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CRM Adoption Rates Are Dismal. Here's Why.
The market for Customer Relationship Management software has skyrocketed in recent years. The big inflection point occurred approximately six years ago when year-over-year usage increased to 74% from 56% in 2012. Today, few workplace tools are as ubiquitous to companies as CRM systems. Despite their ubiquity, there’s mounting evidence that CRM systems aren’t being used to their full potential. According to a report by IBM, CRM adoption rates are as low as 24%! For a market that totaled $26B in 2015, equates to approximately $13B in annual wasted expenditure. If truth be known, it’s not too difficult to see why adoption rates are so dismal:
1. Lack of User-Centricity
Most CRM platforms are tailor-made for sales managers and leaders. Let’s not kid ourselves – this is not accidental. Managers and leaders are the key decision makers in terms of CRM purchase decisions. In an effort to get the deal signed, suppliers focus on optimizing the CRM features that are most applicable to decision makers—those that pertain to reporting, pipeline visibility, and forecasting. The result is that ease of use is deprioritized. It’s a case of catering to check-writers at the expense of key users. The end result is that CRMs are too cumbersome and not intuitive enough for sales reps to effectively adopt them. The most common complaint among sales reps is that CRMs are too time-consuming. 71% of sales reps complain that they spend too much time on data entry. This time expenditure drives many reps to avoid CRM data entry altogether. In fact, 79% of opportunity-related data collected by sales reps is never entered in their CRM!
Another common pitfall of CRMs is the fact that they tend to monitor customers, not human relationships. Customers are conceptualized as mere transactions. The need for an improved, more intelligent CRM is especially pronounced among nice sectors such as business development, venture capital, and real estate. In these industries, relationships have become increasingly complex with the increased cadence of communication and are inaccurately assessed by many traditional CRM platforms.
2. Market Dominance
Many market segments are highly concentrated—a single company or a handful of companies own much of the market for a given product or service. In terms of search engines, Google is the behemoth. In terms of beverages, it's Coca-Cola and Pepsi. The CRM software industry is no exception. Salesforce is the clear leader. One-third of CRM system users use Salesforce. Only a few other giants (Microsoft, Oracle, and SAP) combine with Salesforce to usurp 75% of market share.
Many companies opt for a CRM industry leader before realizing that it isn’t right for their needs. It’s never easy challenging the status quo – especially when market dominance prevails. Turning one’s back away from Salesforce requires a bit of a leap of faith. There’s a perception it has been tried and true. As the old adage goes,“Better the devil you know than the devil you don’t know.”
The process of selecting a CRM is also challenging because most CRM trials require the majority of a company’s customer information to be inputted in order to gain a true appreciation for the value of the CRM. Auto-population has been a game-changer when it comes to empowering companies to jump-start a trial by tapping into their communication data.
If you’re not satisfied with your current CRM, it’s better to rip the Band-Aid and look for a better alternative.
3. Good Enough
In his book "The Hard Thing About Hard Things”, Ben Horowitz explains that innovations that only offer a 2-3x improvement over existing solutions are unlikely to motivate high levels of adoption. He argues that, in order for customers to be motivated to adopt a new technology solution, the incumbent must offer a 10x improvement.
Despite the low adoption rates of CRMs, it’s estimated that approximately 70-80% of businesses intend to continue to use their existing CRM system. This implies there are few products on the market that offer significant tangible and credible improvements that are in the magnitude of 10x or greater.
Most businesses are satisfied with the status quo. They adhere to a “good enough” mentality. Unfortunately, this mentality leads companies to miss out on other solutions that may offer a significant advantage over those offered by Salesforce and the handful of other dominant CRM providers. It’s high time companies start embracing smart enterprise innovation, which, according to Palantir Co-Founder Joe Lonsdale, involves building new systems, not just Band-Aids on old systems.
CRM software systems fall short in terms of their reputation of being the backbone of sales organizations. Forward-thinking companies are quickly realizing the limitations of CRM systems. They’re shying away from traditional CRM systems and adopting technologies that are focused on the end-user experience.
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