Why Your Bank's CRM Is Failing

As more and more banks are undertaking digital transformation projects, CRM implementations have become frequent occurrences.

But as a recent Harvard Business Review article pointed out - lots of businesses aren't getting the most out of their CRMs. What's causing the problem? And how can banks fix it? 

That's the topic for this episode of The Purposeful Banker podcast


Helpful Links

Why CRM Projects Fail and How to Make Them More Successful (Harvard Business Review)

What to Do When Your CRM Project Fails (CIO Magazine)

First National Bank of Omaha: The Power of Connecting PrecisionLender and Salesforce

How Does Your Commercial Bank Coach? (Purposeful Banker)

Podcast Transcription

Jim Young: Hi and welcome to the Purposeful Banker. The podcast brought to you by Precision Lender, where we discussed the big topics on the mind of today's best bankers. I'm your host Jim Young, Director of Communications at Precision Lender. Joining in today by Dallas Wells, EVP of ... today we'll call it strategic innovation. Dallas, wears so many different hats here. We're getting close to the point where he's going to get a kind of a buzzy Silicon Valley title, like pricing evangelist or something.
But anyway. Speaking of tech and Silicon Valley, its home of a lot of CRM companies. And today we're going to talk about actually CRM failure and how to avoid it. Before we dive in. I want to state we're not picking on CRMs here. We like them. And obviously we really like them when they're integrated with our platform. But this discussion is about why CRMs often don't reach their potential at businesses. There's obviously ... A lot of banks have CRMs. So there's a bank angle to this. And really, I would say there's tech beyond CRM. It's applicable there as well.
The reference point for this podcast is a Harvard Business Review article titled Why CRM Projects Fail And How To Make Them More Successful
All right, Dallas. The first thing that caught my eye in this piece was quoted right at the beginning when the author says, "Hey in references, I think CIO magazine said something like there's a 30% fail rate with CRMs. And [inaudible] has been my work with clients. When I asked executives if the CRM system is helping their business to grow, the failure rate is close to 90%." I mean, wow. Do you think the author is going for a little shock value here? Or based on the conversations you have with banks, do you think that number's on target?
Dallas Wells: From the conversations we have I would say that's probably, that's not an exaggeration, let's put it that way. Some of its terminology. If calling a project to failure means it gets ripped out and somebody gets fired versus the way, yes which is, is it helping the business to grow? Because that's usually how these things are sold, right? Is some efficiency gains and more importantly it's going to help your sales force be more productive. So sales will go up by X if you just buy this thing. And that's, first of all, a really hard thing to measure. Did it actually happen? And second of all, it just takes a while. So I think that's why asking that question slightly differently you get the spread between 30 and 90. And I'd say the 90 is about right.
Jim Young: Wow, that is so [inaudible]. The primary reason they missed the mark in helping companies increase revenue is that CRM systems are too often used for inspection. Devil's advocate position here. What's wrong with using that CRM inspection that ... The things they listed sounded inspection type of tactic sounded pretty reasonable to me.
Dallas Wells: Yeah. I want to know what everybody's doing and I want to be able to get on to the people who are missing, right? Missing the number, missing the activity whatever. And I think that actually gets right down to the issue of that first question. Remember that CRM is being sold as this way to help your sales people be more effective. And the way they actually get implemented. And I would say this is especially true in banks. Is it doesn't get implemented as a tool for your sales people. It gets implemented as a policing tool and as way to extract data from them.
You take your sales people, and you say, "Okay, while you're selling, enter the 85 things that we're going to require from you on this new opportunity and save them." And that way, we, as the management team can build these beautiful dashboards and we'll see sales velocity, and we'll know who's doing what and where the bottlenecks are. And there's some useful information there.
But if you look at the effect on the salesperson that you were supposed to make more productive with this, you just slowed them down and you get a little big brotherish with them. And the first thing that happens is, after all of that work that they put in, you come back and tell them, here's the 10 things I noticed that you did wrong after the fact when it's too late to do anything about it. There's not a whole lot of use to them for that.
Then you have all sorts of adoption issues where it's like, if I as a user get very little value out of this, and there's a lot of extra work I'm just going to fight it every way that I can and I'll do what you absolutely forced me to do. But that's it. That's the bare minimum that I will give to the system.
So what's wrong with that? I think it's just starting off with the wrong premise and the wrong approach. There are certainly things that are useful there, right? We go back constantly and tweak our own sales process based on what we see in Salesforce. But we try not to make it punishing the individual when we do that. We try to say, okay, what about our processes broken? And what can we do differently to clean that up and make this easier for them? How can we make this a valuable thing for them, instead of using it to follow along and watch over their shoulder and slap their wrists every time they step out of line?
Jim Young: Another quote, "CRMs today also serve a lot of masters from executives in the C suite, technology, marketing, finance, and oh yeah, sales. And out of those different masters, they've all got different reasons for why the CRM has some value to them." Is there only one master the CRM serves? And if so, who is that? Or is it possible to have more than one master for the CRM?
Dallas Wells: I don't know about more than one master. I think that all those are legitimately stakeholders and especially as something is deeply ingrained into a company as a well-run CRM. It should touch just about every part of your business. And we are a Salesforce shop here at Precision Lender and it touches literally everything. It's not just for the sales team, our developers use it, our support team uses it. It's about as integrated as you could possibly imagine a piece of software being.
