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Study finds high CRM success rate

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A new study has found something surprising in the customer relationship management industry: positive results about the success rate of CRM implementations.

Scheduled for publication this month, the study, titled "The Blueprint for Success," found that 67% of CRM implementations succeed with an average or above average performance mark. More than 400 marketer respondents, representing companies of various sizes and a range of industries, participated in the survey.

CRMguru.com, a portal featuring CRM news and analysis, conducted the research in conjunction with consultant Caribou Lake and market research company Mangen Research Associates.

Bad performance improves

Only 33% of respondents said they had under-performing or non-performing CRM projects. While that percentage is still considerable, it is far below failure rates cited by other researchers in the past two years.

Meta Group, for instance, last year said that 55% to 75% of CRM implementations fail. (Meta qualified this result by noting those failures usually occur in the sales force automation area of CRM.) Other researchers, including Gartner Group, have published similar numbers indicating that the majority of projects fail.

For its study, CRMguru.com determined "success" by measuring the following items: respondents’ customer churn rate; "share of wallet;" customer satisfaction ranking, based on respondents’ research; customer acquisition rate; and front-office staffing costs for customer service and sales reps.

"It’s not success in a wishy-washy, intangible way," said Bob Thompson, founder of CRMguru.com and president of Burlingame, Calif.-based consultancy Front Line Solutions. "Success is defined as getting real benefits."

Industry analyst Kelly Spang Ferguson, principal at Current Analysis, Sterling, Va., agreed that the 33% failure rate was good news. "I’d like to see 0%," she said. "But one-third is better than two-thirds."

Keys to success

The study also identified key reasons why CRM projects succeed or fail. It found that using "customer-centric strategies" is the leading success predictor by a substantial margin. Such strategies include analyzing customer churn data, using customer research and developing measurable business objectives.

Adequate training and support was the second key component of CRM success. "Too many CRM implementations have stopped in their tracks because expensive and sophisticated software is dumped on field sales staffs who refuse to use it," Thompson said.

Tying for second place with training was companywide endorsement of CRM strategies, from senior management down through the ranks. Setting and measuring goals was the fourth major predictor for success.

Process, not technology

Surprisingly, software selection did not come up as a significant predictor of success.

"What we found is the brand of software had no relationship to success or failure," Thompson said.

Current Analysis’s Ferguson agreed. "CRM is less about technology and more about business processes," she said. "It’s all a matter of training and usage. The vendors are just providing the tools to help companies communicate with their customers better."

Thompson said marketers should not blame software vendors when CRM projects fail. "Most of the time, it’s not the vendor’s problem if the project is failing," he said. "It’s like blaming the car manufacturer because you crashed your car."

The study concluded that the use of all four success predictors significantly increased the chances of a CRM implementation being successful.

"Do these things and your odds [for success] are 70% or higher," Thompson said.

Indeed, 72% of respondents accomplishing all four predictors reported success in terms of return on investment.

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