What is CRM Metrics?
Hey! Are you curious to understand the complexity of the terms CRM and CRM metrics? Are you eager to know the most important CRM metrics for the success of your organization?
This article explains about the most significant and fundamental CRM metrics you should be using for organizational success.
Customer relationship management (CRM) is necessary for enhancing the customer’s experience. It refers to the set of practices, principles, and guidelines which an organization follows during their interaction with customers.
As per the organization’s point of view, the entire relationship relates to the forecasting and analysis of customer trends and behavior. The approach deals in making a sustainable relationship with the customers with the use of technology.
This strategy works exceptionally well for improving levels of customer satisfaction, increasing revenue, and building loyalty. It dedicatedly helps the salespersons to manage their relationship with current and prospective customers.
7 Fundamental CRM Metrics You Should Be Measuring
Metrics play a vital role in the development and success of any business. Talking about CRM, we use the term metrics for tracking the complete performance and success.
It allows us to have appropriate control over the marketing and selling efforts. Using CRM metrics, we can react effectively by tracking the happenings closely. It gives us dedicated precision to our efforts in marketing and sales.
Metrics are exceptionally good for tracking CRM success. But, which particular metrics we should track depends completely on our sales and marketing objectives.
The implementation of the term CRM never relates to technology. CRM can help you in tracking the success of your business with result-oriented strategies. It monitors the overall performance of the various departments within your organization and relates them to your success.
CRM metrics enable you to move towards the appropriate path. Finally, the success of all such organizations depends on the efforts of the sales and marketing teams. The best implementation of CRM metrics lets you draw targeted customers for enhancing sales. Better the sales, much better will be the revenue generation for the future.
Coming back to the discussion, CRM metrics play an important role in the success of the organization. Yet, there persist several questions in association with the topic. Which fundamental CRM metrics can you use as an indication of success? How can you locate them appropriately?
Soon after incorporating a focus on product quality and customer relationship building, you should be ready to monitor the performance against customer success goals.
The following points explain the fundamental CRM metrics you should be implementing for the success of any organization:-
1. Customer Churn
Customer churn is synonymous with customer turnover or customer attrition. This CRM success metric explains about the percentage of the recurring customers during a given time slot. You can proceed with the calculation on a monthly, quarterly, and yearly basis.
Among all the other customer success metrics, customer churn is one of the easiest performance metrics to measure. Let us proceed by assuming one month as an example.
Proceed by counting the total number of customers at the start of the month. Then, monitor the number of customers at the end of the month.
Finally, go ahead by subtracting the ending number and divide this answer by the starting number.
Let us understand this with an example. Suppose you have a hundred customers at the beginning of the month. But, after monitoring the figure at the end of the month, you get only ninety customers.
Proceed by subtracting ninety from hundred and the result is ten. Finally, divide ten by a hundred and you fetch the output 0.1 i.e. 10%.
Now, the final customer churn rates will 10% i.e. you are in a loss of 10% customers
This is one of the exceptionally best and powerful CRM metrics for the success of any organization.
2. Net Promoter Score
Net promoter score (NPS) is a feature-rich customer success metric for the measurement of customer satisfaction. The strategy makes you ask only a single question to your customers.
“How likely will you be recommending our products to your colleague or friend?”
Based on the question, they respond to you on a scale of 0 to 10. The number 10 defines ‘very likely’ and 0 explains ‘not likely at all’.
The customers responding on the scale of 9 or 10 are ‘promoters’. They are most likely to recommend the products among their relatives and friend circle.
The customers responding in the range of 7 or 8 are the ‘passives’. Such kinds of customers are symbolic of not having a strong sentiment for the product. Accordingly, they are most likely not to recommend it within their circle.
Those customers responding within figure 6 or below are the actual ‘detractors’ for the product.
NPS stands out among the most powerful metrics to CRM for increasing sales and business.
3. Customer Effort Score (CES)
Customer effort score is another vital customer satisfaction measurement strategy. The CRM metrics differ from the Net Promoter Score. It differs in the sense that companies use it for measuring the satisfaction of customers with the only interaction they face with the business.
The more the effort put into a single interaction, the lower will be the level of satisfaction. For example, if the customers are bound to wait for several days to get a response to an easier question, and even call several times for the same, they are putting harder efforts for interaction.
Instead in the other case, your support team should proactively reach the customers for solving their issues. They should not be doing your work for your interest as well.
This customer relationship management metric is extremely vital to measure complete organizational success.
4. Rate of Renewal
The measuring rate for business growth and acquiring-up new customers is the rate of renewal. For any subscription-based business, the strategy works for measuring the percentage of the customers. These customers are most likely to upgrade their contracts at the end of every month.
For example, if you are executing a business that has 100 customers at the start of the year, and only 95 renew their contracts, the rate of renewal will be 95%. It’s a very easy metric to measure CRM but highly effective for organizational success.
Those organizations with a rapid success graph are acquiring this CRM metric for getting valuable business returns over some time.
5. Customer Retention Cost
Can you imagine the cost of retaining a customer? How much effort are you putting in to check customer retention rates? As per documented facts and figures, almost 80% of the organization’s revenues come from 20% of the permanent or existing customers.
The calculation of customer retention cost is one of the vital CRM metrics and depends upon the successful implementation of the following points:-
- Begin by defining the time-period for the calculation. The period may be monthly, quarterly, or yearly as per convenience.
- Proceed to add the entire customer retention expenditure for the organization. These involve tools, materials, and timing. The assets in these forms are required to be invested in from your end for driving more customers.
- Just divide the figure by the total number of customers resulting in the successful retention during the time slot.
- Finally, you will reach the stage of determining the average cost of retaining a single customer for the organization.
In addition to the above, you should be taking care to ensure that the cost of customer retention is less than the average revenue coming from a permanent customer.
