Why Do CRM Installations Fail?

Industry studies show that 60% of customer relationship management (CRM) software installations fail. Vendors offer tips for succeeding in this red-hot market.

Customer relationship management (CRM) software is a hot installation for businesses trying to get more out of their sales forces. "You can only build your sales force so big. Then it becomes a question of better managing your relationships with your customers. CRM provides businesses with the tools to achieve this," says David Bean, director of alliance development at Interact Commerce (Scottsdale, AZ), a vendor of CRM software.

According to David Leaser, director of the worldwide channel program for GoldMine, CRM software helps businesses manage sales, marketing, service, and support information. GoldMine (Colorado Springs, CO) is most well-known as a vendor of sales force automation (SFA) software. Last year, GoldMine merged with customer service and support software vendor Bendata and has since entered the CRM market. "SFA software only addresses the sales and marketing pieces of the puzzle," says Bean. "Adding a complete CRM solution provides SFA VARs with tools to move into additional areas within their customer base."

Unused Software = Failed Installation
Bean agrees that adding CRM software is a great move for SFA or contact management software VARs. Interact sells the ACT! line of contact management software. "We have an install base of 3 million ACT! users," says Bean. "These users are comfortable with the ACT! interface, so we have based our CRM software on that interface. The bottom line is that if salespeople do not use CRM software, it is worthless. If the interface is not intuitive and salespeople do not want to learn it, the CRM installation will fail."

Start Small, Then Expand Your Installation
According to both Bean and Leaser, industry studies have shown that more than 60% of CRM installations fail. "Resellers try to implement too much, too fast," says Leaser. "Successful CRM resellers start with small installations and then work their way through other departments."

"A focused effort by CRM VARs is important," adds Bean. "Resellers trying to sell networks, hardware, and too many other applications in addition to CRM tend to be less focused and less successful. If you are selling multiple applications, it's important to have a staff dedicated just to CRM."

Leaser says CRM VARs should think of themselves as their customers' project managers. "This involves regular checkups just to see how things are going," he says. "For a good salesperson, these checkups provide the opportunity to sell additional software seats."

Set Realistic Benchmarks
Leaser adds that resellers should set up measurable returns for their CRM projects. "This could include an increase in sales, productivity, or in the level of customer service," he says. "If a customer sees its expectations in these areas being met, this will justify a larger rollout, or phase two, of a CRM implementation."

Don't Shoehorn Software Where It Doesn't Fit
Because CRM is capable of so many different things, it is important that VARs analyze their customers' needs before attempting an installation. "CRM is still new to many prospects. Most people didn't think of it when they started their businesses," says Leaser. "So, when prospects hear the price and scope of a CRM installation, it can be overwhelming. It's often better to approach the customer by asking about their needs related to CRM, without ever mentioning CRM.

"It's also a mistake to shoehorn CRM software into a business where it doesn't fit. A real CRM solution is more than software. It could involve moving the furniture, or installing a new phone system, or just rearranging some schedules." Adds Bean, "Our CRM software is ready to work out of the box, or a reseller can do quite a bit of customization. It all depends on the customer's needs. The software-to-service revenue ratios for our resellers vary from one-to-one to one-to-three."

Market Penetration Less Than 5%
Despite all the attention the CRM market has been receiving, Bean concludes that there is still plenty of opportunity for resellers. "Although a lot of companies are looking at CRM installations, our studies show that the market is less than 5% penetrated," says Bean. "The CRM market is a great opportunity for VARs that really want to grow their businesses."

Ralph Gammon, contributing editor