users, who enter the data and update the system, the managers and executives will never get the reporting they want from the system.
There are 3 prerequisites for sustained user adoption:
- The pain of same must be greater than the pain of change.
- Users adopt software when the application delivers what's most important to them, what they identify as their performance, productivity and personal goals, or what we sometimes call their WIFFMs (what's in it for me.)
- They will continue to use the technology as long as the value exceeds the effort.
Also, there are three primary constituent groups that must be satisfied for sustained success.
- Users. When the implementation is over, will users say their lives are better? Simply put, if the people responsible to enter the data are not on board the people wanting reports will be left without. Adopt a User-First approach, position users as your North star and design user outcomes in the areas of productivity, performance and personal goals.
- Customers. After the implementation go-live, will customers say they are better off? If not, your customers will gravitate to a customer-centric competitor.
- Company. Do the application benefits align and directly support the company's top priorities? Does the technology deliver a measurable ROI? If not, it is not sustainable.
Survey respondents found that an Organizational Change Management (OCM) program dramatically lowered resistance to change and improved user adoption.
Poor Project Objectives
The data reinforced that when you start with the wrong target objectives the rest of implementation project pursues the wrong path.
82 percent of implementations were challenged by poor, insignificant or ill-defined objectives.
The research found the two primary culprits were an emphasis on technology goals instead of business objectives and business objectives that were trivial and just didn't matter to the users.
Approximately half of the failed projects identified pursuing technology goals instead of meaningful business results. These troubled projects frequently expressed their goals in terms of software features, functions and capabilities instead of user, customer and business outcomes.
This challenge was exacerbated when the company was without a CRM Strategy and the implementation was regarded by users to be an IT driven project.
A common contributing factor to a technology focused project was the use of a lengthy requirements list. Instead of focusing on the small number of outcomes that most mattered, these projects created an extensive list of mostly insignificant capabilities that clouded what most mattered.
What nearly every failed implementation had in common was a list of objectives that the business users found unimportant. If a significant investment isn't going to create a significant business performance improvement, then why bother?
Most companies do not have a top business priority of getting software to run correctly. So, if your implementation goal is focused on little more than getting the software operational, or your objectives are expressed as software features and functions, it's probably more of an IT project than anything that will increase revenue from customers, decrease the costs to acquire, serve and retain them, or otherwise grow the business.
A better approach is to forget the requirements list and use a technique such as Design Thinking to home in on the few requirements that will most influence success. Design Thinking for CRM is an iterative and people-focused technique to surface the most important and highest impact user, customer and business objectives.
When CRM software fails to align with the company's top priorities, it struggles to gain executive sponsorship and user adoption, and is rarely sustainable.
Many executives see the signs of uninspiring objectives and slow user adoption, but naively believe the users will ultimately come around. In fact, experience shows the opposite is more likely. The longer it takes to achieve acceptance, the more probable the software will fail to become sustainable.
Ineffective Program Management
Three-quarters of respondents identified haphazard or undisciplined program management as a significant obstacle to success.
It's not for lack of trying. Project managers have the intent and demonstrate the effort, but they simply do not apply efficient and proven implementation methodologies and repeatable processes that achieve predicted results.
That puts results at risk, requires more time and effort from the project team, extends time and cost, exacerbates business disruption and fails to pursue the shortest and least cost route to the destination.
Scope creep and software sprawl were highlighted as contributing factors.
Most everyone knows scope creep kills projects. Fewer seem to recognize that when projects incur significant time and cost overruns, it's not because certain scope items were underestimated. It's because they were missed in the estimating process. Scope omissions, not poor estimates, cause the most significant project overruns.
Survey respondents also revealed a common mistake of unwarranted software expansion. Commercial systems are designed to satisfy virtually every requirement for every industry. But that's not what users need.
To achieve simplicity, realize that less is more. Implement the fewest features that contribute the most impact. Don't succumb to the practice of implementing more and more software features and functions as this makes the software more complex and difficult to use.
Also consider the following four CRM implementation best practices.
- Start with formal program management as it increases the probability of achieving forecasted project objectives – on time, on budget, and on value. It provides the oversight and controls which monitor, measure and report on the project's most important business performance objectives as well as the underlying critical success factors which at the minimum will include scope, time, budget and quality.
- Adopt Agile and Scrum as they have replaced waterfall implementation methods to become the de facto deployment methodology. Scrum promotes close user involvement, iterative and adaptive implementation processes, and the frequent delivery of incremental software releases.
- Apply best practices. Implementation recommendations without supporting data are just somebody's opinion. When you start with research-based findings, learn from companies that have achieved success and apply evidence-based best practices to repeat that performance, you eliminate the guesswork, avoid trial and error, and pursue the straightest and shortest course to targeted outcomes.
- CRM projects introduce significant change and that creates anxiety for many users. Use change management to help users and ensure resistance to change will not delay or derail project objectives. Helpful artifacts include a change readiness assessment, Communications Plan, technology impact analysis, learning & training tools, post intermediation measures and value realization measurements.
Part-time, informal or as-available implementation governance is a recipe for disappointing results.
6 in 10 survey respondents identified insufficient project governance as one of the most significant obstacles to software deployment success.
Enterprise software implementations are complex projects that require resources from across the organization. Without active executive sponsorship and measured project oversight, needed resources and commitments wane and the lack of real progress is hidden until it's too late.
To succeed with project governance, focus on four essential hallmarks.
- Transparency to highlight the measures that most clearly show project status and progress, and whether the project is on track or not.
- Inspection is your regular cadence to review the most essential measurements, vet progress and ensure consensus understanding.
- Adaptation is the process to implement change when results show deviations from plan, or when you need to re-steer the project toward an outcome. It may include implementing remediation plans or course corrections; and
- Accountability defines and aligns resources with success measures. Everyone has their role, and every role knows their responsibilities.
Be clear that when business leaders create strategy, delegate to management and then step back they create an execution vacuum.
Managers will judge the strategy less by its words and more by the executive team's commitment and persistence. Staff take their cues from leadership. If leaders deliver the strategy as an announcement or proclamation and then walk away, many staff will proceed with indifference.
Good governance is about visible and vocal executive sponsorship, recurring inspections and measured execution.
Prevent CRM Failures with Risk Management
The overarching strategy to prevent these recurring failures is risk management. Every CRM project brings with it a certain amount of risk, and every failed project incurred a risk that was either not recognized or not addressed.
Risk management is the process of measuring and prioritizing risks and creating plans to prevent, mitigate or respond to high likelihood or high impact risks that threaten project objectives.
While it is impossible to eliminate all risk or anticipate all the challenges that may occur during a software implementation, risk management is the best tool available to reduce the likelihood that big problems will occur, and that concerns can be dealt with before they become crisis.
Some common risk management tools and artifacts include a risk strategy and plan, a risk register, periodic risk analysis reporting and an early warning system.
These risk management work products give stakeholders and the steering committee assurance that they are not going to be surprised by something that may suddenly or negatively change the course of the project.