Let’s start on an honest note.
A CRM software cannot pull success out of a magician’s hat the minute you implement it in your organization. According to a Forrester study, 2 out of 3 businesses become dissatisfied with their CRM and plan to replace it within just 2 years.
Rather, a CRM tool sets you on a path to achieve your goals. It gives you a fundamental understanding of whether
And much more.
But, how do you find out if the CRM is actually working for you?
And more importantly, how do you find out before any of the above happens?
This is where CRM metrics play an important role.
First Off, What Are CRM Metrics
A Forrester report says,
“Executional discipline is what sets CRM winners apart from failures, and establishing the right metrics is part of that path to success.”
To understand if you are utilizing the CRM to its fullest potential, you need to track the right numbers. These numbers help you measure your CRM success at a business, function, and individual level. This variety of performance-related information is called CRM metrics.
CRM metrics not just helps you closely monitor what’s going on in your organization but also enables you to steer your business in the appropriate direction. Without this, it can be hard to identify if you are moving towards your goal or heading astray.
Driving Growth With CRM Metrics
Broadly, there are two types of metrics you should track—internal and external CRM metrics.
Internal CRM metrics:
Whether you’re switching to a new CRM software or implementing one for the first time, you’ll never know if your sales and marketing teams will use it regularly. Even after a smooth transition, too often, they look at it as data dumping software.
A low adoption rate and incomplete data entry will lead to bad data quality. And insufficient data results in inaccurate reports and analysis.
Hence, it is important to learn and understand how well your teams are using the CRM tool for their sales outreach and marketing campaigns.
3 Ways to Monitor CRM Adoption:
- Monitoring the user login frequency
- Track new record creations
- Measure lead abandonment rate and pipeline activities
If your teams are not using the tool as necessary, it is crucial to encourage and drive user adoption.
External CRM metrics:
External CRM metrics revolve around your business performance. Cleaner data and accurate reports enable you to understand if you are on track to achieve your goals and make informed business decisions.
When you are confident about the business decisions you make, your growth follows.
These external metrics must align with your business goals, and hence, they vary with businesses.
Let’s take a look at how to identify these metrics for your business.
Defining the Right CRM Metrics for Your Business
When it comes to business growth, there is no such thing as too much information.
You could pull out various reports and have a bird’s eye view of what’s happening in your company. However, to succeed, you need to zero in on the metrics you truly care about and monitor every day.
As these metrics may vary with the goal of the organization, follow these steps to identify your CRM metrics:
1. Define your business goals:
Align with different teams across the organization, discuss with the stakeholders, and define a primary goal you want to achieve together.
Next, identify how you and your team can contribute to that goal. For example, if your company goal is to increase revenue from new customers by 60%, you need to see how you can optimize your sales strategy to reduce the sales cycle or improve the close rate.
Related Article: How to create a winning sales strategy
2. Plan out your CRM strategy:
Once you have your sales and marketing strategy planned out, the next step is to leverage the power of your CRM. Identify the capabilities of your CRM tool that will optimize your sales process.
For example, suppose your sales strategy is to increase your cold outreach. In that case, your CRM strategy could be using sales sequences to stay on top of the sales activities or list segmentation to improve personalized engagement with prospects and customers.
3. Identify Key Performance Indicators (KPIs):
The third step is to define specific metrics to track CRM results. So, make sure to couple your CRM strategy with your sales and marketing strategy.
For example, when you want to reduce the length of your sales cycle to 3 weeks, you could use sales sequences to follow up regularly with your prospects every 2 days. Here, your salespeople’s outbound engagement becomes an important KPI to monitor. It allows you to understand if following up regularly reduces the average time it takes to close deals.
4. Tie targets to micro-goals:
Finally, tie the targets to micro-goals.
For example, motivate your sales team to increase outreach engagement and give them a goal to achieve. But remember, when you share these micro-goals, make sure it is result-oriented. So, instead of asking them to send “200 emails per week,” you could set goals such as “15% increase in email reply rate month on month.”
As your team attains their micro-goals, you move towards your main goal.
7 CRM Metrics You Should Be Tracking
Here are some commonly tracked CRM metrics that tell you if your sales and marketing teams are using the CRM to its full potential.
1. Traffic to lead conversion ratio
When your marketing teams put in a lot of time and effort into bringing targeted traffic into your website, you need to measure how much of it is paying off. Calculating how much of that traffic leads to conversion and signups helps understand if you are creating content that resonates with your audience.
A CRM with marketing capabilities can generate heatmaps and scroll maps to identify your user behavior in your web pages. Knowing what your visitors click on and where they bounce helps you optimize your pages for signups.
AI-powered CRMs also come with inbuilt chatbots that can integrate with your website and have interactive conversations with your visitors at the perfect timing. Using chatbots or web forms in your website, you can automatically capture your visitors’ details directly into the CRM.
