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Measuring Success and Failure
For the rest of the July 2002 issue of CRM magazine please click here
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Salesforce.com CEO Mark Benioff said it best: "I define failure in terms of usage. If no one is using the CRM application, then the effort is a complete failure." This may seem like an overall simplification of a complex issue, but it cuts to the core of evaluating the success or failure of CRM. With some high-profile research firms spitting out claims that 80 percent of all CRM implementations fail, CRM magazine felt it was our duty to look deeply into the issue and come out with a set of parameters to outline what makes a CRM initiative a failure and what makes it a success. First, we found that even the research firms making such claims didn't provide details to our satisfaction on how they got to the magic 80 percent figure. Second, when interviewing CIOs and end-users we learned that their CRM systems may not have met their company's expectations initially, but were then turned around and put to good use. So CRM magazine set out to define success and failure in the CRM world. We came across many subjective interpretations. The most popular is ROI, measured by gaining employee efficiency or cost savings or actual increased revenue opportunities. Every company has a different ROI model and every user of CRM expects something different from the system, so one common formula does not fit all. But is simply looking at ROI the right way to size up the success or failure of CRM? Not by a long shot. It's a piece of the puzzle. If a CRM system saves a sales team two hours a day per person in terms of processing orders and that allows each rep to make one extra client visit a week, is the CRM application a failure if the company was expecting two additional meetings each per week? Some firms measure the success of a CRM implementation in terms of being on time and on budget. As long as the CRM system was put in place when it was supposed to be and it cost what it was supposed to cost then high fives all around. This is another ineffective measurement, because it does not consider why the system was purchased in the first place. On time and on budget is important, but who cares if an implementation took a week or two longer than originally anticipated if the desired results are ultimately met? Your customers don't and you shouldn't.
The true measure of the success of a CRM implementation hinges on whether it is being used effectively. Everything else means nothing. Without usage there will be no ROI, no increased customer satisfaction, no closer ties with sales and marketing, and no gains in operating efficiencies. So before you jump on the failure bandwagon, reexamine what your CRM system was intended to do and how you either embraced it as an organization or didn't. And if necessary, reevaluate your expectations around the customer, because ultimately it's satisfied customers--not the technology--that will make or break your organization.
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