CRM's Challenges - What's going wrong?

CRM, despite all the talk about it being one of the most 'profitable' customer strategies of the decade, still allows room for failure. The most important aspect of CRM problems is its excellent ability to achieve customer retention but its failure to do so. This is indirectly responsible for CRM collapse. What actually is CRM failure and why does it occur? Generally one of the reasons this happens is because most organizations that actually employ CRM, experience a lot of confusion about its attributes and what it really is. Some would define it as a business strategy while others view it as something to do with technology.

The statistics show that only one in every six companies that have installed CRM have been successful. CRM has lost its appeal as it has failed to meet expectations. Almost 75% of projects have not succeeded in delivering the expected ROI and have faced numerous problems with CRM. However the absolute failure rate is just 5%. It's mostly the larger corporates that fail. This happens generally because smaller projects fair better. Mid size organizations also have a higher success rate.

What are the Problems with CRM?

Exorbitant Costs

One of the problems with CRM is the huge investment needed to maintain a customer database. The additional expense comes because of the money needed for computer hardware, software, personnel etc. The costs involved are enormous and most often than not the resultant ROI from the CRM implementation fail to cover the costs involved. This leads to a negative feeling within the company about CRM and it's so called successes and ultimately results in CRM collapse.

Inadequate Focus on Objectives

Secondly when starting off on a CRM strategy the objectives are clearly established and followed. Management and employees know fully well what is needed to work towards organizational goals. The goals themselves are clearly laid out after meticulous planning. However midway during the CRM implementation, when hard times hit, the organization loses sight of its goals and ultimately steers away from it. At times goals get interchanged and lose their importance. Companies find themselves work at home directory towards goals that are less important and forgetting the ones that really are. This is one of the fundamental and mostly felt problems in CRM.

Insufficient Resources

Sometimes in phased implementation of CRM, if conditions worsen within the company or without, organizations start lessening their budgets for the current phase. When funds are less, budgets strained, the necessary costs required for CRM success are not employed. As a result CRM starts failing midway. The most important aspect- that of maintaining consistency is lost. Organizations fail to utilize the necessary resources for success and thus result in failure.

Inappropriate Metrics

Organizations have basically failed to use the right metrics. Failure to choose the right method of measurement and implement it is one of the chief reasons why CRM fails. Different metrics have to be employed for the calculation of different goals. Companies seldom pause to analyze which metric is needed for which element and ultimately use the wrong one. This results in faulty measurement and CRM disappointments.

Complex Systems

CRM simple? The hype says so, the experts agree. Is this really the case? Organizations who have employed it though have a different opinion. They are witness to the fact that CRM packages can be highly complex, with vast amounts of intricacies. If this is the case then how do simple employees cope? The answer lies in sufficient training being given in order that they are able to comprehend and deal with the difficulties easily.

Business Needs Most Important

One of the chief mistakes companies make is letting the technology drive their CRM functionality. What's happening is that companies are endeavoring to go to the industry leaders, gain the technology needed and then apply it to the business problems only to find that it isn't solving any of them. Instead they need to analyze their business problems first and then find the appropriate CRM solution for it. This backwards step is responsible for CRM failure.

No Customer Focus

Customer oriented strategy? Yes, CRM does play the part. Customer oriented employees? Now 'that' requires an effort on the part of the organization. It needs to motivate employees to be absolutely customer centric. This involves tremendous effort on the part of the company but is highly essential. CRM problems arise because of employee reluctance to be more customer focused. The result is a highly expensive customer strategy being adopted by the company in an effort to retain customers, with reluctant, unfocussed employees implementing it.

Slow Returns

Another failure of CRM is its inability to provide quick returns on investment. Organizations find themselves waiting for years before they are able to see actual returns on their investment. Most experts view the low ROI as a major problem with CRM but fail to see that the long wait is just as difficult. Waiting for years to see their investments show results, tests patience and leads to both employees and management slackening their efforts in the implementation.

Most CRM problems can be mitigated, resolved and ultimately obliterated. What is highly required is the ability to focus on the business needs, choose a CRM package that works towards it, employ the right resources and assume the right metrics. Adopting these measures would go a long way in alleviating CRM problems.

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