50% failure rate acknowledges something is VERY wrong
There are many fortunes being made on the purchase, licensing and consulting associated with CRM implementations. Big brands in the category like Salesforce, Microsoft Dynamics and NetSuite all promise great riches for their customers after heavy IT investments, training and database deployments. But are the only companies truly benefiting the CRM vendors themselves? While numbers differ depending on the sampling, respondents and methodology, research firms like Gartner, Merkle Group and AMR all cite CRM failure rates ranging from 30–70%.
Stuart Lewis, president & CEO of marketing and communications agency Clever Samurai™ believes there is a fundamental flaw in most programs stemming from the most forgotten aspect—the customer. “CRM program design tends to focus around software rather than focusing on people, prospects and customers. Implementations have the misplaced primary objective of tracking more customer information. The real objective should be how to apply and deliver relevant, personalized and contextual communications which create a positive connection with the customer.”
David Mack, vice president retail and e-commerce at SCI Logistics and a client of Clever Samurai, is no stranger to CRM. His objective is to help his customers effectively manage their supply chains in the context of selling more products to their customers. Mack believes “this is all about the customer and that means listening to them and how they want to be communicated with. It’s not always what the customer tells you directly, as it’s often about tracking and understanding their behaviors online and offline.”
“We’re in a technological world, but that shouldn’t mean technology should drive the customer relationship. It’s the relationship that should drive the application of technology to support greater customer intimacy,” says Lewis. “This isn’t to say that technology isn’t a big enabler, but rather the technology should wraparound the company’s business objectives and a big effort should be directed upfront and ongoingly on how to define customer communication and interaction protocols.”
Lewis believes that CRM investments will be fundamental, particularly in certain business verticals in the next few years. Lewis cites financial sectors, IT services, CPG and telecom as important growth areas.
Investment on the rise
Gartner research estimates that it’s a $25B industry in 2014 and growing, with cloud-computing representing 50% of that. “CRM will be at the heart of digital initiatives in coming years. This is one technology area that will definitely get funding as digital business is crucial to remaining competitive,” said Joanne Correia, research vice president at Gartner.
Gartner’s Market Trends: CRM Digital Initiatives Focus on Sales, Marketing, Support and E-Commerce report highlights that marketing technology is a hot area for IT investment, but solution decisions are increasingly being driven by CMOs and the marketing organization, with little to no IT involvement. CIOs will need to work more closely with CMOs and marketing leaders to adapt to the increasing technology demands emanating across the marketing organization. Mounting pressure on CMOs to drive growth, improve accountability and reduce costs is pushing marketing organizations to make significant marketing technology investments across a broad set of applications and functionality.
Betsy Cosper, vice president marketing at Icynene, also a Clever Samurai client, has the challenge of marketing spray foam insulation to homebuilders, commercial developers, architects and consumers. Cosper’s company sells through distribution, so her lens on CRM includes essentially a third-party sales force, whom she also needs to treat as somewhat of a customer.
“We started with a really clear understanding of what we were looking to achieve and a clear plan of what, who and when we planned to communicate. We understood what assets we had at our disposal and what would be useful and relevant to our wide audiences,” comments Cosper, a seasoned marketer from CPG and the pharma industry.
“It’s very simple to say, but most marketers forget to be consistent and clear in their messaging and ensure that they are touching the target audience that they are trying to convert consistently—without being overwhelming. Key is finding the right balance in providing useful, informative pieces of content while helping them along your cycle without being annoying or confrontational,” adds Cosper.
Collaboration is key
In looking broadly at why CRM implementations fail and gaining an understanding of market data available, one thing is evident—details aside, CRM was generally referred to as an IT project. And perhaps that’s the fundamental reason why failure is so common. Sure there are obvious variables like choosing the wrong vendor, having unclear goals or perhaps a lack of executive sponsorship. But since when did IT drive the relationship between the company and its customers?
Stuart Lewis believes that effective customer-centric CRM initiatives need to include a multitude of stakeholders who not only represent the customers’ interests but also are responsible for interactions with the customer. “Traditionalists might believe that marketing are the brains and sales teams simply need to execute
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. And customer service—what do they know? There is no question that a functional area of the business needs to lead the CRM initiative, and that might well be marketing, but without the input and commitment of other key stakeholders the initiative might be doomed to fail. That input may include that of customers, with some more advanced brands creating ongoing customer panels to provide feedback on a myriad of matters.”
When asked about how to successfully apply CRM, Dave Mack states, “build your strategy around test, learn and optimize. Far too often we focus on one strategy, tweak it slightly and tweak it when it doesn’t perform. This can lead to repeating the same mistake over and over without truly understanding why and hampering the maximization of an ROI from your CRM strategy. A/B test strategies have never been easier to implement.”
Cosper’s view aligns, as her team regularly reviews their KPIs to drive and understand what is working and what isn’t. “We always tweak the communication and the assets to better suit the needs of our audiences.”
Despite the complexity of CRM, Mack, sums things up quite simply. “Put your customer at the centre of your plan… and get started.”
This article originally appeared in the January 2016 issue of Direct Marketing.
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