Why CRM Failures Persist

The Customer Relationship Management (CRM) software success record is depressing. For more than a decade, consistent studies have shared than anywhere from 20 percent to over two-thirds of all CRM efforts have either failed to meet expectations or failed outright.

CRM software failures result in large financial losses, business disruption, months or years of misspent time, red ink, upset customers and often permanent damage to reputation. Many have been known to cause career casualties and some have even been cited as contributing causes to poor financial performance results during earnings calls. Yet the tragedy is magnified as these failures have been occurring for over a decade.

So why implement CRM at all? Because its a cost of doing business. Failure to adopt a customer strategy and support that strategy with software automation will certainly leave your business vulnerable to competitors. Also, blaming CRM failure on CRM software is a lot like blaming a victim for being murdered. While choosing the wrong CRM software system can be a contributing factor to CRM failure, the poor decision, and the following implementation challenges are not software dependent.

Also, many times these projects weren't complete failures. They may have produced some benefits, just not all the benefits the stakeholders used to justify the project undertaking, or sufficient benefits to realize a positive return on investment.

What's perhaps most frustrating is that while the CRM failure rates vary from study to study, almost all studies show they haven't tended to materially decrease over time. One of the first highly publicized studies, by Gartner back in 2001 disclosed a CRM failure rate of 50 percent. A decade later, a 2009 study by Forrester found a CRM failure rate of 47 percent. Another decade later the CRM failure rate is essentially the same.

The CRM success trend is far from hopeful, but the underlying facts and root cause analysis reveal several factors which suggest better preparation and planning can mitigate failure. Most research studies over the prior decade share that most CRM failures result from a limited number of causes. All these causes are preventable if they are prepared for and identified at the earliest occurrence. When you recognize why CRM software fails you can take proactive measures to make sure your CRM project succeeds.