Installing a right Customer Relationship Management(CRM) software eases the tasks of the sales and marketing team in an organization. However, every small business should keep track of the performance of the various campaigns to know whether they are a success or not. That is the CRM projects such as email marketing, newsletter, tradeshows, outbound calls and more, should be measured to know whether the ROI strategy that is currently in place is effective or not. The best way to measure the success of CRM is to have a solid measurable performance metrics. This should be done at the commencement of the CRM project. Nonetheless it’s never too late to define them in the later stages also.
The three metric combination that many small businesses use to define their metrics are the following.
- Reduced expenses/cost savings- CRM is always scanned across the marketing, sales, and also customer service functionalities. When the leads are wisely and effectively selected, it can lead to decrease in the volume of the various marketing campaigns. This in turn will lead to a decline in the ratio of expense-to-revenue. If the prospecting is effective, it shortens the sales cycle. Similarly, if the duration of the customer services for a transaction or resolving a problem is shorter, it reduces the cost.
- Revenue enhancement- A small business will always lookout for ways to cut cost and increase revenue. Cost savings is possible by automating marketing processes. However, importance should be given to increase revenue in the long-term. Increase in revenue is attainable from various sources such as
- improved marketing campaign response such as new orders from the existing and new customers
- number of items bought per order
- up-selling as well as cross-selling opportunities during the sales cycle or while renewing the service contract
- when customers migrate from low end products to products of higher values.
- Customer Values- This is the best metrics and most difficult of all. To get the measurement you need to calculate the
- LTV or the lifetime value of a customer
- customer satisfaction- this can be measured using surveys and polls
- customer attrition rates. Experts opine that attrition rates needs to be measured in segments, as the customer value differs from segment to segment.
A small business entrepreneur should build effective Performance Metrics keeping mind his industry type. This is possible only if the organization’s goals and objectives are clearly defined. Performance metrics also known as key performance indicators are used to analyze the business processes, ROI and customer behavior. The performance indicators are important because it shows warning signs if the business goes off track. Have a look at the following five points.
Five Vital CRM Key Metrics
- Customer Service- A customer is a king; that means he is a vital part of the business equation. Therefore, post sales service holds great importance in CRM metrics. The personnel at the help desk should be trained to handle the customers so they can provide a superior customer support. Great customer support is important as it has amazing potential to elevate the organization’s product or service from an “average” to “the very best.” Key metrics of the help desk such as agent performance, ticket queue as well as ticket analysis can be used to evaluate the issues and formulate strategies to handle customers better.
- Engagement Performance metrics- The marketing team have to keep check of the number of times they try to contact the prospects while prospecting and how often do the prospects respond. Analyzing this pattern can help the business understand their target audience’s moves and take actions as per the indicators of the engagement performance. The indicators will reveal from when the target audience has stopped responding to the emails, unsubscribed the newsletter, blocked them and so on. Even after five consecutive attempts if a prospect has not responded, the sales rep should not waste time on nurturing this prospect as he is unlikely to make a purchase.
- Response Time- A small business need to take this into consideration because response time is directly proportional to conversion rate. Though the response time and its indicators may vary from industry to industry, this is an important performance indicator that needs to be analyzed from time to time.
- Conversion rate- How frequently is the sales team able to able to close a deal? This CRM metric allows the small business to find out how soon the prospect outreach attempts yields a measureable action. Analyzing Conversion rate metric will help to determine whether the current campaigns and strategies are effective.
- Relationship management Metrics- A small business needs to be in constant touch with their customers either through email marketing or newsletters. This is possible if the small business has integrated a right CRM software. Keeping track of the customer relationship management key metrics will help to find when was the last interaction with the customers. Off-late if some customers have fallen off track, they can be wooed back into the business with lucrative and attractive discounts.
Customer relationship management is a vital tool for every business irrespective of the size. Developing and analyzing the above mentioned metrics will help a small business to retain its existing customers, convert them into loyalty customers and also attract new prospects. Additionally, it also helps to maximize the return on investments.