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Why Many CRM Systems Fail To Meet Expectations

October 1, 2003 • Customer Relationship Management (CRM) has become a multi-billion dollar industry over the past decade. Such prolific growth is based primarily on the cost saving premise that technology enhanced integration between sales, marketing, and services can provide for better customer retention, predictability, understanding, and support.

Most of the CRM applications on the market today are built on the premise of cost savings and ROI, but many have failed to meet these expectations after costly implementations that have failed to produce the ROI that was expected.

One of the main reasons why many CRM implementations have failed to meet these objectives is because they have placed the value of cost savings over the value of the customer. The following is an example of this problem that many of us have faced in working with CRM systems.

Historically, the majority of organizations have built their CRM initiatives around their call centers. As a result, such initiatives have only provided customers with a seemingly endless maze of phone triage and wait times all the while hearing repeated messages of "how important their call is" and to "please hold for assistance," often times for ten minutes or more!

Why do so many companies install call centers to improve Customer Relationship Management only to provide them with this type of customer mis-management? Why would companies risk losing their existing customers through this type of processing? The reason is because most CRM implementations value the short term costs savings over the longer-term value of customer retention and true relationship management. Think about the following statistics as it applies to this principle:

• On average, it costs six times as much to obtain business from a new customer as from an existing customer.
• On average, US Corporations lose half of their customers in five years.
• On average, US Corporations lose half of their employees in four years.
• On average, US Corporations lose half of their investors in less then one year.

So how exactly are corporations today who typically implement larger CRM systems supposed to expect ROI on CRM and grow their business when anywhere from 15–50% of their most valuable assets listed above leave each year? The point is that each organization and customer's needs are unique yet many of the CRM systems and implementations are not. They are typically based more on organizational goals and their own ROI models instead of the customer needs of the organization.

In our call center example above, it may very well be that extensive hold times may or may not work well for a particular organization. The problem is that this type of information can only be gained from the organization's customers. Until organizations utilizing CRM can fully comprehend HOW their customers want to interact with their environments, customer feedback will always be the missing link in truly successful CRM implementations.

To put this issue into perspective for most CRM systems today, customer feedback is typically gathered at the customer support level with the sole purpose of resolving current customer problems. The customer support people who manage these functions are typically incented to log and resolve problems and issues from a reactive perspective and are not tasked with the management of customer market acceptance and future needs desired by the customer. Rather, these people are tasked to ultimately address current customer issues and to resolve them as soon as possible. In other words, if you call to complain about something, chances are they are much more interested in "closing" your complaint issue then gaining any additional feedback from you.

To illustrate this point, an individual who recently decided to cancel his current DSL service with one of the largest ISP's in the nation brought a perfect example of this deficiency to our attention. The issue the user had was poor connections with his DSL service. However, he could not get the ISP to fix the problem due to the excessive hold times, often in excess of 30-60 minutes, that were required to bring this issue to their attention.

After he had enough, the user waited over 45 minutes to finally get someone to cancel his service. The ISP representative on the other end was using a CRM system and capturing his information while asking "canned" questions instead of listening to the customer. Once the call was almost completed, the now former customer suggested that the representative tell her DSL technical staff that they should correct this problem. The representative responded that her current (CRM) system doesn't allow her to do that.

On a final note to this saga, the now former customer was called a few days later by the same ISP and asked a number of questions about why he decided to leave them. Once again, his frustration grew, as he was never allowed the opportunity to explain the issue in his own words but rather only allowed to give "canned" responses to the questions - many of which were not even pertinent to his issue. In the end, the ISP lost another customer due to the customer disservice they provided - one in which their CRM system can only alarm them to after they are gone, often times in significant numbers. As illustrated in our white paper entitled "What Negative Feedback Can Really Cost You," that can be a costly mistake!

The use and failure of CRM applications for customer feedback management was best described by Harry Watkins, Director of Aberdeen Research when he said: "Today's CRM solutions can track customer buying behavior, but predicting future behavior, such as what customers will do or want next, from past behavior is like steering a tanker by observing its wake. A bad purchase experience can alter customers' future buying decisions—leading them to take their business elsewhere. Yet, current CRM systems do not indicate that there was a customer service problem until long after the situation occurred," he said.

CRM is a good starting point in the overall goal of complete Customer Relationship Management but it is also just the beginning. When CRM systems were first introduced, they clearly had the "customer" in focus. But as the industry has grown and evolved into what it is today, it must return to the "customer" in order to better fulfill the promise of a strong and consistent ROI. John Freeland of Accenture recently summarized this problem when he stated that "too many CRM projects focus on the mechanics - specific tools and technologies - rather than the ultimate goal: increasing the value of the customer relationship." The only way to reach that objective is to now incorporate Customer Feedback Management (CFM) into these initiatives to comprehend and tap into the true value of the customer.

For further information about customer feedback management, contact the CFS Corporate Research Department at: corpresearch@custfeedback.com or at (800) 465-8430.