As you already know, CRM technology can be beneficial to your business in many ways. You can use it to engage more prospects, to improve the management of actual clients, to increase business efficiency, to ameliorate the marketing communications. It also facilitates the evaluation of sales team performance and makes it easier to analyse their work and make it more profitable. But although these functions remain the main component of CRM system, today the most advanced and successful businesses use it as a customer relationship management tool.
The metrics collected by your CRM system elucidate many operational and performance issues. There is no doubt it is essential to have data that is exact, comprehensive, up-to-date and easily accessible. The success of your CRM system is defined by tracking the right metrics and using them to ameliorate the business efficiency and enhance user experience. But how to use them right to boost your business activity? What are the essential customer relationship management metrics to measure?
Let’s have a look at the most valuable metrics you can collect using your CRM system.
Sales are essential for any business, so the sales calls have a very important role in the company’s activity. It is important to measure their volume, the number of calls that each salesperson makes and that for the team. These numbers establish the base for other useful metrics, such as the calculation of overall increase in performance resulting from your CRM system or the efficiency of your sales team.
Track outbound sales calls on a daily, weekly and monthly basis and analyse the trends. If the daily calls number goes down, it may be indicative of a problem or show that sales personnel takes more time and care to close each sale.
Sometimes the best prospects come out from passive sales inquiries received via your website or social media. Track the overall number of these inquiries, as well as the origin of each inquiry. If this number goes down, it may be a sign to increase your media efforts, update your website or use some SEO tactics.
It is also important to know the number of sales calls per sale. How many sales calls do you need to engage a new client? Having defined it, you will obtain a tool you can use to anticipate the number of deals to be produced and how many time and efforts it will take.
Sales Cycle Duration
How much time does it take you to find a new customer, establish contact and close a sale? The sales cycle is unique for each company. Some companies are able to close sales the same day, but for others it may take weeks, months or even years. This metric was difficult to measure before the arrival of CRM systems. But now you can track it for each client and obtain the information required to make decisions that are important for your customer relationship management and sales forecasts.
Knowing the average duration of the sales cycle enables the seller and management to make time sensitive decisions. It enables you to anticipate future sales and benefits and measure the sales effectiveness. The monitoring of the sales cycle length also shows the areas for improvement. You can see what changes to the sales process can influence the time to close. And once your sales cycle is shortened, your sales team can spend more time to work on new leads.
Sales Closing RateWhat is sales closing rate?
It is the number of leads that were converted to customers for a given time period.
Another metric to measure the sales effectiveness, and one of the most critical ones, is the sales closing rate. It shows how many prospects become your actual clients for a given time period. This simple but powerful metric determines how successful your sales team is at closing deals. It is essential for making strategic decisions in all areas of your activity.
The industry average is about one closed sale for every three opportunities. Certainly, you want your closing rate to improve constantly, no matter how high it is. The increase of this number improves profits, and sometimes dramatically. And if the sales closing rate is not acceptable, that probably means you require changes to your staff, sales process, customer relationship management, marketing or product.
Track closing rates for each of your salespeople, analyse the success and failure rate at every stage of your sales process. Define the best and the worst lead sources. Find out the most common objections and reasons for succeeding new deals.
Marketing Campaign ROI
You need to make the rate of return of your marketing investments the highest possible. The main goal of your marketing campaign is to generate sales. Measure the results of your campaign: the number of leads it generated and of those who were converted to clients. Calculate the amount of money those clients generated for your company and the ratio of this amount to the cost of your marketing campaign. Define the campaigns or events that brought in the most leads.
High conversion rate signifies the market segment is well positioned and marketed and your campaign is successful. You’ll use this data later as well, to define your marketing budget and targets.Need a CRM software for your business?
Cross-selling and Up-selling
It is important to know if your company and each member of your sales team is successful in cross-sells and up-sells. Do the accessories and additional lines your company produces stimulate clients to buy more products or services of your company? The most cost effective way is to sell additional products and services to the existing clients or the repeat orders of products and services they have purchased before.
