Recently, a company invested millions of dollars with a customer relationship management (CRM) provider — only for the new system to become little more than an administrative burden for the sales organization. The executive team was frustrated and expected a return on investment (ROI) soon, but eight months after launching the system, employees across the company were disappointed in its adoption and utility. Of the more than one dozen different categories for contacts, none of them were consistently used to identify the person who would be making a purchasing decision. Furthermore, it was nearly impossible to determine the correct stage in the sales process for each of the top 100 opportunities in the sales funnel. This CRM system had been engineered to do everything, but it was doing nothing to increase sales and improve the company’s bottom line.
Sound familiar? A reported one-third of all CRM projects fail, according to analysis by CIO.com, and in some cases, failure rates are as high as 69%. To understand why so many CRM implementations fail, let’s take a look at the history of these systems.
Customer Relationship Management: A History
The first company-wide systems for tracking sales data were known as technology enabled selling (TES) systems. TES systems had a simple interface for contact and account organization, straightforward pipeline tools to track progress and prompt desired activity or actions, and tools for revenue forecasting. Soon, TES systems morphed into sales force automation (SFA) systems, which connected sales data to marketing systems and processes for lead generation, lead management and follow-up tracking.
CRM became the new term a few years later, as these systems expanded to connect with order entry and fulfillment systems, enterprise resource planning (ERP), and many other business functions. Most importantly, CRM turned into a management tool with the powerful potential to report metrics and increase sales force efficiency. Unfortunately, as its capabilities expanded, the primary value of CRM — a tool to increase sales — was lost in the shuffle.
While I am pro-integration when it comes to technology, if integration with other functions creates too much complexity or dilutes the effectiveness of the system, leaders must take a good, hard look at how much that integration is worth.
A Better Way
The good news is that there is a straightforward approach to ensuring that your CRM system delivers the value you expect from it:
1. Clarify Whom the CRM Is Supposed to Help (Your Sales Team)
Make the sales process the centerpiece of the CRM system. Moving opportunities through the pipeline is at the heart of CRM, so organize the system around opportunities and what sellers must do to move them from one stage to the next. Most good sales processes have four to six stages, each representing a discreet set of actions with a prospect or client, and are aligned with the typical buying process for the company’s ideal clients.
2. Track Metrics That Are Predictive of Success
Most CRM systems’ reporting capability will exceed your needs. Use the technology to help you stay focused on the leading indicators that portend the results you want to see. Pay attention to things like:
- New opportunities entering the pipeline.
- Stage advances (e.g., the number and value of opportunities moving from stage 1 to 2, 2 to 3 and so forth).
- Opportunities that are stuck in a given stage for a long period of time.
It’s also useful to identify the milestones that typically occur in the deals your team wins, regardless of the stage. One financial services firm found that its sales reps closed around 90% of their prospects if they did a site visit in the “present solutions” stage of their pipeline, so tracking site visits for prospects at that stage became useful.
3. Measure “to Improve, Not to Prove”
As Egon Guba wrote, “The purpose of evaluation is not to prove, but to improve.” It’s a useful way to think about how you can use metrics to drive improvement rather than to inspect. With all the metrics available in a CRM system, it’s easy to default to managing by the numbers — but the real power of those metrics is the valuable information they provide about where to apply coaching. It’s not simply about reporting the numbers to illustrate progress or lack thereof; sales managers can use the information in the CRM to direct their improvement efforts. If a sales rep has a lot of accounts stalling in the late stage, investigate why it’s happening, diagnose the performance problem and work with him or her to develop an action plan to address the issues.
If you’ve invested heavily in a CRM system that isn’t producing the ROI you expected, there’s hope. It just requires a strong dose of something that many organizations struggle with: focus. If you’re willing to focus on the essential function of a CRM (increasing sales) and avoid the distraction of “over-integration,” sales results will follow.