Poor implementation of CRM systems is wasting huge amounts of money
CRM (Customer Relationship Management) systems are intended to improve the relationship, and hence business, with customers. They provide customer facing staff deeper information about the relationship with the customer which results in a superior customer experience that is tailored to the customers’ unique attributes. A well designed and implemented CRM is a strategic advantage to an organisation because it is a key component of making the organisation the customers’ easiest, most satisfying choice in a crowded market.
Whilst the primary reason for implementing a CRM is to support the best possible customer relationships, if the focus of implementing the system is purely to ‘increase sales’ without understanding how it will improve the customer experience, the system will be an impediment to business. A poorly implemented CRM adds significant overhead to the business in expenses and lost productivity thereby destroying competitive advantage.
Here is a list of significant reasons that will make a CRM waste money through increased overheads, staff dissatisfaction and lost revenue due to poor customer engagement.
- Implementing CRM ‘inside out’ rather than Customer in. Customers do business with suppliers for their reasons, not to improve the revenues of their suppliers. To effectively implement a CRM system that will increase profitable revenue, it is essential to identify what it is that the customers expect from the relationship with the organisation, then establish how an innovative CRM system can differentiate the organisation from the competition.
- Poorly defined or executed value chain/sales process. I have experienced CRM systems that have been implemented without a clear view of what the organisation’s value chain is and without any documented, well implemented sales process. These CRM systems are implemented piece-meal with attempts to ‘tailor’ the CRM to suit the practices of the business. In these cases, there is contention between the various ‘silos’ of the business for what the CRM provides to the business and no thought applied to the value that the system adds to the customer relationships. The result is that there is resistance to the system in the sales force because they see it as purely an administrative overhead that adds no value to their sales effort.
- Ignoring the ‘best practice’ of the CRM. CRM systems are designed based on wide input regarding what is ‘best practice’ from leading organisations around the world. It is common practice for adopters of CRM systems to attempt to tailor the system ‘to the way we do things here’. All too often the system will not perform exactly the way the adopting organisation works meaning it will not be well adopted or worse, actively resisted. Given that the major CRMs are based on best practice, planning to implement a CRM is an excellent opportunity to perform business process reengineering to identify and adopt best practice that is supported by the short listed CRM systems. Ignoring the best practice offered by the CRM will waste money due to conflicting processes and lost opportunity cost that could be gained if the CRM best practice was adopted.
- Non-integrated CRM. Customers expect that anyone talking to them from their supplier knows about them and their business with that supplier. Where a customer facing staff member makes contact with the customer based only on the information in a non-integrated CRM, that staff member will have a very limited view of the overall customer relationship. This will lead to poor customer perception and dissatisfaction, particularly where there may be financial dealings in progress or customer service problems being addressed. A non-integrated CRM is a very high risk for losing significant customers and therefore revenues/profits.
- CRM as a marketing database. In many implementations that I have experienced, the CRM was installed to be a central database of customers to provide automation to ‘tele-market’, send out advertising hence creating and capturing leads or online sales. This does nothing for the customer and very little to assist the sales team in their dealings with the customer. Such a CRM is nothing more than an active database. Direct sales staff will receive customer hostility when they are ‘cold called’ by tele-marketers who are not aware of what the direct sales people are doing. The leads that are registered in the system largely get ignored because the sales team are not actively using the CRM system to manage their pipeline and forecasts. This means that the expenditure on the CRM is wasted and revenues are lost due to irate customers changing to suppliers that they feel understand them better and that they are therefore more comfortable with.
- CRM as a Sales Management Tool. Where the CRM has been installed and the pipeline management aspects of the system used, the CRM will become the point of reference for sales management. Where the processes in the CRM are not well understood by sales people and/or sales management or other departments that use the CRM data, it will lead to misunderstanding of the data provided by the system between the sales team and senior management/other departments. If only selective options are enabled and not others, such as Forecasting where the sales team can manage what they forecast, expectations of those inspecting the data will be different from the intent of the teams that are inputting the information. In the case of not enabling Forecasting, large potential deals will be left out of the CRM by sales people because they will know that if they register them, they will be continually hounded by other departments and senior management as to what is happening with the deals. Major sales can be lost and sales staff turnover increased as a result of failing to properly adopt the CRM.
- CRM for Finance reporting. Where the system is primarily implemented to gain management overview for financial reports and the customer facing teams only get feedback if there is negative potential results,
the system will be actively resisted. The CRM will be seen as a ‘Big Brother’ tool and people will only ‘input what they want to hear’ or ‘not input anything that might be bad news’. Provided a CRM is properly implemented and all disciplines that rely on it are using it to be aligned to provide the highest level of customer relationship, the data in the system can be used to underpin financial projections for the business. Using the CRM primarily for financial reporting will add administrative overhead to the sales team and reduce their time selling which in turn leads to lost sales. - CRM for Product Management. Where the system is being used primarily to track sales of particular product lines, the customer facing staff will need to manage expectations of the product marketing people who will continually push the sales teams to increase sales of their product lines. Again, this will lead to customer facing staff avoiding inputting any deals that will distort the expectations and create a barrage of enquiry from product marketing. The sales team are defocused on the customer and hence sales will suffer.
CRM systems are an essential part of a market leading organisation’s information technology infrastructures.
Where they are implemented poorly, they waste money. Customers are not well serviced. Customer facing teams see them at best as a waste of time and at worst a ‘Big Brother Tool’ to avoid as far as possible. Money is lost through customer defection, higher administrative overhead, low staff morale leading to staff turnover and lost sales opportunities due to distraction of the sales teams.
Where the organisations’ value chain is clearly defined, the processes well defined/implemented by enthusiastic continually trained teams and the CRM is integrated into the other vital systems of the organisation, they are a tool that differentiates the organisation from their competitors. A CRM that is implemented to truly enhance the customer relationship and highly integrated into the culture and processes of the organisation is a formidable strategic advantage.
Philip Belcher © LSE Consulting Pty Ltd
Please contact LSE Consulting to find out how we can assist you to improve your CRM implementation, sales enablement or any other strategic business issues.
LSE Consulting is a specialist management consulting company. The purpose of the company is to assist business leaders to improve their organisation’s results, turn around underperforming businesses/business units and prepare for successful exit. The LSE Consulting method focuses on Leadership, Strategy and Execution, hence ‘LSE’, with a strong emphasis on business strategy aligned marketing and sales. The company was founded by Philip Belcher to assist business leaders through interventions that are based on his 30+ years’ experience in leading, turning around and successfully exiting businesses.
