Customer relationship management, or CRM, is a systematic approach to building relationships with customers by using technology for improved levels of customer satisfaction, increased revenue and loyalty. By definition, a CRM is an app created to help salespeople manage relationships with current and prospective customers.
Most CRM systems are designed to string together relationships of contacts. For example, visibility of all communication with one contact, notes from different teams of people who have worked with the same client, or engagement activity of a contact from ongoing marketing campaigns. It helps build a big picture so sales reps know exactly what to talk about during their next meeting. In this blog I’ll discuss seven fundamental CRM metrics you should be tracking.
Tracking every point of contact your reps have with their prospects will provide crucial information, such as:
- Prospecting effectiveness
- Average sales cycle
- Average follow-ups required to close
- Activity levels needed to reach quota
These metrics should be both quantitative and qualitative. It’s good to note that quantity matters less than quality. For instance, making 20 well-researched, targeted outreach calls a day is better that dialing 50 cold calls.
If sales calling is a key part of your process, the volume of calls needs to be measured. Each salesperson needs to know how many calls they’re making so you can begin to track how that number is changing over time. You can begin to determine the average number of sales calls that are made per sale for each sales rep. Start tracking sales outreach for different time periods to identify trends. This will allow you to calculate the productivity gains from implementing a CRM system and allow you to better understand what needs to be tweaked in your sales process.
Leads by Source
Not all leads will come from sales activity. In fact, sometimes the best leads come from passive inquiries such as an individual engaging with your website, social media or other marketing efforts. Track these inquiries to show how marketing channels have helped attract visits, leads and customers. This will allow you to compare different sources and evaluate which provides the best return.
Length of Sales Cycle
How long does it take you to close a sale from the first time a prospect is identified? It is important to keep track of how long it takes your team to convert leads into an outcome — closed, lost or won and how long the lead lives in each stage of the funnel. It is important to provide reps with data so they can begin making more informed decisions. For instance, you might start to see that some reps have longer sales cycles than others. This will help you properly identify where in the pipeline they are lagging so they can begin making decisions on facts instead of gut instinct. The goal for most businesses is to shorten the sales cycle and allow the salespeople more time to begin cultivating new leads.
Conversion Rate by Rep
This metric is pretty straightforward. To gain better insight, start tracking the number of leads for each rep and the number of deals closed within your average sales cycle. These numbers are key elements to building and maintaining a predictable sales model. For example, take the number of reps multiplied by average leads worked per month multiplied by the average conversion rate from last quarter to project numbers for the next quarter.
Customer Retention Rate
It costs significantly more to acquire a new customer than it does to retain an existing one. This makes it important to measure how successful you are at maintaining relationships with existing customers. To do this, subtract the number of new customers acquired for a given time period from the total number of customers obtained at the end of the period. Divide this number by the total number of customers you had at the start of the period. Once you know your customer retention rate you can work on improving it.
Lifetime Customer Value
Determine what a customer is worth based on their spending habits and length of time they have been doing business with you. Which top clients attribute the most to your bottom line? Understanding your lifetime customer value allows you to prioritize and focus efforts toward retaining the most profitable customers while finding new customers that fit the same patterns. This metric also allows you to better align marketing with sales and will help determine where to offer discounts and deals and to whom you should focus future lead-generation campaigns.
This is just a small subset of the kind of marketing metrics you should be tracking in your CRM. Data is the most powerful resource any sales team has at their disposal, so begin using it to your advantage with some of the metics noted above. What CRM performance metrics do you typically track? Feel free