Using your CRM metrics in the right way, you’ll see, for example, that you receive most of repeat orders during the first week of the quarter. Take advantage of this knowledge to boost your up-sells!
Customer Retention Rate
It is considered that acquiring a new client costs up to 30 times more than retaining an existing one. Generating a new client is an expensive and time consuming process. So it is reasonable to maintain long-term relationships with your existing customers and make them come back. For this reason it’s important to measure whether your are successful at retaining your clients. You should be guided by a minimum rate of 60% customers retained. It is equally good to know which customers are retained to understand the reasons for which some of them stay and others don’t.
To measure your retention rate, subtract the number of new customers acquired during a certain period of time from the total number of customers at the end of this period. Divide the obtained number by the number of customers you had at the beginning of the period. That will be your customer retention rate.
Your CRM system should also track the reasons why some customers stay and others don’t. Find the factors that make them leave. Knowing this reasons, as well as your customer retention rate, you can set the goals for improvement of your customer relationship management.
Lifetime Customer Value
You can estimate the lifetime customer value based on his buying activity and the length of time he stays engaged with your company. In fact, there are two customer value metrics: the value of each individual client and the value of your average customer.
This calculation can give unexpected results. But it is important to know how much the customer contributes to your ROI and how much you depend on your biggest clients.
Knowledge of the value of each customer gives you the possibility to prioritize your marketing, make it more client-oriented. It will guide you when making decisions about offering discounts to your most profitable customers. You will be also able to define the types and sources of highly profitable customers to focus your lead generation efforts.
The average lifetime customer value is a valuable metric for customer relationship management. It allows to calculate everything from the costs for client acquisition to forecasting the credit requirements for short and long-term planning.
Other Customer Relationship Management Metrics
Surely, these are not all metrics of business efficiency you can have via your CRM software. There are dozens of them, such as time per website visit, e-mail list growth rate or number of cases closed the same day. But these metrics are essential for the development of your business, sales effectiveness and customer relationship management. When you become more acquainted with evaluating these data, you’ll be able to dig into the other ones.
How to Use These Metrics?
So, now you know what you can track via your CRM software and what information you are able to obtain. But how to use these metrics to enhance user experience and business efficiency?
Metrics are only useful if they are related to a business strategy you are trying to implement. The company’s CRM strategy, tactics, goals and metrics must be all in alignment. The first point is to establish the goal of the CRM initiative. Then the corporate business goal should be linked to a defined set of specific CRM strategies and tactics. Here is a 4 step guide how to use CRM metrics to improve your sales process and customer relationship management.
- Set and quantify your business goals. Calculate what benefit your CRM initiative brings to you: increases the profit earning from customers or reduces the costs of acquisition and service. For each expected business result, specify the method of estimation of the expected benefit.
- Define CRM strategies and tactics. Formulate the strategies and tactics to achieve the goals that were set and quantified. Identify convenient tactics for each essential client-oriented function, such as sales, service and marketing.
- Specify corresponding CRM measures. For example, the metrics aimed to improve customer service should include the number of calls per salesperson or first call resolution. The customer perception metrics might include the customer retention rate and the lifetime customer value. Set the performance baseline before starting your CRM initiative and define the expected improvement level you want to achieve. Tracking these metrics regularly, you’ll be able to monitor your performance and to take corrective actions if you find that anything goes wrong.
- Link business goals to strategies and define the appropriate CRM metrics. For example, if you aspire to improve the profits from new leads by 10%, your strategy might be to increase the sales effectiveness. And to do this you should close more deals with your prospects. The metrics associated to this strategy could be the sales closing rate and the sales calls number.
Utility of CRM Metrics
Tracking right metrics via your CRM system is essential to keep your business growing. It gives you a comprehensive overview of sales processes, business efficiency and helps you in customer relationship management. It is also an important tool helping to enhance user experience and customer retention.
Not all metrics are equally useful for any company. Your business strategy will define the CRM metrics that will be relevant for your specific targets. Tracking these metrics, you’ll probably find more ways to use these data to enhance sales effectiveness and boost your customer relationship management. Make statistics work for you!