CRM has a reputation for being a “soft” business endeavor that can’t easily be measured. How do you numerically quantify something that has “relationship” in its name?
That’s outmoded thinking. CRM can be measured and, if you’re serious about your business, it has to be measured.
So where do you start with measuring CRM? Here are some of the most essential facets of any CRM program that you should start quantifying and tracking today.
Outbound Sales Calls Made
The lifeblood of every company is sales, and the key ingredient of any sales organization is the sales call. Depending on the specifics of the enterprise, some companies may operate by undertaking only a handful of sales calls each day. Other companies may undertake hundreds or thousands of them. Either way, it’s important to know how many calls your sales staff is making, and – more importantly – how that number is changing over time. Track sales calls on a daily, weekly, and monthly basis, and watch for trends. Daily calls going down over time may be a sign of trouble – or it may be an indicator that salespeople are spending more time and care to close each prospect.
Inbound/Passive Sales Inquiries Received
Not all inquiries come from the efforts of your sales staff. Sometimes the best leads come from passive inquiries that come in via visitors engaging with your website, social media, or other brand-building efforts. Track these inquiries – not just the overall number received, but the origin of each inquiry, as well. If they’re going down over time, you may need to redouble your social media efforts, freshen up your website, or consider some SEO tactics.
Sales Closing Rate
One of the most critical metrics to understand is how often prospects are being turned into actual customers. This is a simple calculation that measures how successful your sales force is at closing deals. Naturally, you want this number to be as high as possible – and to increase over time. If you want to get more detailed, you can look at this metric on a salesperson by salesperson basis, and by the channel through which they became a lead.
Marketing Campaign ROI
Your marketing campaigns, be they paid advertisements or more grassroots outreach programs, will likely have a primary goal of generating sales. Every campaign should be measured: how many leads did it generate, how many leads were converted to customers, and how much money did those customers generate for the company in relation to the cost of the campaign.
Customer Retention Rate
It’s commonly said that it costs up to 30 times as much to acquire a new customer as it does to retain an old one. There’s value in ongoing, sustained customer relationships, and it’s important to measure whether you’re doing a good job of keeping existing customers in the fold. This rate is calculated as such: subtract the number of new customers you acquired during a period from the total number of customers you had at the end of the period. Divide this number by the total number of customers you had at the start of the period. That’s your existing customer retention rate. Ensuring this number remains high is especially essential for businesses that operate on a subscription basis, like fitness centers or many online services.
Length of Sales Cycle
Measure the time from when a prospect is first identified to the time when a sale is closed. That’s your sales cycle. Some companies may be able to close sales in the same day, but in many businesses closing a sale can take weeks or months. This can be tracked through your CRM system and, as with other metrics on this list, measured over time. The goal at most businesses is to shorten the sales cycle, as this allows your sales force to spend more time cultivating new leads.
Lifetime Customer Value
One of the often unsung metrics of CRM is the value of a customer. What will your business earn from someone over his tenure as a customer of your company? Based on that customer’s purchasing patterns and the typical amount of time over which a customer remains engaged with your company you can estimate this value. Doing this calculation can often be a sobering math exercise, showing just how much some customers contribute to your bottom line – and how much you rely on some of your biggest clients. Customer value also lets you prioritize your marketing – both in determining where to offer discounts and deals to existing customers, and in identifying the types of highly profitable customers where you may want to focus future lead generation efforts.
Other Metrics
This is just a small subset of the kind of metrics you can generate through your CRM data. As you become more comfortable with quantifying this data, you can start slicing the above metrics more finely (such as looking at the sales cycle by salesperson, location, or whether the lead was active or passive) and adding additional metrics (such as metrics surrounding customer service calls and competitive analysis). The data is at your fingertips. It’s up to you to put it to work!
At Insightly, we offer a CRM used by small and mid-sized businesses from a huge variety of verticals. Learn about all of Insightly’s features and plans on our pricing page or sign up for a free trial.
About the Author: Christopher Null is an award-winning business and technology journalist. His work frequently appears on Wired, PC World, and TechBeacon. Follow him on Twitter @christophernull.