The problem is though, is you do have to have a primary goal for it, right? And again, I think you can probably tell from my take on the first couple of questions, I think it has to start with sales and actually the sales people, right? So we try to make ours and we see the banks that do well with it, too. They try to make it so that when the production staff, when the sales people get in there, they have information in there about their customers and about their prospects that is useful to them, right? That will help them make a sale. So we're growing pretty quickly adding new people. They can go in and quickly catch up on an account and see what conversation our founders had with somebody in 2012 at that bank, right?
They can see what the context is. And they can see what the history is and they can find other clients like that, that had similar journeys and kind of pull case studies and examples out of that. Those are things that are valuable to the sales people. We always let that be what drives how Salesforce is structured, and everything else from what our executive team gets out of it to what our developers and the support team get out of it. That stuff is secondary and we try not to break it. But if we have to break it to make it work better for sales, we will.
Jim Young: Yeah. And speaking of breaking and that sort of thing they talk about fixing your CRM. And they go back to this first kind of point is really kind of ... By the time you got in this article it's a little bit obvious, which is hey your CRM should be a tool to increase revenue, got it. So to partner here Dallas, how often do you see banks that treat their CRM that way and part two, what does it look like when they do?
Dallas Wells: Yeah, so how often I would say honestly it's probably about half and half of banks that really view it as a means to increase revenue. I think the other half sort of view it as almost like, well, it's something we have to do, right? We're just big enough now where if we're going to manage the pipeline, we can't keep all the deals in our head anymore. This is the way we have to systematized it and make it so that we can follow things here.
And I'll tell you the giveaway, we end up being kind of front row spectators to some ... It's a little buzzword. But it's what the banks call it. It's a digital transformation project, whether they're rebuilding sort of this machinery on which a deal flows, right? So their CRM, the pricing and negotiation platform that we do and an LOS. And so a lot of times these will be bundled into this multi-phase project. And so we've seen a few of those and how they're getting pitched and it'll have the cost of each phase of that and the expected return.
And we occasionally will see somewhere the CRM has a big cost number associated with it. It's a big project and the direct return on that is literally zero. And basically what they're saying is like, look, this unlocks a lot of other things that we can do, it will gain efficiencies and other places. But as far as the revenue we're actually going to see from the CRM itself, it's going to be zero.
And when we see a bank approaching it that way, there's some alarm bells that go off like, wait a second, I bet this is going to end up being cumbersome, nasty, and the sales people are going to hate it, the RMs are going to rebel against it. And it's not just going to be that they get a zero out of it, it's actually going to lead to a lot of friction. And eventually this is going to either have to be a relaunch or a tear it out start over.
Jim Young: Yeah. All right, final point in the piece, "That managers use this CRM to coach improvement not to create reports that inspect." And you kind of touched on this a little bit with how we try to use our CRM in that aspect. And this certainly sounds familiar to the tunes we sing about how banks should use their pricing tool. I mean, is it pretty much the same process when what we're talking about with coaching through a pricing tool, is it pretty much the same process for the CRM? Does that all blend into one?
Dallas Wells: Yeah, I think the ... Again, you're talking about sort of two basic fundamental approaches. One is you can use it to police. And you can find the people who break a rule or don't meet a minimum number for a month. And you can get them in trouble based on what you see in the CRM, like what which report spits out the exceptions, the anomalies, the things outside of the rules.
What we've seen is the more valuable way to approach it is use all the data and the pretty dashboards and stuff that come out of these systems and say, "What are the most successful people doing? What are the patterns there that we can try to repeat?" And so you can use that as positive coaching.
And so instead of saying, "Hey, you were supposed to make 15 outbound calls and you only made 13." Instead, you can say, "Here is what Susan tried last quarter and it worked really well. Let's try to find some of your deals where we can try the same thing." Right. And so you can take things that you learned that are working well, patterns that are proven to be repeatable and successful and you can coach everyone else up a level and really use your best performers as the tracks that everyone else can follow, and also be successful and find some of their own success.
It's rewarding the good instead of punishing the bad. It's a subtle difference. But it's really important and it will really change how your people interact with these pretty expensive tools. If you want to get your money's worth out of them, how you approach them from the very beginning is really important.
Jim Young: Absolutely. All right, well, thanks, Dallas. That'll do it for this week's show. Now for the few friendly reminders, if you want to listen to more podcasts or check out more of our content, you can visit our resource page at precisionlender.com or head over to our home page to learn more about the company behind the content. If you like what you've been hearing, make sure you subscribe to the feed and iTunes, SoundCloud, Google Play or Stitcher. We love to get ratings and feedback on any of those platforms. Until next time, this has been Jim Young and Dallas Wells and you've been listening to the Purposeful Banker.

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About the Author

Jim Young

Jim Young, Director of Content at PrecisionLender, is an award-winning writer with experience in a range of positions in media and marketing, from reporter to website editor to content marketer. Throughout his career Jim has focused on the story – how to find it, how to understand it, and how best to share it with others. At PrecisionLender, he manages the many ways in which the company shares its philosophy on banking and the power of relationships. Jim graduated Phi Beta Kappa from Duke University and holds a masters degree in journalism from Columbia University.

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