The failure rate is 90%.
“When I ask executives if the CRM system is helping their business to grow, the failure rate is closer to 90%.” Scott Edinger wrote about failure rates in his article for HBR. In his article, Edinger says most CRM platforms fail to deliver sales, revenue, or growth.
That’s a problem.
If you’ve invested the time and resources into a CRM platform, you should see a return, right?
So why aren’t they?
I’ll outline what your CRM is supposed to do and outline why you may have the wrong CRM platform.
What a CRM platform should do for your business
If we look up the definition for CRM on Wikipedia, here’s what we see:
“CRM systems compile data from a range of different communication channels, including a company’s website, telephone, email, live chat, marketing materials and more recently, social media. They allow businesses to learn more about their target audiences and how to best cater for their needs, thus retaining customers and driving sales growth.” – emphasis added.
See that last part?
The long and short of it is this – CRM is supposed to produce more customers and sales growth. So how are 90% of organizations with CRM platforms failing then?
Their CRM hasn’t boosted sales.
Here are 4 signs indicating you may have the wrong CRM platform.
#01. Your CRM isn’t designed to drive sales
Believe it or not, this is a common mistake; Edinger, in his article, writes:
“The primary reason they miss the mark in helping companies increase revenue is that CRM systems are too often used for inspection — to report on progress, improve accuracy of forecasts, provide visibility, predict project delivery dates, and provide a range of other business intelligence — rather than creating improvement in the sales process. Front-line sales professionals and managers rarely find the majority of these capabilities useful in winning more business for the company.”
What does this tell us?
There’s a whole lot of bureaucracy around CRM platforms. But why all the attention on progress reports, accuracy, and intelligence?
They’re looking for one-throat-to-choke.
According to Ian Miell at Zwischenzugs, it’s about ownership.
“One of the most commonly-asked questions when architecting a solution within an enterprise is: ‘Who is responsible for that component/service/system?‘
This ownership results in ‘one throat to choke’ for audit functions. Much like the police will go after the drug dealer rather than the casual user, the audit functions of an enterprise will go after the formally responsible person or team than the (potentially thousands of) teams using an outdated version of a particular technology.
A lot of the political footwork in an enterprise revolves around trying to not own technologies.”
What does this mean?
There’s a lot it can mean – but here are four common scenarios outlining what could be happening here.
- Managers want to maintain their current budget. They’re using CRM to justify their decision-making, ensuring they’re not at fault if something goes wrong.
- want to increase their current budget. They’re using the company’s CRM platform to justify yearly budget increases. This often means less budget for another dept.
- Leadership wants a fall guy. They want a dept. (sales) to take ownership of the CRM platform, but they want control over the platform and how it’s used. If things go south, sales takes the fall rather than those in control. The sales team has ownership of CRM, but they don’t have control. As a result, it’s less useful to salespeople.
- Leaders are looking for a career-making moment. They’re using CRM to track the progress made with or without their help. They can attach themselves to progress taking place in the organization, riding that momentum to a bigger payday.
Each of these factors means there’s less emphasis on using your CRM to drive sales and a greater focus on investigative and analytical work. This, of course, means less revenue.
#02 Your sales team won’t use your CRM platform
You need a CRM system.
Your managers, dept heads, purchasers, etc., discuss their ideal CRM system; they create a list of requirements and begin their search for potential options. The search is narrowed down to a few candidates, and eventually, a winner is selected. The CRM platform is rolled out, and the company notifies everyone.
Just one problem.
The salespeople refuse to use it.
Why is that?
In a previous post, we shared the answer.
“This issue stems back to not figuring out the sales reps’ needs during the buying process. Companies should seek a CRM that solves specific problems and relay those features to their sales teams. Explain how sales reps can close more deals if they use the CRM right. Make sure the final decision about a CRM is a shared decision by the sales team.”
The CRM system doesn’t meet the needs of your sales team.
