Why CRM Initiatives Fail and What You Can Do About It

Over the last several months, there's been a lot of debate about the validity of CRM as a business strategy. Gartner Dataquest recently found that as many as half of all CRM implementations fail. Although this also means 50% are succeeding during tough economic times, it still begs the question: Why do so many CRM strategies fail? Well, in a word, this stuff is difficult. Building a customer-centric enterprise takes time, planning, and a dedication to change at the front and back end of a company.

Just how tricky can this process be? Picture this: A few months ago, a global management consulting firm ran a survey in its e-newsletter asking subscribers to state the most challenging CRM issues facing executives today. Prizes were offered for 10 random participants. A wave of subscribers responded, and the good ideas poured in. However, in the end, no prizes were awarded. Due to an important back-end oversight, the firm was unable to identify which readers took the survey. Which company made this mistake? You guessed it, our very own Peppers and Rogers Group. The point: No matter how customer-focused you are, there's always room for error.

That Nefarious Villain
Other than simple execution failures, the single most frequent mistake companies make is to confuse a CRM strategy with a technology implementation. The difficult part of any CRM initiative is making sure a company's culture and structure are on board. Technology can then become an enabler of one-to-one communication: Web sites, call centers, mobile devices, etc., become opportunities to develop profitable customer relationships that will put your company in the successful 50%. Here are five basic action areas that can help you get there:

• Organizational Change: A single customer relationship may be spread over different departments. Data integration, inter-departmental communication, and someone to oversee these processes is critical to success.
• Metrics: The routine financial measures of success commonly used in a sales-transaction company are often insufficient. A customer-based company must align its compensation, budgeting, and incentive policies according to a customer-centric model.
• Culture Change: A customer-based enterprise must be prepared to make recommendations that are in the customer's own interests, even if they conflict with the short-term interests of the enterprise. This may require a substantial culture shift for most companies.
• Channel: For firms moving their products or services through channel partners, establishing relationships with both end users and channel partners is crucial.
• Transition planning: Any company engaged in becoming customer centric must be cognizant of the transitional process, including a step by step awareness, a clear funding strategy, and attainable goals.

These represent fundamental areas of CRM strategy that are often overlooked by aspiring companies. Whether you are trying to revive a stalled implementation, or launch a new one, this is where the fine line between success and failure is often drawn.

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