CRM implementation failure rates are alarmingly high, nearing 90%, primarily due to companies misjudging their readiness for transition. One of the most notable CRM implementation failures was experienced by Hershey.
Hershey’s implementation plan, initially set for 48 months, was overly ambitious. Despite believing they were ready for the transition, they were caught off guard by the challenges, resulting in severe operational disruptions and a significant drop in their stock price.
To avoid such pitfalls, companies must thoroughly research and evaluate the best ways to integrate a CRM system with their existing customer interactions and workflows, ensuring alignment with their growth objectives.
This article discussed the world’s famous CRM implementation failure and preventive measures.
Reasons Why Most CRM Implementations Fail
- Focusing more on internal priorities than on customers’ needs is disastrous. Once you ignore customers’ needs, they will ignore your business, and failure will present itself.
- Lack of management from the business executives. Any business where the leaders are not fully engaged in CRM implementation would face failure.
- Rushing to implement CRM to enjoy credits offered by the CRM vendor leads to failure.
- Assumption kills; when you assume that a CRM software will perform a specific task without learning the features of the CRM can take that business to grave.
- Implementation missteps brought about by improperly staffed teams. The users of the CRM should be well-equipped with the CRM implementation processes.
- Complicated CRM software can be complicated for the CRM team to use. Ease-to-use CRM is the best to enable them easily understand the implementation processes.
Case Studies of CRM Implementation Failures
1. Hershey's CRM Implementation Failure
The Hershey Company, commonly known as Hershey’s, is one of the largest chocolate manufacturers in the world.
In 2020, Hershey achieved its 100% certified and sustainable cocoa commitment in 2011. Despite being the world’s best chocolate manufacturer, Hershey encountered CRM failure in 1999.
- Their system testing failed.
- Its stock and quarterly profits dropped by 8% and 19%, respectively.
- Hershey’s could not process over $100 million worth of Kiss and Jolly Rancher orders, even though it had most of the inventory in stock.
Root Cause Of Hershey's CRM Implementation Failure
In 1996, Hershey decided to upgrade its legacy IT systems to an integrated ERP environment, incorporating SAP’s R/3 ERP software, Manugistics’ supply chain management (SCM) software, and Siebel’s customer relationship management (CRM) software.
Although the recommended implementation time for these platforms was 48 months, Hershey’s executives insisted on a 30-month turnaround to complete the rollout before Y2K. Additionally, they attempted to deploy all three technologies simultaneously, which was not ideal given the company’s operational readiness.
Compounding the issue, Hershey received the bulk of their holiday orders during one of their busiest sales and distribution periods. The new systems were not prepared to handle the surge, causing conflicts between various departments. The severity of the situation led to significant operational disruptions and a drastic plummet in their stock price.
Preventive Techniques
- Do not try to rush ERP system implementation to meet unrealistic timelines.
- Do not try to deploy a complex technology at once. Focusing on one centralized solution prevents minor problems from slipping through the cracks.
- Test the business processes and systems using a methodology to simulate realistic operating scenarios.
- Ensure you plan carefully and thoroughly when implementing complex technologies.
- Always Try to reduce incoming orders during the cutover period.
By adhering to these preventive measures, your company will mitigate failure risks and position itself to drive ERP success.
2. Vodafone's CRM Implementation failure
Vodafone is widely known to be one of the largest wireless phone companies in the world. They develop various products and services to help build future digital societies.
Despite their efforts to deliver a better customer experience, the following CRM failures caught them unawares:
- Error in customer billing data and price plans.
- Failure in customer support response.
- Massive Financial Losses
- Vodafone breached Ofcom’s billing rules.
Root Cause Of Vodafone's CRM Implementation Failure
In 2013, Vodafone experienced a significant financial loss due to a failed ERP implementation, costing the company millions.
The failure led to Vodafone breaching Ofcom’s billing rules. Firstly, their system failed to credit the accounts of customers who had paid for mobile credit top-ups, and they were slow to address the issue. Secondly, Vodafone failed to inform customers of their right to escalate unresolved complaints to a third-party resolution scheme after two months.
The new system’s failures caused a surge in customer complaints, prompting a formal investigation by Ofcom. Following the investigation, Ofcom fined Vodafone £4.6 million: £3.7 million for taking money from pay-as-you-go customers without providing the corresponding service, and £925,000 for mishandling customer complaints.
Preventive Techniques
- Ensure you understand your company’s needs and how best to connect a CRM system with customers and workflows. CRM failure often occurs when a company invests in software that streamlines emails and text messages, but its customers prefer to communicate with them on the phone or in person.
- Quality data is necessary to realize the benefits of a CRM system. So, eliminate duplicates and correct inaccurate entries when combining databases or data sources.
- Equip your team with the knowledge and resources they need to respond to customers’ complaints correctly. You can still offer refresher courses for ongoing support even after formal training. You can also take advantage of training programs and learning opportunities, such as knowledge databases, offered directly by the CRM vendor. In the case of Vodafone, their representatives needed to be equipped with the resources and knowledge they needed to support their customers.
