Key takeaways
It’s easy to find the benefits, so let’s discuss the disadvantages of CRM. Marketing departments are pretty great at telling the world how awesome their software is, but they’re often less effective at explaining its shortcomings.
Some businesses find countless benefits from using CRM software. Others have little need for them, or face prohibitive costs to access their value. Others still only see positive ROI if the software covers certain specialized functions.
Like everything else in business, CRMs have downsides. Let’s talk about them.
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CRM explained
CRM stands for customer relationship management. While the term can be used to refer to a collection of policies, practices, and methodologies intended to build, maintain, and strengthen relationships with customers, more often the term is used to refer to the category of software used to implement and execute these initiatives.
In either case, the goal of CRM is the same: to help brands achieve better revenue outcomes by improving lead-to-customer conversions, customer support interactions.
Put much more simply, CRM tools serve as a database for customer accounts and contact information, lead funnels, touchpoints, interaction history, and more. In many cases, it also hosts or enables the interactions in question at scale. Now, let’s move on to the disadvantages of CRM.
Disadvantages and drawbacks of CRM
Now we’re ready to jump into the meat of this discussion. Brace yourselves; we won’t be pulling any punches.
Drawbacks of CRM as a methodology
We begin with some disadvantages that come with CRM as a practice and approach to brand-centric interactions. In a professional landscape increasingly diluted with artificially generated messaging, and with the vast majority of relationships established through manufactured encounters and thoroughly sterilized exchanges, there are a few baseline risks involved in anything that reduces the humanity of your brand.
Prioritizing metrics over “moments”
CRM is very process-oriented, meaning that it’s great for taking what works and standardizing it across a large organization. It’s not so great at the intimate little touches that encourage customer loyalty and make a brand stand out.
CRM is a facilitator of standardization. And much like standardization in manufacturing, it tends to turn the client into something fungible. That can be good for products, fasteners, and tools. It’s far less desirable for human interactions. No one wants to feel like just a name in a database or a number on a P&L statement.
That’s not to say that CRM can’t be used to improve outcomes, even those related to customer experience. But it requires successful implementation—which, admittedly, is a little like saying “it’s important to outscore the opposing sports team if you want to win.” Still, CRM tends to prioritize the metrics and KPIs over touchpoints, customer experiences, and loyalty-building interactions and “moments.” This is arguably the most impactful disadvantage of CRM, and should be guarded against.
Customers don’t always see the benefits
The organization may see a reduction in overhead costs, improvements in training and process consistency, but the customers themselves may not actually see most (if any) of the ROI on this. It’s entirely possible to implement CRM in a way that has clear, observable upsides for your team, but none to speak of for the customers on the other end.
If done poorly, it may even result in decreased brand reputation, should interactions be negatively impacted.
Again, positive outcomes can be achieved. That’s a big selling point for CRM solutions. But often, the best an organization may achieve is a net neutral change to the quality of customer interactions.
What the CRM process does right
Here’s why CRM—as a process—is still worth a try despite some disadvantages: it reduces variances in quality, especially at scale.
If you’re struggling to ensure that agents and staff provide leads and customers with the support they need, with some staff doing well and others doing less so, CRM may be an effective remedy.
For one, it can lead to more accurate analytics, which may highlight critical components of success (or failure):
- Key characteristics of ideal customers, or red flags for those who won’t be happy with what you’re selling.
- Recurring support issues, commonly occurring agent mistakes, and marketing initiatives that prove ineffective.
- Seasonal/situational trends in things like lead generation and lead capture, spikes and lulls in support calls, periods of increased marketing effectiveness, etc.
While this data and information won’t, on its own, improve outcomes (for you, or for the customers), it can give you access to the insights required to make the needed changes.
Weaknesses inherent in software tools generally
For all its advantages, software tools and solutions have their flaws and inadequacies. In a large number of use cases, the benefits far outweigh the hurdles. But it’s important to be aware of them as there are some situations where they don’t. CRM software is no different.
The cost to get started, keep it running, and address problems
As you’re likely familiar with, computer-based solutions don’t often come cheap. You’ll need devices, you’ll need software, you’ll need internet access, and you’ll need training (just to name a few things). Even once everything is in place, there are ongoing costs associated with running and maintaining these solutions. Software subscriptions, server hosting, technical support, and so forth.
