CRM Success White Paper
Common Reasons Why CRM Implementations Fail and How to Ensure Success
August 2019
White Paper Overview
When implemented properly, CRM software has proven to be a valuable asset for companies of all sizes. According to a study by Nucleus Research, a proper CRM implementation offers an average ROI of $8.71 for every dollar spent. In addition, it can help increase sales by 29% and sales forecast accuracy by 42%.
Salesforce believes the right CRM (with a 360-view of the customer) can improve customer retention by 27% and lead to a 30% increase in lead conversion and 25% increase in revenue and sales productivity.
The following are the main benefits businesses are hoping to achieve through their CRM investments, according to a study by Salesmate.
We have categorized the above into the following strategic benefits and ROI categories resulting from their CRM investment:
Revenue (and sales) enhancement
Cost avoidance
Increased customer satisfaction (resulting in reduced churn)
Improved financial forecast accuracy
Meet legal requirements.
Despite all the benefits, Customer Relationship Management (CRM) system implementations have consistently high and troubling failure rates trending around 50% but ranging from 30% to 70% depending on the study. A few of the most common CRM failure rate studies include:
Forrester Research 2009 Study found a 45% CRM failure rate
Butler Group's 2002 study found a 70% failure rate
Merkle Group's 2013 study found a 63% failure rate
AMR Research's 2006 study found a 31% failure rate.
This means that CRM software implementations either fail to achieve their initial business objectives or fail outright and never get implemented. In addition, research has also shown that the larger the effort (people/employees, departments, interfaces, etc.), the more likely the failure rate. The CRM industry has been around since 1995 yet failure rates have not declined over the years, which is a cause for concern.
We believe the root causes of these CRM failures are similar and continue to repeat themselves year after year. We have identified many of the root causes and believe that the right risk mitigation strategies can help ensure success and respond to some of the challenges and reasons for failure.
The top reasons for CRM failures and methods of ensuring success are presented below.
Top Reasons for CRM Failures
The following are some of the top reasons for CRM failure and some of the preventative measures we would take to mitigate or avoid these issues: