Cost, Satisfaction Constraining CRM Success

September, 2017

Adoption of customer relations management (CRM) systems is high, but the outcomes of CRM implementations certainly could be better. CRM systems are designed to be the source of all customer knowledge within the organization. They should facilitate sales, marketing, forecasting, business intelligence, social media, and internal collaboration. They should be a vital tool for maximizing the success of any company.

However, despite their import, maturity, and high adoption rate, there is room for growth. Only slightly more than half (56%) of all companies in our annual Technology Trends study have deployed CRM systems. The major reason for that might be the unpredictable total cost of ownership associated with them. In addition, relative to other technologies, CRM has one of the lowest overall satisfaction rates.

Figure 7 from our full report, CRM Adoption Trends and Customer Experience, shows that nearly a third (31%) of companies deploying a CRM system spent over the budget allotted for those systems. A scant 4% found a way to spend less than budget. The remaining 65% spent the same as the budget. This adds up to one of the worst total cost of ownership experiences of all the technologies in our survey. 

CRM fig 7 - Cost, Satisfaction Constraining CRM Success

All major software deployments come with budget uncertainty, and some projects fail to come in under budget. ERP systems have a similar (but slightly better) track record when it comes to total cost of ownership. However, satisfaction with CRM systems is also low. There may be a perception that they are simply not worth the cost compared to other major systems, or organizations may not be achieving the business outcomes they expect from CRM.  

 “The story isn’t all bad for CRM,” said David Wagner, vice president for research at Irvine, Calif.-based Computer Economics. “Investment is moderate but consistent. We’re also seeing a lot of new capabilities being introduced to CRM platforms these days. Artificial intelligence and machine learning, two technologies that are difficult for most organizations to invest in individually, are being offered as a part of many CRM offerings by major vendors such as Salesforce, Microsoft, and Oracle. SaaS is also making deployments easier—though replacing on-premises systems with SaaS is never as easy as the sales pitch makes it sound. Nonetheless, one of the major promises of SaaS is budget certainty, so it may make CRM more attractive if going over budgets is a major block to more investment.”

Despite the cost uncertainty, CRM continues to be a major backbone in the applications portfolio of most organizations. However, the TCO concerns are likely a factor in their not reaching similar deployment numbers to ERP systems, which hovers around two-thirds of all respondents. Growth is likely on the way as CRM systems gain capabilities and become simpler to deploy.

CRM systems centralize and organize all information about customers and their previous interactions with the organization. They should help sales professionals find upsell and cross-sell opportunities, achieve better segmentation of the organization’s most profitable customers, and improve the overall customer experience. Most CRM systems also include capabilities for knowledge management, community development, and social media. Integration of marketing and sales is also common with campaign management, content management, media planning, web marketing, email marketing, and other marketing-automation functionality that bring a greater number of qualified leads to the sales force.

The full report provides an overview of key concepts and vendors in this space. We then examine CRM adoption and investment trends, providing data on how many organizations have the technology in place, how many are in the process of implementing it, and how many are expanding implementations. We also look at the return on investment experience, total cost of ownership experience, and which type of applications are the most popular.

This Research Byte is a brief overview of our management advisory on this subject, CRM Adoption Trends and Customer Experience. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).