Where CRM Falls Short and What to Do About It. Ron Siahpoosh

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1 Where CRM Falls Short and What to Do About It Ron Siahpoosh

2 Where CRM Falls Short and What to Do About It Ron Siahpoosh CRM software has the potential to transform companies by helping them strengthen relationships with customers and increasing sales. Yet the experience of most companies falls short of this objective. Some 60% of CRM implementations fail, and even those that succeed often leave lots of potential on the table.

3 Across industries and regions, the problems are familiar: Sales force employees resist using CRM software, thinking that it s simply a means for their bosses to keep tabs on them. Managers within the sales force and in sales operations don t trust the quality of the data, believing that reps just enter whatever they think management wants to see. As a result, these leaders can t rely on CRM data to generate actionable insights. And company leaders have no clear indication of the system s ROI. This is a significant missed opportunity. CRM packages are expensive, and if they aren t quantifiably improving business performance, they represent a waste of capital. To better understand this situation, ZS partnered with the Sales Management Association on a comprehensive study of CRM performance. The findings give a clear picture of the current challenges regarding CRM, along with specific priorities that companies should focus on to improve their CRM performance in the future. Methodology The survey, conducted by ZS Associates and the Sales Management Association, drew 115 responses, primarily sales leaders (52 respondents) and sales operations leaders (43), along with 20 respondents in other roles. Roughly 75% of respondents were from companies with more than $10 million in revenue, and approximately half were from organizations with more than $100 million. Industries with the largest representation included manufacturing, software, healthcare, financial services and professional services. Respondents reported that their organizations used a variety of CRM platforms, with Salesforce.com in the majority (54% of respondents), followed by SAP (19%), Microsoft Dynamics (17%), Siebel (13%), Oracle (10%) and other systems (29%). 3

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5 Where We Are Today Survey respondents reported getting value from a range of CRM applications, but there is plenty of opportunity to improve. Specifically, the largest number of respondents reported generating either moderate to high or high to extremely high value in areas such as opportunity management, customer information look up and performance management. By contrast, the areas where the fewest respondents reported generating results were incentive compensation management, partner management, and collaterals and proposals (see Figure 1). Gauging the Value Received From CRM % of Respondents* Opportunity Management 42% 39% Customer Info Lookup 39% 39% 78% 81% Performance Management 29% 41% Customer Targeting 21% 46% Meeting Info Tracking 26% 37% Account Assignments 28% 34% Sales Forecasting 35% 24% Call or Meeting Planning 18% 39% Account Planning 19% 35% Campaign Management 27% 25% 70% 67% 63% 62% 59% 57% 55% 52% Internal Coordination 13% 32% 45% Customer Communication 13% 25% Collateral and Proposals 7% 31% Partner Management 13% 23% 36% 38% 38% Incentive Comp. Management 14% 18% 32% High to Extremely High Moderate to High * SMA ZS CRM Survey Figure 1: Respondents reported getting value from a range of CRM usages, but there is significant opportunity to improve. The survey findings also looked at the handful of companies that exceed their revenue objectives, to determine key differences in CRM usage among this subset. Specifically, the high performers showed the biggest differential in 5

6 several areas, including: performance management (cited by 44% of those who exceed revenue goals, compared with just 29% of the total sample); meeting information tracking (32% versus 26%); sales forecasting (40% versus 35%); and incentive compensation management (19% versus 14%) (see Figure 2). Where CRM Delivers the Most Value for Leading Companies % of Respondents* All Companies Opportunity Management 42% Companies Exceeding Revenue Goals 44% +2 PP Customer Info Lookup 39% 36% -2 Sales Forecasting 35% Performance Management 29% Account Assignments 28% Campaign Management 27% Meeting Info Tracking 26% Customer Info Lookup 21% Account Planning 19% Call or Meeting Planning 18% Incentive Comp. Management 14% Internal Communications 13% Customer Communication 13% Partner Management 13% Collateral and Proposals 7% 40% +5 44% % +1 31% +4 32% +6 20% -1 20% +1 17% -1 19% +5 13% - 8% -5 15% +2 8% +1 * SMA ZS CRM Survey Figure 2: A much higher proportion of exceeding objectives companies get high value from CRM in performance management. Dashboards are moderately effective, according to the survey. Some 39% of respondents reported generating about the right level of insight from dashboards, with roughly 30% saying they generate greater insights, and about the same number saying they generate less value. Perhaps not surprisingly, most respondents (72%) reported that their salespeople are not spending enough time on the company s CRM platform. One of the biggest barriers to greater CRM adoption is the accuracy of data. To dig deeper into this issue, we looked at three categories of information: existing 6

