Avoid the New Perils of CRM


In today’s volatile economic landscape, where layoffs are rampant in every major industry, banks (like Silicon Valley Bank) are failing, and venture capital is harder and harder to come by, the need for efficient revenue programs has never been more urgent. Businesses are scrambling to adapt to new buyer’s journeys, which have undergone significant recent transformations, none more so than the advent of Chat GPT earlier this year. Customer Relationship Management (CRM) systems have long promised to be a tool that, if used wisely, can be a game-changer. However, CRM is not without its pitfalls, some of which have persisted since the early 2000s and others that are new in the era of generative AI.

The Original Four Perils of CRM Revisited

Implementing CRM Before Creating a Customer Strategy

The first peril, as outlined in this HBR article from 2002, is implementing CRM without a well-defined customer experience strategy. This issue is still relevant today. Businesses often get enamored by the shiny new features of CRM software, forgetting that these tools are meant to support a broader end-to-end digital customer experience, not replace it.

Rolling Out CRM Before Changing Your Organization to Match

The second peril is rolling out CRM technology before aligning your organization’s structure and processes with customer needs. This is a classic mistake that many companies continue to make. They equate an investment in CRM with digital transformation, then invest in CRM software but neglect to train their teams or adjust their business processes to make the most of these new tools.

Assuming that More CRM Technology Is Better

The third peril is the assumption that more technology is better. This is a dangerous mindset because it can lead to overinvestment in features and capabilities that your team doesn’t need or won’t use. The result is often a complicated, cumbersome system that hinders rather than helps your sales efforts.

Stalking, Not Wooing, Customers

The fourth peril, stalking instead of wooing customers, has evolved in a way that could be likened to Big Brother from the book 1984, watching over the shoulder of sales professionals. Instead of empowering them with tools that are force multipliers, companies are using CRM systems to micromanage, creating a culture of surveillance rather than support.

The New Perils of CRM

The Evolving Buyer’s Journey

The first new peril is the dramatically changed buyer’s journey. With the advent of revolutionary technologies like the mobile devices circa 2007, and now generative AI, customers now have more control over how, when, and where they interact with brands. According to a Gartner study, the buyer’s journey is no longer a linear path but a complex web of touchpoints and customers are more than halfway through the purchase process before they have the first meaningful contact with a seller

Lack of Organizational Alignment for CRM success

The second new peril is the lack of organizational alignment between marketing and sales, between business and IT. This is where Patrick Lencioni’s concept of The Five Dysfunctions of a Team can be applied. The lack of trust, fear of conflict, lack of commitment, avoidance of accountability, and inattention to results are often magnified when there is a disconnect between different departments. A lack of alignment between marketing strategy and front line sales execution can lead to massive overspending, while misalignment between business and IT can lead to CRM cost overruns, extended project timelines, and payback periods.

CRM Continuous Improvement and Change Management

The third new peril is the widespread adoption of agile, continuous improvement, and change management methodologies, which have become the norm for virtually all enterprise business applications—except, notably, CRM. While these methodologies are excellent for keeping complex projects on track and teams aligned, they expose a glaring gap in the maturity of Salesforce, whose appetite for complex digital transformations has increased but its ability to deliver on a predictable schedule has not kept pace.

Contrasting Salesforce with Microsoft Dynamics Sales with Copilot

The fourth peril that organizations face in the realm of CRM is the dangerous assumption that legacy CRM platforms, which were designed in a pre-AI era, are inherently equipped to handle the complexities and nuances of generative artificial intelligence. This misconception can lead to significant inefficiencies, missed opportunities, and even detrimental customer experiences.

Salesforce, a CRM behemoth, serves as a cautionary tale in this regard. While the company has made commendable strides in integrating AI capabilities into its platform with features like Einstein, it is a notably a late mover in connecting data across its applications much less deeply embedding AI into its core functionalities. This delay can be attributed to the foundational architecture of Salesforce, which is not designed with AI-first principles in mind, limiting organizational opportunities to leverage productivity improvements and new customer experience innovations that generative AI offers. A simple count of the number of Salesforce instances (e.g. orgs) within a company illuminates the underlying fractured data problem that is often present. As a result, while Salesforce has been messaging its leadership in the world of AI in order to justify recent price increases, in reality the company is playing catch up on the fundamentals so its product integrations (like Slack) and AI features often feel more like bolted-on additions rather than seamless, native functionalities. This can significantly elongate the payback period for customer investments and put organizations behind the generative AI adoption curve.

In stark contrast, Microsoft has been at the forefront of deeply connecting all layers of its considerable platform, from Azure (cloud infrastructure) to Microsoft 365 (Office) and Dynamics (Business Process Applications like CRM) As a result, the company has been a leading innovator and investor in Open AI, integrating AI into its products, services, and cloud infrastructure. Their collaboration with OpenAI, especially in the development and deployment of models like Chat GPT, showcases their front-runner status for making AI an integral part of their entire ecosystem. Microsoft’s approach is not just about adding AI; it’s about reimagining products with AI at their core. Their approach to CRM is fundamentally different that Salesforce and, in our opinion, marks the beginning of a new era of CRM and sales productivity. Salesforce’s big innovation was moving CRM to the cloud. The new AI-era of CRM is first and foremost about sales productivity and reducing the cost of sales where Microsoft leads by a large margin. Customer’s can leverage their existing investments in finished Microsoft applications (Outlook, Teams, Excel etc.) to boost productivity and further leverage data from their custom applications built on the Microsoft platform to accelerate CRM projects and payback periods.

Organizations must recognize that not all CRM platforms are created equal, especially when it comes to AI readiness. Simply retrofitting AI into an older system is akin to placing a jet engine on a vintage car; it might move faster, but it’s neither efficient nor sustainable. As the business landscape becomes increasingly AI-driven, companies must choose CRM platforms that are not only AI-compatible but AI-native, ensuring that they are well-equipped to harness the full potential of artificial intelligence in enhancing customer relationships.

Navigating the Future of CRM

To navigate these perils, both old and new, it’s crucial that CEOs make CRM decisions in the context of their overarching revenue programs. This involves a multi-step approach that begins with a clear understanding of your buyer’s journey, then defines your customer experiences in that light, and finally allocates sales and marketing resources in the most impactful, efficient way. SalesSmyth offers revenue consulting services to help businesses navigate these decisions and opportunities.

Key Takeaways


  • Finding 1: CRM is a powerful tool but comes with its own set of perils, both old and new.
  • Finding 2: Salesforce’s fragmented platform poses challenges for unified CRM implementation.
  • Finding 3: A user-centric approach to CRM is often overlooked.
  • Finding 4: Microsoft leads in AI innovation within the CRM space.

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Source References

Avoid the Four Perils of CRM – Harvard Business Review

Gartner CEB Challenger Sale Study

The Five Dysfunctions of a Team by Patrick Lencioni

1984: Big Brother is Watching



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