Lessons Learned from the Vodafone CRM Failure

One of the top, multinational telecommunications companies, Vodafone, is used to being in the news. However, in 2016, the company made a different kind of headline.

That year, Vodafone was hit with what was recognized as the single-biggest fine ever imposed in the UK for “serious and sustained” breaches of the country’s ironclad consumer protection rules. Costing £4.6 million, the fine was the direct result of a failed attempt to centralize the company’s operations with an extensive CRM and billing migration program.

What led to the Vodafone CRM failure and what lessons can we take from it? Today, we’re sharing how to avoid the same fate during your own CRM implementation.

The Vodafone CRM Failure: What Happened?

The project was hefty, but it started out promising enough.

In 2013, Vodafone began an extensive effort to migrate and consolidate all its billing and CRM systems onto a single Siebel platform. This was the largest IT effort the company had ever undertaken, and it required moving over 28.5 million individual customer accounts. At the time, those accounts were spread among a whopping seven different billing platforms. 

It didn’t take long for the problems to begin snowballing. As the migration effort went into full swing, Vodafone reported that a “small proportion” of the accounts were migrated incorrectly.

These data migration errors caused the following problems:

1. Customer Billing Errors

The company incorrectly entered and stored records in the new CRM system. This led to mistakes in customer billing data and price plans.

More specifically, nearly 10,500 pay-as-you-go customers lost money when they paid to “top-up” their mobile phone credit, but Vodafone failed to apply this credit to their accounts. Over the 17 months that the IT failure occurred, these customers were out a collective £150,000.

When Ofcom, the U.K.’s telecommunications regulator, learned of the error, they issued two fines to Vodafone. The first was £3.7 for taking money from pay-as-you-go customers without delivering a service in return. The other was £925,000, issued for Vodafone’s inadequate customer support response. 

2. Massive Financial Losses

By 2015, Vodafone admitted to the breaches and compensated all identified customers who were affected by the issue. Still, the failure resulted in a major financial setback, along with a bruise to the Vodafone brand. 

3 Lessons Learned from This CRM Failure

If you’re on the cusp of a CRM project, what can you learn from these two years of turmoil? Let’s take a look at three lessons learned from the Vodafone CRM failure and how you can avoid them in your own organization.

1. Be Open to Business Process Reengineering

The most sophisticated CRM system in the world won’t deliver on expected benefits if your company holds tight to an outdated and inefficient customer service model.

In the case of Vodafone, the company was already recognized as lagging in this department. In fact, according to a market survey conducted by Ofcom in 2015, Vodafone easily took top honors as the “most complained about” UK mobile provider. While most companies fielded around 10 complaints per 100,000 customers, it had nearly three times that amount. 

Still, it pressed forward with a CRM implementation without addressing those areas of weakness. As a result, when the migration failure occurred, representatives were ill-equipped with the resources and knowledge they needed to correctly respond to customer complaints.

If your processes are as broken as Vodafone’s, you may want to conduct business process reengineering before your implementation begins. Start by determining which workflows are already optimized and which need tweaking. Don’t be afraid to shed practices that are no longer serving the customer. 

2. Invest in Employee Training

In a statement acknowledging the CRM failure, a Vodafone representative said the company planned to invest an additional £30m in its customer service department. This included more than 190,000 hours of representative training to ensure employees knew how to identify and resolve customer problems. 

While the effort is a valiant one, it can be considered too little, too late. Proactive employee training on how to effectively use and manage the new CRM system would have been preferable to a late-term response. 

End-user training is an essential part of organizational change management and ensures that everyone in your workforce knows exactly how to use new software, whether this is ERP software, HCM software or CRM software.

In a CRM implementation, training not only mitigates change resistance, but it also empowers your staff to use the features correctly when responding to customer requests. 

3. Include Issue Resolution in Your Project Plan

There are bound to be a few hiccups in any CRM implementation. However, a proactive approach to issue resolution can keep issues from having a detrimental domino effect.

A clear and thorough project plan can help you identify potential risks before they even occur. From there, you can determine the steps to take to mitigate and contain these risks.

Had Vodafone followed this model, they could have spotted and flagged the customer account missteps much sooner. Instead, the company noted the teams responsible for managing the relevant areas did not identify issues “fast enough.” Once they did catch wind of them, they “did not fully appreciate” the significance they carried.

Within your CRM project plan, we recommend defining internal controls and escalation procedures. This way, everyone knows exactly what to do at the first sign of a problem.

Expert Support for Your CRM Implementation

The Vodafone CRM failure was a master study in a lack of preparedness. Not only were support representatives ill-equipped for the wave of customer complaints, but the new platform itself was faulty from the beginning due to the botched migration.

Add in lethargic internal controls and a lack of risk management, and it’s easy to guess what happened next.

Our team of ERP consultants can help you avoid these issues and set your CRM implementation up for success from Day One. Contact us below to learn how.