6. Expansion Revenue
The measurement of expansion revenue is synonymous with measuring the customer renewal rate for the organization. It refers to the amount of revenue a company is generating from the existing customers.
This CRM metric makes us aware of the customer’s behavior of investing further in the company or not. As per Forbes, about 80% of the company’s future revenue is generated from the existing customers. Accordingly, the appropriate administration, monitoring, and management of the growth of expansion revenue are exceptionally important for business success.
To calculate the expansion revenue, just perform some simple sets of steps. Divide new revenue from upsells and cross-sells to the already existing customers of the business within a month by the revenue from those sources at the end of the past month.
The result after doing the appropriate calculation comes out as the revenue expansion rate. As per research, you should always target to achieve the revenue expansion rate above the figure 0.
Expansion revenue is another one of the powerful metrics for measuring CRM in the organizations.
7. First Contact Resolution Rate (FCR)
The first contact resolution rate is one of the important CRM metrics you should be measuring to keep an eye on the organizational business. The term is synonymous to the percentage of customer support tickets that the helpdesk management resolves in the first go.
The organizations that have the highest FCR rates never make customers wait for a longer period for receiving a resolution to their respective support queries. Most often, they solve them in the first attempt.
The procedure becomes extremely easy for organizations in the case of using an all-in-one CRM solution fulfilled with built-in helpdesk group functionality. The groups are synonymous with the sub-teams in the organization’s department, specializing in one specific product or service.
The highest FCR levels always result in a high level of customer satisfaction. The role of FCR is to measure the effectiveness of the service desk for conducting the customer-oriented business.
It is an integral part of most of the factors including the types and complexities of the transactions, agent training quality, and the agent’s experience. The use of tools such as knowledge management and the remote control adds much to the functionality.
These metrics work mostly every single month. Moreover, it even works on an hourly, daily, and weekly basis as per the requirement of the organizations.
This CRM metric helps customers receive expert advice and support every single time. The approach results in providing exceptional support to the customers building up the sake of trust.
In addition to the above, there exist other important CRM metrics for monitoring the performance of the organization’s business. These include marketing campaign ROI, lifetime customer value, sales cycle duration, customer acquisition cost, customer lifetime value, etc. to name a few.
To keep your business thriving in all aspects, it is essential to track the CRM metrics. The components of the CRM metrics help in providing a comprehensive overview of the sales processes and the organization’s efficiency. Most importantly, it helps you in building successful customer retention rates and retaining the customer’s trust.
How to use the CRM Metrics
CRM metrics can be helpful only when they act as the best business strategy as per your implementation ethics. You must make enough effort to align the CRM strategy, metrics, goals, and tactics for the success of the organization.
The following points explain the list of four-step guide for improving customer relationship management and the sales process:-
1. Setting up and quantifying your business targets
Ensure your efforts in calculating the benefits your CRM initiative brings back to you. It may result in increasing the profit earning from the customers or reducing the expense of acquisition and the service. Specify the process of estimation of the benefit. The initiatives are necessary for getting the business output as per expectations.
2. Explaining the CRM strategies and tactics
To achieve the goals, you should formulate the already set tactics and strategies. You should keep on identifying the convenient formulae for every single client-oriented process including sales, service, and marketing. To implement the CRM components, you must be aware of the methodologies for the best usage of the CRM metrics.
3. Specification of the corresponding CRM measures
As per the practical implementation, the metrics to improve customer service should include several factors. Keeping the priority, it refers to the total number of calls per salesperson or the first call resolution aspect.
The customer perception metrics may constitute the customer retention rates (CTR) along with providing the lifetime value to the customers.
Most importantly, it is mandatory to set up the performance baseline before proceeding with CRM initiatives. It even leads to explaining the improvement level as per the desire.
With the successful tracking of all these metrics, you will find yourself eligible for monitoring your level of performance. The strategy even leads you to take corrective action in case of the occurrence of any eventuality.
4. Linking the business objectives to the strategies and explaining the exact CRM metrics
In case the organization desires to enhance the profits by 10%, the prime objective should focus on increasing sales effectiveness. To get a go ahead with this strategy, you should keep yourself ready to move ahead by closing more deals with your prospects.
Moreover, the CRM metrics with this strategy will be the sales closing rate and the sales call number. Accordingly, the successful linking up of the business objectives to the strategies is of vital importance in using the CRM metrics for organizational profits.
Utilization of the CRM Metrics
The CRM metrics work effectively to keep your business aligned and assure growth. You are ready to fetch a comprehensive overview of the complete sales processes.
It facilitates business efficiency and helps you to achieve the zenith of customer relationship management.
The tool helps in enhancing the user experience and increasing customer retention rates. Keeping an eye on effective managerial skills and customer retention rate is crucial for drawing more and more customers to the business.
There exist different priorities for various CRM metrics for every single company. It never happens that every single metrics holds the same importance for all organizations.
Organizational business strategy best defines the CRM metrics for achieving success within the shortest period. Based on the successful tracking of the CRM metrics, you will feel competent to boost the creativity of the organization. You will be capable of finding the data to boost up customer relationship management and enhance sales effectiveness.
To cap it all, you must be able to analyze the customer’s mentality in the effective utilization of your company’s product. This assurance and examination are exceptionally important for the health and complete success of the organization.
All the CRM metrics work effectively in boosting up the organization’s business and enhancing the sales rate within the shortest period. Accordingly, the appropriate and on-time monitoring holds vital importance for success.
Just go ahead and implement the strategies and ensure the complete organizational flow with exceptional outputs. The organization will start exhibiting positive business outflows with the assurance of profit for every single sale. The CRM metrics will start functioning in a technologically equipped manner by drawing a huge number of customers.