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Why Many CRM Projects Fail

By Exforsys | on December 22, 2006 |
CRM Tutorial

Why Many CRM Projects Fail

Customer relationship management is a tool, and like any tool, if it is not used properly, it cannot achieve the goals of those who use it. A number of studies have consistently showed that CRM can greatly increase the customer retention of a company, and it can also help them increase their profits.

However, a number of companies fail when attempting to implement are CRM system. Understanding why these companies fail will allow you to avoid the same costly mistakes. It is crucial for companies to realize that Customer relationship management is not a cure to all the problems they will face. It is a tool, and it must be used properly if a company wishes to maintain strong relationships with their customers.

The first mistake made by many companies is placing too much importance on the technology or the vendor. They are under the misconception that simply purchasing the latest technology will allow them to become a success. Companies that hold this belief are likely to be disappointed with the results of the project. In contrast, some companies focus too much on the strategies they will use with the technology. Both extremes can lead to failure. The reason for this is because the companies that focus too much on strategy often overlook the quality of the product and the vendor, and companies that focus too much on the product often forget to formulate an effective strategy. There needs to be a balance between the two.

The second biggest mistake that companies make when implementing a CRM system is failing to focus on their customers. This is a mistake that should simply not happen. The term CRM stands for "Customer relationship management," and once a company has failed to make their customers the primary focus, it will be next to impossible for the CRM project to succeed. Why is this? Because the company has placed their priorities in the wrong place. The customer must always be considered when a CRM system is implemented. If they are not, the project will become a failure before it even begins. It is important to make sure the system is simple. A system that is overly complex will alienate the customer, and if this happens, it will be difficult for the company to succeed.

The best ROI with CRM is when customer retention levels are improved. When a company can maintain the customers they have, they will be a success. Many companies fail to succeed because their customers don’t understand them, and the company does not understand its customers. This scenario has to be avoided at all costs. Focusing too much on technology is a grave mistakes. Remember, it is not bells and whistles that will make a company succeed. It is the relationships that they build with their customers that will play the most important role. The technology should only be used to support, not replace this central concept.

Another common mistake made by companies is rushing into CRM implementation. A lack of patience has caused companies to lose millions of dollars, and it has even caused some companies to go out of business altogether. It is first important for company executives to make sure the IT department accepts and understands the importance of using a CRM system. The company should also have well defined goals which dictate why the CRM can help them become a success. If these things are now done, a company is unlikely to implement the system successfully. Some companies find that implementing CRM systems require them to create new departments altogether, and this can be both costly and tedious.

When a CRM system is implemented, an organization must make sure it is done across the entire enterprise.

If companies are not patient regarding the implementation, a number of compatibility issues could occur. The employees may become confused, and this will ultimately lead to the customers becoming confused. Once the customers become confused, the company may lose their loyalty, and this will have a damaging effect on their bottom line. The data should be analyzed on various systems, and the workers will need time to establish the networks. If the company is building call centers, more care must be taken in making sure they are set up properly.

« « ERP Analysis
How To Choose a CRM Tool » »

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Editorial Team at Exforsys is a team of IT Consulting and Training team led by Chandra Vennapoosa.

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