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Research finds CRM failure rate lower than widely reported

Painting a brighter picture than many other reports, new research finds that one in three CRM projects don't produce desired returns. One of the report's authors calls the failures "self-inflicted" and highly preventable.

New research on the state of the CRM industry found that more than one in three installations doesn't produce a return on investment -- a failure rate that's roughly half of what some analysts have estimated. It also discovered that most of those failures are highly preventable.

The study, "The Blueprint for CRM Success," places the blame largely on the shoulders of end-user companies that don't draw up customer-centric strategies or put in place the necessary organizational changes to accompany new technology. The results are based on 448 online interviews with executives from small, midsized and large organizations.

Forty-five percent of the CRM projects included are clear successes that are producing definite paybacks, while 35% are likely failures. Twenty percent of the cases are generating some return on investment (ROI) but not in a timely fashion, the report found.

Half of those questioned had statistical measures in place to measure ROI.

Dick Lee, practice leader at Minneapolis, Minn.-based consultancy Caribou Lake and one of the study's three authors, calls the failures "self-inflicted injuries." He said that those who are disappointed miss the mark in four key areas: planning effectively, providing low-level training and support, making organizational changes, and defining key metrics.

"There's a long history of customers who want to gain without pain," Lee said. "They try to do an end run around the process."

Lee also finds fault with vendors and consultants who pitch products and services as customer cure-alls, instead of making sure their clients have customer-centric strategies in place before tackling new technology.

Overall, the study found little variation in success based on vertical industry or the vendor selected. Satisfaction levels also remained consistent among various types of CRM software, although call center implementations did fare slightly better than sales force automation, marketing or analytics projects.

The research identified several key indicators that a company would achieve ROI, such as a reliance on customer satisfaction research and customer attrition data in developing a CRM strategy. It also challenged the common perception that companies can get a quick bang for their CRM buck with small tactical projects. Instead, it found these implementations to be "high risk, low ROI."

While these latest CRM failure figures certainly fall short of some analyst totals, which have been as high as 70%, Lee admits that the fact that fewer than half of those surveyed achieved satisfactory returns isn't a ringing endorsement of the industry.

"There's a ton of proven potential that's there for companies that want [CRM] badly enough," Lee said. "The downside is it's highly likely there's a large percentage of businesses that [culturally] simply can't do it."

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