Has CRM Failed?

Last Updated Jun 28, 2011 5:08 PM EDT

The product category known as Sales Force Automation (SFA) is at least three decades old, and Customer Relationship Management (CRM) has been around nearly that long. Companies have spent billions of dollars on these systems.

Has it been worth it?

The basic concept of SFA/CRM is to apply the principles of factory automation to a sales environment. The emphasis is on making sales processes repeatable and standardized. Reps follow a standard set of behaviors at each stage of the process, with the system monitoring those steps, much like a factory automation system monitors the steps in a manufacturing line.

Unfortunately, this approach does nothing whatsoever to help sales teams to sell.

Quite the contrary, because SFA/CRM needs data from the sales force to produce meaningful reports, sales pros have often been forced to do a lot of keystroking, on top of their normal duties.

In addition, the "factory" model of sales technology also ignores the fact that customers often have a very different idea of how they would like the buying process to proceed.

While SFA/CRM encourages the notion that selling is a simple, repeatable process, the point of the "consultative selling" model is that that the sales pro works in partnership with customer on a joint agenda.

In today's selling environments, every opportunity is likely to be fundamentally different, making a rigid process, enforced by an SFA/CRM system, into more of a sales speedbump rather than an sales accelerator.

Not surprisingly, many sales reps (especially those trying to pursue a higher level of professionalism) aren't often not big fans. Even so, companies have continued to pursue SFA/CRM systems, to the tune of billions of dollars a year.

Now, you'd think with that kind of investment, companies would be seeing huge benefits. But you'd think wrong.

Despite all the new technology, most sales organizations are floundering. According to CSO Insight's 2010 survey of 2,800 companies worldwide, "the percentage of reps making individual quotas dropped significantly, and the percentage of the overall company revenue target achieved dropped, as well."

In fact, the failure rate of CRM implementations is surprisingly high. According to the market research firm Gartner, it's edged as high as 50 percent during some years. That's pretty dismal, considering all the time, money and effort put into making these systems work.

This is not to say that ALL sales technology is useless. Where would we be without email and voice-mail, for instance? And there are some very cool things going on out there, especially on smartphones and tablets.

However, I think it's fair to wonder at this point whether the basic SFA/CRM concept might not have been overhyped from the get-go.

For example, consider Salesforce.com. You'd think that they, if anybody, would be getting more efficient over time. However, according to the SEC, in 2006, the company's "sales and marketing" expense was 48 percent of the company's total revenue. The percentage in 2011? 48 percent.

All that spiffy new technology and Salesforce.com STILL can't get their sales costs down? What's wrong with this picture?

I suspect that, in many cases, CRM is more of a glorified contact manager rather than something that's substantially driving sales.

What do you think? Vote in the poll below or, better yet, leave a comment.


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