Beyond that, there are countless issues that can crop up and present significant problems, usually requiring the expensive intervention of very smart, highly trained professionals to address. Even just standard practices like server migration can be a logistical, budgetary, and operational nightmare.
In other words, your digital solutions are just like your human employees: expensive to onboard, expensive to keep on staff, and expensive to replace.
Dependence and enforced loyalty
All of that expense just to get started with a software solution lends itself very easily to the sunk cost fallacy. The vendors of these kinds of tools know this, and will often try to use that to their advantage. They don’t want you switching to another tool and giving another provider your money, so some of their design and policy decisions will be aimed at limiting and hindering your ability to switch to something new.
In the most extreme cases, providers will go as far as “holding data hostage,” refusing to allow you to export all of the information you’ve digitized, turning the hurdle into an economical trolley problem.
Even when that’s not a major concern, there’s still the risk of becoming entirely reliant on the technology, such that without access to power, internet, and cloud servers, you can’t actually do any work. To some extent, this is more or less unavoidable as our work becomes increasingly embedded into the technological ecosystem, and vice versa.
Nevertheless, it’s something to be aware of—especially if you work in an industry that tends to go places where those critical components are difficult to access.
Compatibility issues
Relatedly, sometimes the worst thing a digital solution can do is add complexity to your tech stack. Interoperability, compatibility, and integration are important enough as concerns that they often constitute the biggest possible deal breakers when looking for a tech solution.
After all, if you’re already knee-deep in other software tools, or heaven forbid are stuck using legacy hardware, the cost of replacing non-compatible components of the infrastructure may be so cost-prohibitive as to be complete non-options.
Privacy/security concerns
Say what you will about the irritations and limitations of doing things on paper, but it has at least one advantage over cloud-based business tools: it’s a lot easier to protect things if they have to be physically accessed.
Privacy and security have been sticking points since the first time one computer could make another one across town display the words “hello world.” We’ve developed a great many approaches, practices, and technologies to try and counteract the vulnerabilities in question, but none of it is foolproof, and data breaches happen embarrassingly frequently.
Depending on your industry, and the nature of your work, you may have to contend directly with some of these concerns, and where the data is hosted and/or accessed from may need to be taken into account. These are standard, universal risks, but that doesn’t mean they shouldn’t still be treated as serious.
Adoption resistance
As with all software, it will virtually always be a struggle to get the actual people involved to even use the darn thing in the first place. Humans can often be resistant to change, with that characteristic being all the more prevalent when there’s significant levels of doubt regarding the change’s potential value.
In other words, until you can reach a point of critical mass, the software won’t actually be the facilitator of improved processes. Instead, it will be a fracture point between the staff that can upskill and onboard quickly, and those that drag their heels (either because they struggle to learn the interface, or because they genuinely think their way is worth keeping).
Where software solutions get it right
All of that said and acknowledged, we have to point out the admittedly obvious advantages to using digital tools. First and foremost, software enables the digital storage, organization, and access of data and information. Turning your customer list into a searchable database is almost enough value in and of itself—if you’ve ever had the displeasure of having to sift through cabinet after cabinet of files to find a single folder, you know what we mean.
From there, software can improve visibility for staff activities, customer demographics, trends and patterns, possible opportunities, and potential pitfalls. It improves data accuracy and recency (which also positively impacts the previous statement). And, ultimately, it can result in more accurate and impactful analytics insights (so you can more effectively manage staff, processes, and products).
Potential issues with CRM software and platforms
Now, let’s pivot to CRM software specifically. Much of this comes down to the Venn diagram overlap between the two previous sections:
- Tech stack conflicts
- Enforced loyalty
- Asset lifecycle concerns
- Overdependence
- Prioritizing process over people
What’s worth adding here is the issue of data hygiene and data integrity. Your analytics are only as good as your data is accurate, and there are a lot of barriers that interfere with that accuracy.