- Before starting the migration, consider using CRM software that integrates with your team’s other systems, like email, document sharing, marketing automation software, sales software, etc.
3. Blackberry's CRM Implementation Failure
Blackberry has been the most magnificent smartphone worldwide since the early 2000s. In the UK, It held over 55% of the smartphone market share in 2009, but its RIM disaster pushed it down to less than 4%. Blackberry has fallen victim to a botched CRM implementation, often with the following disastrous results:
- issues with its email services
- Messaging delay
- Browsing delay
- Poor customer support
Root Cause Of Blackberry's CRM Implementation Failure
“The service outage was caused by a core switch failure within RIM’s infrastructure; the system has a backup switch, but it failed to function as previously tested; we apologize for any inconvenience and are working to restore the normal service”.
– The company said in a statement.
The beginning of the end of Blackberry met them in 2010. BlackBerry has faded even further into the abyss to the extent that countless numbers of BlackBerry users have left Blackberry ever since then.
At that time, Most Blackberry users encountered slow or collapsed email services, browsing delays, etc, while BlackBerry Messenger also broke down.
Blackberry and their decision maker RIM-(Research in Motion), delayed explaining to their customers the cause of the service outage and when it would be resolved. They left their customers in the dark for some time. They neglected to use CRM software to send concise messages to their customers; instead, they relied on Facebook.
Preventive Techniques
- Ensure you conduct quality checks on your service to know if it’s still in line with the current quality trends.
- Design a backup plan for your service and always test it. Blackberry designed a failover to backup switch, but the failover did not work as planned. So, you need to continuously evolve your backup strategy so that it responds whenever its needs arise.
- Being open and transparent in dialogue with your customers is the primary factor that helps in trouble times like this. It makes them believe in whatever you are saying.
- Do not delay giving them information about the problem and when it will be solved.
4. Cigna's CRM Implementation Failure
Cigna is a global health service company with the mission of helping people improve their health. Cigna has over 70,000 employees serving over 150 million customers throughout the world.
Due to their strong desire to deliver a better customer experience, they undertook a $ 1 billion initiative to overhaul their IT infrastructure and implement a CRM system in 2002. The CRM implementation did not work as expected, and the below failures sprang up immediately;
- $445 million net loss in 2002
- A drop in membership from 13.3 million to 12.5 million.
- Failure to access information about their coverage.
- Glitches in customer service
Root Cause Of Cigna's CRM Implementation Failure
Cigna embarked on a $1 billion initiative to move 3.5 million customers to a new system. The goal was to enhance productivity and reduce costs by replacing disparate legacy systems with a unified infrastructure.
Despite close monitoring by Chief Information Officer Andrae Anania, the project encountered significant issues. These challenges led to a massive revenue loss exceeding $400 million and caused widespread glitches in customer service, leaving millions of customers dissatisfied.
As a result, Cigna lost 6% of its healthcare members in 2002 alone.
Preventive Techniques
- Take the time to follow best practices to reach CRM success carefully.
- Don’t expect the users to adapt to a new system in a short period quickly; take time to train and prepare them for the upcoming operational shifts.
- Hands-on training is essential for users to understand how to use a particular feature.
5. General Motors's CRM Implementation Failure
General Motors Acceptance Corp Commercial Mortgage(GMACCM) is the champion in business real-estate loans with a mortgage portfolio totaling more than $151 billion. In 1999, GMACCM began its own CRM initiative to increase automation, efficiency, and the amount of borrower information available to call center staff.
Unfortunately, the below problem surfaced;
- loan officers lost their business
- The rivals lured away their customers.
- 99% of its loan consumers zeroed out to a customer service operator.
- Multiple complaints from customers marred the company.
Root Cause Of General Motors's CRM Implementation Failure
The lack of user-centred design methodology is why GMACCM’s CRM implementations failed. They implemented a CRM solution without clearly defining the intended user’s needs. The CRM solution automated voice response technology as the first point of contact for consumers making loan inquiries.
They later discovered that 99% of its loan consumers were zeroing out to a customer service operator. Many complaints were coming from different customers, and loans lost a lot in their business.
Preventive Techniques
- Ensure you always stick to customers care representatives to learn your customers’ challenges. GMACC should have continued using customer service agents to handle queries instead.
- The users of the system should be identified. User analysis, task analysis, and testing should have been employed.
- Consider conducting a simple user test as one of the CRM implementation strategies to know the user’s preferences. Had they conducted user tests, they would have discovered that many users would bypass their state-of-the-art system instead of talking to a live person.
6. BMC's CRM Implementation Failure
BMC Software, Inc. is one of the world’s largest developers and vendors of independent systems software. This $1.5 billion software company undertook an initiative for the implementation of CRM. They failed two times and succeeded on the third attempt. At the first attempt;
- They experienced very low utilization, with only 30 to 50% of users adopting it.
