The Top Reasons CRM Fails


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It’s no secret that among the five biggest types of business applications, CRM software has the highest failure rate … by a landslide.

The analyst firms report that 30-50%+ of all CRM deployments fail to achieve their objectives or fail outright. Research also shows the larger the effort the more likely the failure. Given that CRM is a 23 year old industry, and these CRM implementation failure reports continue to repeat themselves year after year, the statistics are cause for some much needed risk analysis and mitigating measures. Below are the top causes of CRM failures, and the preemptive measures that can prevent, mitigate or respond to these challenges.

CRM failures

  1. Poor Objectives

    A lack of clear and measurable goals results in an aimless project, questionable completion and fictitious ROI. It’s also helpful to recognize software features and functions are not business objectives. They are at best piecemeal capabilities, seldom roll up to measurable business impact and normally indicative of an “IT run project.”

    Design Thinking is the best tool to identify the CRM software’s highest impact and most important success criteria; measured in user, customer and business terms; and according to the people who will most use or benefit from the business software. This people-focused framework shifts CRM project objectives from being measured in software features and functions ― which frankly most users and managers don’t care about ― to being measured in user, customer and business outcomes ― which users and managers care deeply about.

    While it would be unusual, there’s no rule that says CRM objectives must include revenue improvements. However, by definition, if you can’t measure revenue impact, you can’t calculate ROI.

    Similarly, there’s no rule that says CRM objectives must include user goals. However, simply installing and configuring the application software, without delivering user experiences that make the users’ lives easier, more productive and more rewarding, is a lot like saying the operation was successful but the patient died. CRM projects are most successful when project objectives are designed to satisfy company, customer and user goals.

  2. Poor CRM Strategy

    A CRM strategy is a lot like a map. You need to understand where you are starting from, where you want to go and the shortest route to get there. Your company’s business strategy architects the competitive advantages and go to market plan that strive to make the company successful. Your CRM strategy should engineer customer facing outcomes that align and support the company’s business strategy. That may include revenue goals such as increased customer acquisitions, customer share or customer tenure, or cost savings goals such as lower cost to serve or higher staff productivity.

    It’s important to remember that Customer Relationship Management isn’t a software application. It’s a business strategy aimed at growing mutually rewarding and profitable customer relationships. And that business strategy is empowered with enabling technology that we often call CRM software. Don’t confuse strategy with software.

    Also avoid deploying technology in the absence of accompanying strategy. It’s important that any CRM program show specifically how strategy, people, processes and software are optimally orchestrated to directly impact the company’s most important customer and revenue objectives.

    You can implement CRM software without an accompanying strategy, but what normally happens is the results slip from strategic objectives to tactical goals such as getting data into a system, measuring staff activities or producing a pipeline report – possibly valid goals – but do little to nothing to improve customer relationships or move the needle on the company P&L.

    And if your CRM software doesn’t improve your customer relationships, you miss the point of Customer Relationship Management, and will instead revert to CDM (Customer Data Management). CDM may have some value, but falls woefully short in helping the company achieve its most important business objectives.

    Instead, when CRM strategy directly supports the company’s business priorities, it makes CRM something the company can’t live without – which makes it both wildly successful and sustainable.

  3. Scope Creep

    We all know that scope creep kills all projects, so we must actively manage scope in a disciplined way and at a detailed level. An interesting fact about scope is that if the project incurs significant time and cost overruns, it won’t be because certain scope items were underestimated. It will be because certain scope items were completely missed in the planning and estimating process. Scope omissions, not poor estimates, cause the most significant project overruns.

    Every CRM implementation methodology has its own scope levers, measures or dimensions, but most of them manage scope by micro-managing individual scope areas including the application deployment, data migration, system integration, software customization, staffing, change management and the four project management cornerstones of scope, time, cost and quality.

  4. User Adoption

    Resistance to change is a given in most CRM implementations. When that resistance fails to be quickly and properly addressed, and spreads from a few challengers to defiance by groups, you can quickly pass a tipping point whereby recovery is lost and the CRM system is destined for failure.

    A new CRM system brings new processes, automation, information, roles, responsibilities and control, or oftentimes an actual or perceived loss of control. That’s a lot of change, and the problem with change is that it causes anxiety for users, and while it is endorsed by the few imposing the change it is often not so well accepted or even contested by the majority receiving the change. To bridge this gap, change management systemically shifts individuals, groups and organizations from a current state to a desired future state while mitigating productivity loss during the transition, creating an environment for sustained change and realizing the benefits of change more quickly. A change management program is the single greatest tool that will determine whether user adoption is enthusiastic, sluggish or challenged.

    Some of the change management events and artifacts used in CRM software implementations include change readiness assessments, communications plans, business and technology impact analysis, learning and training tools, post go-live intermediation measures and value realization measurements. These steps provide assurance that resistance to change will not delay or derail project objectives.

  5. Poor Business Process Design

    On average, businesses change their strategies and operations every 20 months, but only change their business processes every four to five years.

    Without business process improvement, you’re just creating another place to enter data. The predictable result is that users will be unimpressed, software utilization will be low and user adoption will steadily wane as users work outside the system using spreadsheets, shadow applications and manual methods.

