Article

Why CRM Systems Fail: The Problem Isn't What You Think

October 2008, Auto Dealer Today - WebXclusive

by Tom Herald - Also by this author

Each day thousands of business owners and executives read their profit and loss statements, financial records, and sales reports, searching for increases in sales and profits. Yet, through all this, they are probably missing the one figure that means the most but never shows up on financial reports—customer retention.

Lackluster sales, employee turnover and decreasing gross margins are just a few of the many problems facing businesses that lose sight of the ultimate purpose of business—to attract and maintain loyal customers. Customer loyalty, or rather the lack of customer loyalty, is the real issue and every company, large or small, needs to embrace it as a critical measurement for success.

Your best customers are the ones who’ve already purchased from you. This is a timeless fact to which any experienced salesperson, especially when economic times are tough and competition is fierce, will testify. Top businesses live by this rule and treat previous customers like they are the most important people in the world. They continually ask their customers for more business by offering perks and promotions and routinely prospect them for referrals. They do so because they know their reputation, profits, and ultimate survival depend on customer contact, satisfaction and loyalty.

I just received my monthly statement from Delta airlines and was notified that I’ve achieved “Platinum Medallion” status again. For another year, I will be eligible for complimentary upgrades, free travel, numerous perks and the all-so-important priority boarding. What an effective tool for customer relations! Does it matter? Yes, absolutely! Especially for a frequent flyer like me who routinely takes a “red eye” from Vegas back to the East Coast. I make sure to keep my account current with all my contact information.

Car sales and airline travel are much the same to the consumer. There are plenty of choices and competition is high. There is also very little difference between the “products” among competitors. Therefore, the competitive advantages must come from superior service and customer relations. A good CRM tool can dramatically improve sales and help make that little difference to keep you ahead of the competition.

However, any CRM is only as good as the data within it. As the old programmer’s motto goes, “Garbage in, garbage out.” Regardless of all the bells and whistles, a CRM is only a tool, or better yet, a vault. It’s the customer information contained within the database that is the real gold; it’s what you can do with that information that really makes a difference to your bottom line. In order for a CRM tool to be effective, the data must be accurate and kept up to date.

What a sinking feeling it is when you realize, after all the time, money and effort to install a CRM, that something’s wrong with your customer list. It’s much smaller than anticipated. It’s missing the names of recent customers. Many profiles have not been filled in. Numerous records are incorrect; others are riddled with typos. Even worse, your server just dumped and you lost the entire database. What an incredible waste of time and money! Now, what do you do?

Fortunately, you’re not alone. One of the most common reasons cited for the high failure rate of CRM systems is poor data quality. It is also one of the easiest problems to avoid. You need to first gather your key users and managers together and thrash out a “CRM Data Procedure” document to define the rules of use, and then enforce those rules with the same diligence you use to protect your vehicle inventory.

When formulating your CRM Data Procedure, you should:

  • Decide who has what rights to the system and which rights they have (i.e., who can create, insert, modify or delete records). 
  • Define the procedure to check for duplicates before creating a new record. Utilize the “data scrubbing” features your system has and watch out for salespeople who skate each other by purposely misspelling names.
  • Make sure everyone using the system checks spellings. Do not trust spellchecker! When in doubt, ask the client. 
  • Pay attention to the simple stuff that will confuse a database search (i.e., abbreviations, acronyms, all letters being upper- or lower–case). A simple policy to ensure consistency will help to avoid duplications and search difficulties in future.
  • Define when records, notes, etc., are to be created or updated. Set the rules and enforce them consistently. Remember to inspect what you expect. There is nothing worse than having and paying for a CRM that is not capturing accurate customer data. 
  • Ensure your data meets the specific requirements of the post office for bulk mail.
  • Define rules for creating new profiles or User Definable Fields (UDF). Every time a new UDF is needed—lead source, for example—it should first be approved. Otherwise, duplicates will permeate your database and key metrics like lead source tracking will be useless. 
  • Ensure that e-mail addresses are accurate and input correctly. This may seem like a simple procedure, but it is a common and costly mistake!
  • Set up procedures of how to create records from inbound e-mails and inquiries.
  • Determine what data fields are mandatory to initiate a record.
  • Decide who is the responsible person for backing up and protecting the database, as well as who covers for that person when they are absent or unavailable. Decide how backups are to be done and how frequently, and find a secure place to store them.

Help your staff members to understand the need of accurate customer data and what they can do as a team with a robust CRM system to facilitate marketing, sales and reporting. Teach them that the success of the business and their careers relies heavily upon customer retention and that the CRM is how we track and protect that vital information. By creating a sense of pride and ownership in the company database, you are nurturing the essential process of buy-in, which is necessary for the success of your CRM initiative. Don’t compromise this critical tool by allowing your database to be infected by inferior data. 

Vol 5, Issue 9

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