- They experienced the problem of inaccurate data.
They encountered the following problems on the second attempt;
- Failure to capture wide usage.
- The mistaken impression was that all the users needed to get on boarder more features and better data.
Root Cause Of BMC's CRM Implementation Failure
BMC was interested in the processes that they would perform faster without considering the needs of their customers. Methods and systems were implemented without involving the key executives. They assume that IT managers could handle CRM initiatives; that software would sell itself to employees and automatically generate the required organizational changes.
Preventive Techniques
- If you rush into CRM implementation, you’ll run out of it. So, do not rush.
- Take your time to calculate your customer strategy, which helps employees understand where they are going.
- Equip your employees with the tools needed to succeed.
- Ensure you manage change effectively by showing support teams how to achieve their aim through new processes.
7. British Airways's CRM Implementation Failure
British Airways are well known for quality in-flight services and customer service. Their flight service covers more than 170 destinations worldwide whilst supporting the UK economy by providing vital channels for trade and investment. British Airways have a long history of CRM failure.
- The data structure wasn’t designed for analytical purposes, so it was difficult for the analytical team to understand the system.
- Creating queries was slow and complicated, even for the most straightforward generation.
- A lot of time is consumed in training the SAS users.
- The analytical team’s confidence was undermined due to many questions regarding data quality.
Root Cause Of British Airway's CRM Implementation Failure
British Airways undertook an initiative in 2001 intending to simplify the decision-making processes. The initiative was to consolidate information from the organization into its Integrated Commercial Warehouse. They adopted Ocean Wave, also known as Customer Data Warehouse, as the CRM. The analytical finds it challenging to understand because it wasn’t designed for analytical purposes. They experienced failures, and the CRM implementation took them two years to complete.
Preventive Techniques
- Take your time to assess the company’s needs because most CRM failures have more to do with how the company views itself than the system’s ability.
- Companies should concentrate on CRMs that are Simple and training-rich; so team members can use CRM easily and quickly when tasks are automated.
8. Owen Corning's CRM Implementation failure
Owen Corning is the world’s largest manufacturer of fiberglass composites. They claimed to be the global leader in residential, commercial, and industrial building materials, including insulation and roofing products. But the following CRM failures slapped them in 1992.
- They were unable to boost the customer service of their current customers.
- Unable to create fresh interactions with potential clients.
- They experienced the draining of a large chunk of the budget.
Root Cause Of Owens Corning's CRM Implementation Failure
The primary reason why Owens Corning failed in its CRM implementation was that it neglected customers’ preferences. They decided to adopt a CRM tool in 1992 due to a lack of consistency in marketing across different departments.
The CRM team found it challenging to integrate the new system because the company was busy updating its internal processes using an extensive ERP system.
This took away the attention of the representatives from the CRM integration, and customer service was not taken care of.
Prevention Techniques
- Owen Corning should have taken the customers’ needs as the main priority and worked backwards from that point.
9. Dow Chemical's CRM Implementation Failure
Dow Chemical is among the three largest chemical producers in the world. With a presence in about 160 countries, it employs approximately 37,800 people worldwide.
In a bid to update customer support, they undertook a CRM initiative but experienced failures in the process:
- Inadequate definition of business processes.
- Failure to support users
Root Cause Of Dow Chemical's CRM Implementation Failure
Dow Chemical rolled out an extensive, overly complex CRM in 1992. This overly-complex CRM initiative failed due to an inadequate definition of the business processes. It was unable to provide remote support for the users. Later, an attempt at implementing a smaller, more localized CRM initiative was successful. It allowed the company to address more specific issues and scale down the number of projects allowed.
Preventive Techniques
They should have clearly defined the overall business processes for better CRM implementation.
10. CarsDirect's CRM Implementation Failure
CarsDirect.com is a leader in the online automotive space. They have been in the business of helping people buy cars for over 12 years now. They suffered the following failures after implementing a customer tracking tool;
- $50 million in operational losses
- Failure to achieve a return on investments
- Budget overruns
- Customer confusion, frustration, and dissatisfaction.
- High post-implementation running costs
Preventive Techniques
To prevent this kind of failure, the best option is to use a scalable and robust CRM tools that accomodates the growth of the company. For instance, Salesforce and Hubspot.
Conclusions
CRM implementation is a complex process that requires careful planning and execution. Unfortunately, the failure rate of CRM implementation is high, with some studies suggesting it is as high as 90%.
This article explores some of the most famous CRM implementation failures, including those experienced by Hershey, Vodafone, Blackberry, Cigna, General Motors, British Airways, Owen Corning, Dow Chemical, and CarsDirect. The root causes of these failures are analyzed, and preventive measures are presented to help companies mitigate failure risks and position themselves for successful CRM implementation.
Choosing easy-to-use software and taking time to understand the best practices are crucial to a successful CRM implementation.