2. Sales activity reports
To know if those MQLs passed on from your marketing team are converting, or understand if your salespeople’s prospecting efforts are giving you desired results, you need to keep an eye on the sales activity reports. The two important outbound CRM metrics to track are
Emails:
The number of emails sent, the open and click percentage, and the reply ratio tells you how engaging the sales emails are. A high reply rate shows that your email content resonates with the prospect’s needs and pain points. If you don’t get a satisfactory reply rate, your need to keep tweaking the copy until you see the results you desire.
Call to appointments ratio:
The number of calls your salespeople make does not matter if they can rake opportunities. Tracking the number of calls that have resulted in meetings tells you if you are targeting the right audience. It also tells how well your salespeople can convert on phone calls.
A CRM with an integrated dialer and 2-way email sync allows you to make calls, send emails, and track these metrics from within one tool.
AI-powered CRMs also analyze your prospects’ engagement with your brand and suggest the next best action you can take.
3. Sales cycle duration
A sales cycle is how long your salespeople spend to close one deal. In other words, it is the measure of the average number of days it takes to convert a lead into a paying customer.
It takes from a few weeks to several months to close a deal. And this heavily depends on factors such as industry, employee size, stakeholders, the cost of your product/service cost, etc.
While you cannot control the external factors that influence your sales cycle, here are a few things you can do to speed it
- Learning to identify the right decision-makers (and not minions)
- Following up with them regularly and staying on top of their minds
- Demonstrating the value you bring to their business
- Establishing a meaningful relationship with them by engaging contextually.
Related Article: A complete guide to sales cycle
A CRM helps you measure how long a deal took to close. It pulls reports that show the deals pipeline and the average time a salesperson took to convert a lead into a customer using the tool.
4. Close rate
Close rate is the number of successful deals closed by your sales team in comparison to the number of opportunities in a given month. This CRM metric helps you understand the factors contributing to won or lost opportunities. It also enables you to identify if your sales strategy works or needs to be improved.
A CRM system collects all the information regarding deals, interactions with prospects, and history. It can tell you if a deal is likely to close or at risk and needs immediate action to save it.
With this information, your salespeople can mark deals as “commit” or “best-case” to identify deals they’re confident of closing. You can now use these inputs to make monthly and quarterly forecasts.
5. Net new revenue
Net new revenue is how much new business you bring in for the organization. Calculating this tells you the amount your salespeople are bringing to the table at regular intervals. Based on your business model, you can calculate it once a month, quarter, or year.
With an AI-powered CRM tool, you can increase the net new revenue by identifying
- Interested Prospects: The CRM tool can rank prospects based on their engagement with your brand. This helps you prioritize the most interested prospects first.
- High-Value Deals: Deal management in CRM software can give a birds-eye view of the ongoing deals based on deal size. This can quickly tell you which deals would bring you the most profit.
- At-risk Deals: An AI-powered CRM tool also tags deals that are “Likely to close”, “At-risk”, “Gone cold”, to understand where you need to focus your efforts.
6. Marketing ROI
Marketing ROI is the measure of how the marketing efforts either holistically, or on a campaign basis, contribute to revenue growth. You can calculate it by finding how many leads from marketing campaigns have been converted to paying customers. This helps you understand if the marketing spends and budget has been justified with growth and determines ongoing or future marketing campaigns.
The right CRM gives you insight into your prospects’ behavior and preferences. It allows you to segment them based on these insights and target the right people with the right messaging.
7. Customer Lifetime Value (CLV)
Customer lifetime value is a prediction that foretells how much revenue you would receive from a single customer account during their period with you.
Keeping the 80/20 rule in mind, it is a good idea to have a high customer lifetime value. It goes hand in hand with the customer support experience. Unhappy customers post-purchase are likely to churn quickly, bringing down this metric. In contrast, when your customers stay longer and spend more on you (with cross-sell, up-sell, and regular subscription), the customer lifetime value goes up.
[Note:
Average purchase value => Revenue / Number of sales
Average purchase frequency => Total number of purchases / Unique number of customers ]
A CRM software can help you achieve a good CLV by
- Retaining customers: With a holistic view of customers on a single screen, support and customer success teams can instantly get the complete context of the customer’s journey and respond quickly to their concerns.
- Bringing in quality leads: Marketing teams reach the right audience with the targeted campaigns. This ensures that leads in your pipeline are actually interested in your business.
Tracking Success at Every Step
These CRM metrics can show how quickly your company is growing and areas of improvement.
A modern CRM system such as Freshsales Suite will enable you to create dedicated dashboards containing various CRM metrics. It allows you to create different dashboards according to the team, role, or function. You can also export reports, share to your team, or set it up to automatically send important reports to your inbox at regular intervals.
