Mistaking CRM Tools for CRM Strategies. Why do CRM Projects Fail?

The concept of Customer Relationship Management (CRM) has been around for over 2 decades. You would think that talking about what makes CRM projects successful is a bit like preaching to the converted. However, many companies are still making a common mistake that is costing them millions. If you are sponsoring a CRM initiative, or tasked with managing a CRM project, I hope the 5 minutes it takes to read and reflect on this post will be of value to you.

Those who have experience in CRM know, that the success rate of CRM projects is embarrassingly low. There are many reasons why CRM projects fail, but a common pitfall is mistaking a CRM tool for a CRM strategy.

At conferences and user groups, companies often present proudly, the number of features they have implemented on a particular platform, how many integration points they have built, and how fast they were able to do so. Yet, during coffee breaks, project managers lament about how unappreciative users are, how hard it is to get management involved, how senior managers do not bother to look at the useful reports and beautiful dashboards that come with the system. A question we need to be asking ourselves is, “Why wouldn’t someone want something that is useful and beautiful?” Could it be, because it is not relevant?

In many CRM projects, success is often measured in terms of delivering a solution on time and on budget. However, delivering a solution on time and on budget is not the reason why projects exist. Projects exist to help companies achieve business goals, enable the execution of business strategies — to move the company toward where they want to go. To do this, project managers need to know what business goals are, how the company plans to achieve them, and closely align their projects to support business strategies.

Let us take a generic example:

• Business Goal: To grow revenue and maintaining profit margin.
  • Business Strategy 1: In emerging markets: focus on winning new customers and market share. To do this; attract and develop local partners to gain quick access to local knowledge and sales and service capabilities.
    • CRM strategy 1: develop processes and capabilities to support the recruitment, development, and enablement of local partners to drive sales and customer acquisition.
  • Business Strategy 2: In mature markets: focus on revenue protection and profit margin by targeting top 100 accounts in each country. Become strategic end-to-end solution provider to top customers.
    • CRM strategy 2: Breakdown divisional silos and improve collaboration between sales, service, and support. Enable end-to-end solution selling to largest enterprise customers.

Business Strategy and CRM Strategy need to be aligned. To do this, we need to have clarity on the business strategy, which answers the question, “How will we go about achieving our strategic goals?” If we do not understand the business strategy, then we would struggle to prioritize the right requirements. We would not be able to decide if we are defining the right specifications.  We would not be able to explain why the project is strategically relevant.

CRM technology offers a plethora of tools to analyze and automate CRM processes. However, CRM tools and out-of-the-box processes are just raw ingredients. To get value out of them, you need to determine what to apply, how to apply them, and what data to analyze. Simply turning on lead, opportunity or case management processes will not by itself bring value. Neither will making them available on mobile devices. Incentivizing, threatening, and hall-of-shaming users to use a tool may temporarily increase login rates and data volume, but it is a big leap to equate usage metrics with business value.

Successfully realizing a CRM strategy is not easy. It often requires resources, tools, and significant changes to current processes and behavior. All of which, need to be aligned with the business strategy. Because, if your project is not aligned to business strategy; it will be hard for you to connect your project to the strategic priorities of the organization. Without that connection, you will not be able to win senior level sponsors needed to drive change.

The importance of project alignment with business strategy seems obvious, but misalignment is a problem in many projects. I wrote about this in my previous post “Myopic Focus on Technology?” and identified 6 key questions sponsors and project managers must have clear answers to before proceeding with a project.