Causes of CRM Failure

  • Post last modified:4 November 2021
  • Reading time:6 mins read

Causes of CRM Failure

Too often management views CRM as an easy solution to their business problems.It is often initiatives that begin and unfolds the management realizes the gaps in the expectations. Some of the causes of CRM failure are:

Mistaking CRM as the substitute for good marketing management

Many marketing managers view a CRM programme as the substitute for marketing management assuming that the programme would lessen the hard work involved in marketing. They place excessive expectations on the CRM software and think the software will by itself look after their customer management tasks.

No CRM programme can substitute the hard grind that marketing is all about. CRM requires superior marketing managers and staff, who are not only sensitive to the customers but also willing to put in the needed work in the execution of the CRM programme.

Failure to appreciate the dynamic nature of marketing

Customers’ needs and the value they perceive in various offerings are subject to change over time. Technology and environment to keep changing, affecting the firm’s customer management strategy. When a CRM programme does not take cognizance of this dynamism of marketing, it fails.

Preoccupation with a gathering of data and neglect of its application: Application of the insights on customers to marketing action is the core of CRM. The usefulness of this expenditure depends entirely on the extent to the information is applied to marketing actions.

Inadequate appreciation of the potential of the customer database

The firms lack adequate appreciation of the potential customer base. Their CRM programmes remain as just, PR programmes. They stop with just quarterly customer mailings or monthly customer letters. Measurements of customer satisfaction and protocols for applying the results there of for calculating the efficacy of marketing are usually non-existent.

Failure to use brand intelligibly in the CRM programme

Using brand intelligibly is the key to successful mass marketing. It is seen whenever the brand and its values are not utilized throughout the CRM process, the results are not favourable. The way customers interact with brands has been changing in recent years. Multiple channels have contributed to this.

This means that in the present times, the brand must work in all the channels/media and all the levels/touchpoints at which the communication takes place. CRM must first know how the customers consume its brand and how they relate to it.

Using this knowledge, the brand’s value proposition and the various benefits it offers should be tailored to the individual customer and communicated to him in a specific way.

Reluctance to measure customer satisfaction precisely

Manny managers are reluctant to precisely measure the level of customer satisfaction. They also fail to set clear parameters/ metrics for this measurement. Obviously, these managers have no way of finding out whether CRM implementation has brought in benefits or not.

Failure to follow up the feedback from the customers

Analysis shows that in many cases, firms painstakingly gather feedback from customers, but afterwards forget about it completely. After coercing the customers to fill in any number of feedback forms, suggestion forms and survey questionnaires, they make no attempt to action the feedback or to initiate a further dialogue with them. This is worse than not gathering feedback at all.

Reluctance to share the data on customers with all staff

Many firms have a protectionist approach to information. Their thinking is that information should be made available only on a ‘need to know’ basis within the organization and must be tied closely to rank. This is anti-ethical to CRM. CRM programmes believe in making all relevant information available to all those in the organization, who interact with the customer in one way or the other.

Ignoring the need for efficient, trained, well-motivated employees

Happy customers are the outcome of happy and well-motivated employees. And such employees bred only in great workplaces. Companies can succeed in CRM only by having efficient, well-motivated and happy employees.

The challenge is often with the speed of response. The firm must resolve customers’ problems adequately and quickly. Employees with the right motivation ‘customer –first’ attitude create a satisfied customer.

Some CRM programmes incur very high costs

Running a CRM Programme, especially the creation and maintenance of an effective customer database involves significant costs. There are software costs, hardware costs, systems costs, people-related costs, training and motivation costs and so on.

The business must be capable of generating such revenues and profits that costs of CRM programme do not pose a problem at all. There must also be proper control of the costs of CRM-both investment costs and operation costs. The CRM programme succeeds only when the net is positive.

Failure to appreciate that the scope for CRM varies over businesses

All businesses and all customers do not lend the same scope or applying CRM. Failure to appreciate this basic fact will lead the CRM programme to failure.

For example, in FMCG businesses where the end customers run into millions and are a distance from the company by several tiers of middlemen and geography, a one–to–one relationship is difficult to maintain. They may be better of with traditional mass marketing/communication strategies.

Failure to fit in the needed flexibility

In some cases, CRM programmes fail as they are designed without the needed flexibility. A rigid structure will be incapable of supporting one-to-one marketing. It will not be able to respond to individual customers’ needs in specific ways.

Poor planning affects business goals

Poor planning affects the company’s views of interaction with customers and increases the chances of addressing the wrong issues. Planning must be based on creating new initiatives that will make doing business better for the customer. It includes taking small steps to reach the larger goal.

Resistance to Change

Remaking a company to be genuinely customer-centric is new and uncharted territory and as with anything new, there is always resistance to change. Change often forces people to regress to what they know and protect what they have always been comfortable with.

Commitment from senior management

A solid and total commitment from the most senior management is a must for the CRM project work. The project must have a dedicated senior executive with the strength to sell the program throughout the organization as is champion, assuring the company’s commitment.

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