    Staff productivity is enabled with technology, but not achieved with technology alone. Business process automation is the #1 contributing factor to increased employee productivity. Automation replaces manual activities, speeds business process cycles and incurs fewer errors. The increase in labor productivity allows staff to focus less time on entering and fixing data, and more time in using the data for improved actions and performance.

    The Component Business Model is generally a good place to start as it defines and designs end to end business processes, such as quote to cash or lead to customer, or even broader processes such as procure to pay or record to report. Once you have an enterprise-wide business process view you can prioritize and architect process optimization to reduce friction in processes, eliminate low value or non-value added steps, decrease business process cycle times, lower operating costs, achieve superior information reporting and improve outcomes.

    Business Process Improvement

    It’s important that you perform process optimization before you catalogue your CRM requirements, as new business processes will eliminate many of those requirements, introduce new requirements that will otherwise be missed if only looking at current state, define fields or attributes needed for objects, entities and forms to support workflow, automation and analytics, and detect which fields can be removed in order to improve ease of use and the user experience.

  6. Missing Executive Sponsorship

    Missing, inactive or inadequate executive sponsorship closely correlates to CRM failure. Staff and management take their queues from the executive team so it is imperative the executives deliver visible, vocal and active project sponsorship.

    I have found governance to be the best tool to aid executives in achieving what they want to achieve, but often aren’t sure how to go about it. While everybody knows they need project governance for their CRM project, fewer people understand how to apply specific governance methods that will most benefit their CRM project. They struggle to define a framework that brings both visibility and predictability to the project. Instead, they approach governance reactively and endure mind numbing monthly steering committee meetings.

    Governance frameworks should define clear responsibilities for every role, collaboration and feedback expectations for each constituency, meeting cadence, the right communications artifacts, critical milestone reviews and meeting agendas that surface truly meaningful content and lead to actionable outcomes.

    CRM Governance

    A governance framework must also give stakeholders and the steering committee what they need to do their jobs. They need clarity in communications. The need communications that deliver transparency, inspection and accountability. They want truth and they want it early. They want the project team to share risks, issues, concerns and bad news objectively and early – so they can advise corrective action at the earliest opportunity. Bad news does not get better with age. And most of all, they want to avoid surprises.

    When you deliver real governance, you empower leaders and the project team to view the project through the front windshield, and not just the rear view mirror, and to be able to proactively steer the CRM project to a planned destination, and not just be along for the ride. Maybe that’s why they call it a steering committee.

  7. Lack of Systemic, Predictable Project Execution

    Agile and Scrum have replaced waterfall implementation methods and become the de facto CRM deployment methodology for good reasons – they accelerate time to value, bring systemic execution that delivers predictable results and reduce project risk. They also help project teams separate the urgent from the important and avoid confusing activity with progress.

    However, it’s been my experience few organizations do Scrum correctly. Instead, they use pieces and parts largely based on convenience, ignore some of the more challenging rules and then wonder why things didn’t work out. As the founders of Scrum attest, “Scrum’s roles, artifacts, events, and rules are immutable and although implementing only parts of Scrum is possible, the result is not Scrum. Scrum exists only in its entirety …” If you expect to get the predictable results of Scrum, you have to follow the framework as its intended. There are no shortcuts.

  8. Lack of Continuous Process Improvement

    Your company’s quest to acquire more customers, increase customer share and improve customer retention never ends, so neither should your enabling technology.

    Like business, CRM is a journey, and successful CRM programs leverage continuous process improvement cycles to constantly refine and optimize the business software system. This may take simple forms such as recurring training after new releases or more expansive forms such as creating a Center of Excellence or pursuing a CRM maturity model.

    Even a relatively successful implementation followed by stagnation will result in a steady decline in CRM usage over time. It won’t take long until users and managers believe the CRM software incurs more effort than value, and begin working without or around the system.

Preventing CRM Failures with Risk Management

The overarching strategy to prevent these recurring CRM failures is risk management. Every CRM project brings with it a certain amount of risk, and every failed CRM project incurred a risk that was either not recognized or not addressed. Risk management is the process of identifying, measuring, and prioritizing risks; implementing strategies to manage them; and creating plans to prevent, mitigate or respond to high likelihood and/or high impact risks which threaten project objectives.

While it is impossible to eliminate all risk or anticipate all the challenges that may occur during a CRM software implementation, risk management is the best tool available to reduce the likelihood that big problems will occur, and that concerns can be dealt with before they become crisis. Some common risk management tools and artifacts include a risk strategy and plan, a risk register, periodic risk analysis reporting (integrated to the weekly status reporting) and an early warning system. These risk management work products give stakeholders and the steering committee assurance that they are not going to be surprised by something that may suddenly or negatively change the course of the project.End


  1. Hi Chuck, full agreement here, although I would put the CRM strategy point even stronger. The vendors have succeeded in making CRM a technology (where it is a strategy). Even Paul Greenberg has given up on correcting the industry here, back in 2011, I think. This positioning as a technology also leads to poor executive commitment/sponsorship and poor user uptake, as they are ‘just’ the ones who need to feed the system with data instead of being key stakeholders.