These CRM systems:
- Are too complex
- Create a significant amount of pain during the setup or transition process
- Are inefficient; they aren’t aligned with existing workflows and processes
- Have a steep and long learning curve
- Don’t come with the training your sales team needs
It’s no surprise that these CRM systems aren’t being used by the people who need them the most. That’s a disaster because sales reps produce the kind of intel you need to maximize the value you receive from your CRM.
#03. Your CRM platform makes it harder for salespeople to sell
What do your salespeople want to spend most of their time doing?
That’s right.
They want to spend most of their time closing deals and taking orders. If they’re doing this, they’re bringing in revenue for your business and earning fat commission checks. What specifically does this mean, though? It means that they’re building relationships with active buyers, the people who are willing and able to buy.
The wrong CRM stops this.
Instead of spending time in the field (or on the phone) closing deals, your salespeople are inundated with busy work. They’re forced to deal with a long list of new to-do items that take them away from prospects.
Isn’t this helpful in the long run?
Not so much, no. This unnecessary busy work creates revenue leakage. Your salespeople close less and earn fewer commissions, all thanks to these administrative tasks. This complicates things further; your salespeople are told from on high that they must use the new CRM. But their sales managers are unhappy with their poor performance.
It’s a catch-22.
If your sales reps want to keep their jobs, they’ll need to sell more and ignore the busy work. They’ll complete these administrative tasks to keep leadership happy, providing CRM stakeholders with the data they want.
Either way, they lose.
You know what they’re going to choose, right? They’re not going to focus their attention on the CRM; they’re going to focus their attention on closing sales so that they can keep their jobs. They’re less likely to lose their jobs if they’re bringing in revenue.
#04. You have the wrong type of CRM
Depending on who you ask, there are at least four types of CRM.
- Analytical: These CRMs are all about collecting data and visualizing the insights gained from this data. This is perfect if you’re looking to gain deep insights into your customer’s behavior. If you’re relying on your salespeople to drive sales using this CRM, not so much.
- Collaborative: They’re all about sharing data – This could be data shared with other vendors, suppliers, and distributors or data that’s shared across multiple departments in your organization. This can work well if turf wars, silos, and internal politics can be kept to a minimum.
- Campaign management: A hybrid of the analytical and operational CRMs, this CRM type is used to manage large-scale sales and marketing campaigns using the data collected. This works well if you have clearly defined, well-documented processes. If you’re winging it, this CRM platform is a disaster. Properly defined workflows and procedures are important for all four types, but they’re must-haves here.
- Operational: This CRM system is iterative; your sales team collects customer data, then you make changes in your business based on the lesson you’ve learned. This is especially suited for teams using CRM to retain customers and drive revenue and growth directly. These CRMs offer sales, marketing, and service automation, an essential component if you’re focused on
Which one is right for you?
That depends on a variety of factors, including:
- Your business model
- The industry
- The number of employees in your company
- The presence (or lack of) documented processes and workflows
- Culture
- The type of sales team you have in your organization
- The culture of your sales team
Choosing the wrong CRM is inevitable if stakeholder and end-user feedback are ignored. You’ll need a clear idea of the goals, objectives, and circumstances if you’re going to select the right CRM. It’s also important to accurately measure success – this means having the right KPIs and metrics.
What are the right KPIs and metrics?
Your stakeholders and end-user feedback will tell you. If you want your CRM platform to help your salespeople to drive sales, their feedback is essential. Do you need to provide management with actionable feedback, recommendations, and intelligence? Get input from your analysts.
It’s simple.
Talk to the users who will use your CRM platform. Get a clear understanding of their needs; this upfront research will show you exactly what you need.
Do you have the right CRM platform?
As we’ve seen, the failure rate is 90%.
When organizations are asked if their CRM system is helping their business to grow, the failure rate is close to 90%. That’s because most CRM platforms fail to deliver sales, revenue, or growth. If you’ve invested the time and resources into a CRM platform, you should see a return, right?
Are you seeing a return?
Your CRM platform is, by definition, supposed to produce more customers and more sales growth. Begin with the end in mind; focus on your stakeholders and end-users – what do they need to drive sales and growth? Listen to the right people, and you’ll find it easy to identify the right CRM platform for your business.