Not only do people tend to have poor user and data entry habits generally unless thoroughly practiced with the system they’re using, CRMs add the dimension of external user inputs. A lot of the data will come from the leads and customers themselves:
- Lead forms
- Customer user profiles and logins
- Support questionnaires, chats, and emails
- Etc.
Any time you hand the reins over to someone outside the organization, you’re risking a significant amount of disorder—they don’t know your systems, how data should be entered and organized, or what values are valid or required.
So that means that you’ll need something in place to scrub and clean the data to improve its integrity after the fact, because it will never be reliable enough on the first try. And, in case you don’t work in the departments that would handle that sort of thing, be aware that data cleansing is not a simple, easy, or straightforward process.
Overcoming CRM disadvantages
In the end, these problems, disadvantages, and hurdles aren’t unique to CRM. You’ll find similar ones across different product categories, serving different industries, and in solutions built for different environments. So it’s important to know that you’re bound to encounter them wherever you go.
Yes, there are problems, and there are risks. But eschewing a powerful tool just because you’re afraid you won’t need it or will use it improperly makes little sense. The right CRM solution can indeed bring a lot of value to the table, and you’ll be hard pressed to know for sure what criteria will define “the right solution” for you and your team unless you at least try a solution.
With this, we stand to learn quite a bit from how our friends in software development do things:
- Plan
- Test
- Iterate
Outline a plan with your use case, your needs, your objectives, your projected timelines, your metrics for success and failure, and anything else that’s immediately relevant.
Then, build your shortlist of candidates, pick the most promising one, and start taking them for a spin. Not all tools have free plans, or trial periods. If that’s a factor, start with ones that do, and work from there instead. Whatever the case, you want to test drive some of these tools to better understand how your team will really use it, and whether the tool can support it in the way you’re hoping.
Once you’ve done that, measure your results, both quantitative and qualitative. Did it lead to the desired results? Was there feedback from the staff that used it, and was it positive or negative? How about the cost/benefit breakdown? How impactful is the cost on the budget? Were there any clearly evident costs that can help weed out options and thin the list further?
Remember, one of the biggest advantages of computers is the way it makes it easier to make adjustments. You can edit a digital document more easily than a hand-written one. Similarly, you have the flexibility to change plans, pivot mid-stride, and otherwise alter course so you can minimize the amount of time and resources spent on sub-optimal solutions.
As costly as it can be to try something and then have to change, it’s much less risky or costly in the long run than refusing to try anything, or refusing to abandon something that doesn’t work as desired.
Issues with organizational change at large
Finally, we just have to accept that making major, sweeping changes across the organization at large will be difficult and problematic. As mentioned above, people often push back against change. Familiarity is comfortable, even when the thing itself isn’t all that great. The evil we know, and all that. But that’s not all that there is to it. It’s not just resistance to adopting a new tool or process.
In some cases, it’s a matter of leadership buy-in and setting an example. If the top brass aren’t throwing their weight behind things, it will be hard to convince the rest of the crew to jump on the bandwagon. Even if you get the management team to endorse the change openly, though, production-level staff can typically feel when support is half-hearted, insincere, or strictly focused on “number go up.”
Put another way, no one’s really keen on going to great lengths just to make things easier for the people above them, if none of those benefits are going to flow back downstream.
This all entangles into the cost concerns, which itself can lead to someone in charge of the budget deciding that it’s a sunk cost they don’t want to keep paying, and terminating adoption before you’ve even gotten the thing off the ground. It’s all too easy to see the short-term dips on the chart, and assume that it either won’t spike back up, or will take too long to do so.
That kind of ROI short-sightedness has led to plenty of plugs being pulled even in just the last half-decade, across every industry.
Last but not least, we need to talk about FOMO. In business, we recognize the trade-off that comes with making certain decisions, as there isn’t enough time, resources, capital, or available hands to do everything we might plan on doing. In many cases, choosing one option means declining another. We call this “opportunity cost.”
Well, there are times when opportunity cost and “fear of missing out” come together in unholy matrimony, and create a state of decision paralysis. If you’re limited to a single CRM option, and choosing the wrong one can lead to added costs, decreased productivity, and tarnished brand interactions, it might feel like stalling on choosing a CRM is the least risky option.
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