    Imo risk management can deal with all risks but the strategy one. No strategy is a risk with a potentially catastrophic outcome – which a project (risk) manager will hardly flag as long as the ‘CRM is a technology’ view of the world prevails.

    2 ct from Down Under

  2. Great read! Another reason why CRMs fail is also due to a lack of user adoption. This is a major problem in small businesses. It is first of all difficult to find the ‘right’ CRM and when you do manage to invest in one – continued use is a challenge. Especially so when you aren’t ready or trained to take advantage of all the benefits the tool/software offers.

  3. @Thomas – Your point is well taken. It’s been my experience that a lack of CRM strategy is a pervasive challenge. Maybe this is because implementing technology is relatively easy compared to implementing strategy which often must be accompanied with changes to culture, people and processes. Too many times, CRM adopters look for the easy option. If they achieve any level of success at all, it is at best Customer Data Management, and does little to nothing to improve customer relationships and business outcomes.

  4. @Contact … Lack of user adoption is a common cause associated with CRM failure, but it’s been my experience that this factor is more of symptom than a root cause. Sure, when evaluating CRM software it’s important to ensure the User Interface (UI) is simple, intuitive, leverages consumer technologies and delivers a rewarding user experience. But the bigger precursors to CRM adoption are how the CRM application – when combined with strategy and process – delivers user, customer and business outcomes. When users believe the CRM application does little more than micro-manage their activities they adopt sluggishly or not at all. When they believe the solution (strategy, process and software) combine to improve their lives, customer relationships and business outcomes, user adoption is much less of an issue.

  5. Hi Chuck: IT projects underperform expectations for every reason you mentioned, and user adoption was a good add by @Contact. I hesitate to use the word fail in this context, because for project retrospectives, the meaning is so unclear. Assessing the efficacy of project outcomes requires understanding and measuring several variables that often differ, depending on the organization. Rarely can an IT implementation be anointed a complete success. And a vast majority are not total failures, because some positive results have been achieved.

    When I look up what defines project failure, I get “A project is considered a failure when it has not delivered what was required, in line with expectations. Therefore, in order to succeed, a project must deliver to cost, to quality, and on time; and it must deliver the benefits presented in the business case.” If I accept this definition, I would be challenged to find any project implementers who could honestly tell me they’ve worked on a successful project. I certainly haven’t. Accordingly, the 30 – 50% failure rate seems pretty good. And just now, my search picked up a 2013 study that reported a 63% failure rate for CRM projects.

    I don’t know of anything that could cause CRM projects to have a higher failure rate than, say, manufacturing, HR, financial services, or ERP software implementations. Like CRM, these projects have ‘footprints’ throughout the company, high project costs, lots of lead-time and uncertainty, and are subject to all the vagaries you identified in this article, and then some.

    Interestingly, some of the biggest IT project meltdowns I have worked on or analyzed don’t involve CRM. They include the Denver Airport baggage handling fiasco (2005), Nike’s implementation of i2’s logistics software (2004)–how–and-why–nike-recovered-from-its-supply-chain-disaster.html?page=2, and more recently, the debacle rolling out (2015)

    Most of my company’s client work involves risk modeling, and for IT projects, the Project Management Institute (PMI) has developed useful frameworks to help IT professionals achieve greater success at implementations. You can find out more through this link:

  6. agree with all your comments. CRM is not a Platform/software/IT thing. It is a corporate strategy. So not only a team or department responsibility. The whole company should put the customer/consumer in the center of their daily activity. At the end the tecnology have to support business processes, and these ones are designed to follow the company strategy. All these topics are related, but it is important to understand the individual mision/vision of each of them to be success.
    Main of the CRM deployment in the companies fails because lack of company strategy (more even of there is a poor CRM strategy). A similar situation is happening with the famous digital transformation. Some companies are very focus on the technology to implement, and not in transform their business model or way of working. In some cases the CRM is in the center of these digital transformation programs. Vendors should press for theis technologies, so this is why it is important to onboard correct advisors/professionals to guide along the process (CRM strategy set up, digital transformation,..).
    Some time ago I wrote an articule in Customerhink about this. Here you have the link for further info:

  7. @Jaime, you make some good points – customer-centricity, strategy, business transformation. It’s exactly these types of points that make CRM programs successful. Thanks for your comment.

  8. I think most companies fail to achieve the benefits of CRM because they fail to put the customer at the center of their business. These companies are easy to spot. They’re product focused companies that choose not to use empirical market research to design products, fail to survey their customers and have no idea what the lifetime value is for any of their customers. Until you create the strategy that orients your business around your customers, CRM software has little value.

  9. So true – the CRM system is often viewed by sales as an annoyance, and squabbles between sales and marketing often focus on the low quality of the data, and difficulty accessing what data there is. Great article on how to use CRM as a tool for growing sales.

  10. That’s why the proper CRM training from professionals are important. CRM is not just to insert the customer informations which can be done within contact books too. Infact its more than that, understanding customers being one.

  11. Excellent point. Simply inserting customer data creates an electronic Rolodex. The value of CRM is not what you put into it but what you get out of it. Good design and training are key to that value.


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