7 customers (including sales results, profiles and characteristics); prospective customers (profiles and characteristics); and opportunities and activities for future sales (such as sales and marketing activities and leads). Across all three areas, few respondents rated the accuracy of their CRM data as very good. The existing-customer category had the highest perceptions of data accuracy, particularly in sales results and customer profiles. Yet even in those areas, only about 40% of respondents believed their company s data was accurate (see Figure 3). Questioning the Accuracy of CRM Data % of Respondents* Sales Results Current Customer Profiles Current Customer Characteristics Opportunities and Leads Prospective Customer Profiles Sales Activities Marketing Activities Prospective Customer Characteristics 25% 24% 19% 15% 14% 10% 42% 40% There are substantial improvement opportunities even with data relating to existing customers. While companies track opportunities and leads, few perceive this data to be highly accurate. Organizations that can provide their people with high-quality prospect data can drive competitive advantage. Existing Customers Prospective Customers Activities and Opportunities * SMA ZS CRM Survey Figure 3: Few respondents rated the accuracy of their CRM data as high or very high. Looking at information that could lead to future sales data on prospective customers and activities and opportunities fewer than one in four respondents believed the company s data is accurate. These findings were consistent across both groups of respondents: sales leaders and sales operations leaders. They make it easier to understand why the sales force doesn t want to spend time on the CRM platform, and why managers don t trust it to generate the kinds of insights that will strengthen relationships with customers. 7

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9 Where CRM Has to Improve The survey results point to several clear priorities for companies keen to improve their use of CRM. First, they need to improve the quality of their data (identified as a priority by 74% of respondents), and do more to tie the CRM function to support of sales and marketing processes (74%). Those two measures can deliver immediate returns, not only boosting the reliability of CRM systems but ensuring that the software leads to specific actions that the sales force can take right away. Those measures will then boost user adoption, which 54% of respondents cited as a priority. It s tough to boost user adoption directly; attempts to force the sales force to use products they don t believe in almost always backfire. Instead, companies first need to improve the functionality and reliability of the CRM platform, and then convince employees of its increased value. (Other priorities include dashboards and reports, and analytics, but they should be addressed only after data quality and processes have been improved.) Looking at companies of various sizes in the overall sample, it s clear that these priorities are more urgent for larger organizations. In almost every instance, the percent of respondents citing data quality and supporting processes as priorities rises in line with company size (see Figure 4). Fixing CRM Is More Urgent for Bigger Companies % of Respondents* $10M+ Companies $100M+ Companies $1B+ Companies Supporting Processes 74% 77% 85% Data Quality 74% 75% 80% Dashboards and Reports 62% 60% 73% User Adoption 54% 54% 62% Ad Hoc Analytics 39% 41% 42% * SMA ZS CRM Survey Figure 4: For many organizations, supporting of processes and data quality are the top CRM improvement opportunities (1:2). 9

10 Using the survey findings and our experience working in a wide range of industries, we have identified two key ways to improve CRM usage and impact. (See for an example of this approach in action.) Company leaders must ensure that CRM helps them: Do the right things with customers, defining a customer engagement process [linked to CRM] for how to build stronger customer relationships and financial results. Know the right things about customers, implementing data management and analytics programs to consistently gather, integrate and analyze data for deeper customer insights. Our survey clearly reveals that all is not right with CRM. More important, it shows what companies can do to capture much more of the potential of their CRM systems. Companies that act on these findings and follow the steps we have outlined above will be far better positioned to understand their customers, create richer engagements and ultimately differentiate themselves from their competitors. About the Author Ron Siahpoosh is a principal in ZS s Chicago office and the CRM practice lead. He has wide-ranging experience helping companies in a variety of industries including pharmaceuticals, medical devices, high-tech, financial services and travel improve their customer engagements and relationships. His experience spans areas relating to CRM strategy, process, data, analytics, people and technology. Ron s experience spans a diverse range of sales models, including key account management, generalist and specialist field sales, channel partners and different inside sales models.

11 About ZS ZS is the world s largest firm focused exclusively on improving business performance through sales and marketing solutions, from customer insights and strategy to analytics, operations and technology. More than 3,000 ZS professionals in 21 offices worldwide draw on deep industry and domain expertise to deliver impact where it matters for clients across multiple industries. To learn more, visit or follow us on Twitter (@ZSAssociates) and LinkedIn.

12 For more information, please contact: ZS Associates zsassociates.com ZS Associates 07-15