Make Sense of your CRM Metrics - or Else
The CRM metric is one of the most sought-after elements of a business. All of these scenarios are real. In the first one, the call center agent's success is measured based on the number of calls he can deal with without passing the call on to a supervisor. The agent's been so indoctrinated that escalation is bad that he keeps the customer on the line even when he has no way of helping him. That call's going to end badly for all involved. Now, what was the goal of having the call center in the first place? Greater customer satisfaction. The CRM metric applied is designed to minimize call center costs; its use results in the goal not being met.
Example 2 is a classic: sales' definition of a qualified lead and marketing's definition are at odds, so there's really no way that marketing can satisfy sales' needs. Instead of clearing up this misalignment, marketing sets out a quantity CRM metric: if we get more leads, then just as a matter of percentages we'll get more leads that sales will like. Sadly, that approach just gives sales more chaff to wade through - and in this economy, who has time for that? The original goal was to deliver more qualified leads to sales; the CRM metric of lead quantity does not measure marketing's success in doing so.
Example three exemplifies why the CRM metric is perceived as a failure in many cases. A loyalty program is targeted at keeping existing profitable customers, not at attracting droves of new ones. However, all too many executives still view CRM metrics as a panacea to all a company's sales woes. In this case, the CEO failed to understand that the success of the company's loyalty program is measured in greater loyalty, not in new customer acquisition. The data that comes out of the CRM metric has to be employed in alignment with the goals of the company - and if those goals are uncertain from the start there's no way the CRM metric will succeed. If a company's focus swings wildly from loyalty to new customer acquisition and back, and the resources aren't there to manage multiple efforts across the scope of these activities, in too many cases CRM is judged a failure. And it ain't so.
When buyers ask about the first thing they should do when looking for a CRM metric solution, I always tell them to examine their own businesses first. That's not always what they want to hear - they want to know what to buy, how to install it, and when the money will start rolling in. But without goals, you can't use any technology properly. In the CRM metric’s case, if you don't understand your goals from the outset, all you're going to end up doing is making the same errors you've made in the past, only faster. And once you do have those goals in place, the only way you'll know if you're meeting them is to pick the right metrics.
What is a CRM metric?
A CRM metric is a performance measurement that helps track and assess the effectiveness of a customer relationship management (CRM) system. There are many different CRM metrics that can be tracked, but some of the most important ones include the lead conversion rate, customer retention rate, customer lifetime value, and revenue per lead. By tracking these crm metrics, businesses can see how well their CRM metric is performing and make changes as needed to improve its performance.
How to Measure CRM Success (13 CRM Metrics You Should Know)
When it comes to your CRM metric, success isn't always easy to measure. There are a lot of moving parts, and it can be tough to know which CRM metrics really matter.
But if you want to make sure your CRM metric is truly successful, there are some key CRM metrics you should be tracking. Here are 13 of the most important ones:
- Lead conversion rate: This CRM metric measures how many of your leads are converting into customers. A high lead conversion rate means your CRM metric is working well.
- Customer retention rate: This metric measures how well your CRM metric is keeping customers. A high customer retention rate means your CRM is doing a good job.
- Customer lifetime value: This metric measures how much money each customer is worth to your business. A high customer lifetime value means your CRM metric is valuable to your business.
- Revenue per lead: This metric measures how much revenue you're generating for each lead. A high revenue per lead means your CRM metric is generating a lot of revenue.
- Cost per lead: This metric measures how much you're spending to generate each lead. A low cost per lead means your CRM metric is efficient.
- Sales cycle length: This metric measures how long it takes for a lead to turn into a customer. A short sales cycle length means your CRM metric is efficient.
- Lead response time: This metric measures how quickly you're responding to leads. A quick lead response time means your CRM metric is responsive.
- First contact resolution rate: This metric measures how often you're able to resolve a customer's issue on the first contact. A high first contact resolution rate means your CRM metric is effective.
- Customer satisfaction score: This metric measures how satisfied customers are with your CRM metric. A high customer satisfaction score means your CRM is doing a good job.
- Net promoter score: This metric measures how likely customers are to recommend your CRM metric to others. A high net promoter score means your CRM is doing a good job.
- Churn rate: This metric measures how many customers are leaving your CRM. A low churn rate means your CRM metric is doing a good job.
- Referenceability: This metric measures how likely customers are to refer others to your CRM. A high reference ability score means your CRM metric is valuable to customers.
- NPS by-product: This metric measures how likely customers are to recommend each of your products. A high NPS by-product score means your CRM metric is valuable to customers.
These are just some of the key metrics you should be tracking to measure CRM success. By tracking these metrics, you'll be able to see how your CRM metric is performing and make changes as needed to improve its performance.