If you’re as dated as I am, you might remember the heart-warming Mastercard Priceless commercial where the toddler prefers playing with the cardboard box in which her expensive toy came rather than the toy itself.
As sweet as the ad is, I am sure you’ll agree that this isn’t what you want to happen with your new CRM if you’ve just invested a large amount of money in it.
Nope, not at all. You’d want it to be used to its fullest and for your teams to make the most of all the tools and functionalities. (Which is why staff buy-in and proper onboarding are so important, too). In short, you’d want more than a little bang for your buck.
But how would you know if this is the case? How do you go about measuring if a CRM implementation is successful or not?
Well, you’d have to set measurable goals across your sales, marketing and customer service departments and then analyse those metrics to see if your CRM is being used optimally.
As Uku’s Marketing Director Claudio Pereira notes: “Choosing an adequate CRM for your team is usually just the first step. Having a plan in place to measure the impact it has on your team, their productivity, your customers and all the steps that follow are essential”.
That’s to say before you can start tracking metrics to measure CRM success, you first need to get your teams to adopt the new system through proper onboarding.
The First Steps to CRM Success
Oftentimes, teams may take some time to get acquainted with a CRM’s tools and may require extra training on how to use these before anything can be measured.
In addition, CRM success also depends on setting a clearly defined CRM strategy (for instance, what do you want to achieve and how will each team contribute to the goal) and mapping out existing sales processes and linking them to your new CRM so that there is sufficient data to analyse.
Remember, a CRM is only as good as the implementation and adoption process - without these the best system will not be successful as it is dependent on human users at the end of the day.
As Freshworks notes: “A CRM cannot pull success out of a magician’s hat the minute you implement it in your organisation. 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 your pipeline is filled with poor quality leads, your salespeople are focusing on the wrong deals or if you have trouble retaining customers”.
There are, of course, a multitude of metrics that you can measure to find out if your CRM is working or not. Below we’ve listed the ones we feel are most important to keep track of if you want to measure CRM success.
5 Metrics You Should Be Tracking to Measure CRM Success
1. The Length of Your Sales Cycle
One of the main reasons many companies invest in a CRM is its positive impact on sales. This includes an increase in the productivity of sales teams and the shortening of their sales cycle. In fact, a CRM can decrease the time it takes to close a deal by up to 14%. A huge advantage if you take that the average deal takes up to 3 months to close.
The length of your sales cycle is also one of the key sales metrics you can track to measure the success of your CRM.
“The key factors that affect lead velocity are the cost of your product or service, and how transparent you are about it; how well you communicate its value to customers, the number of touch-points along the way, and the quality of the data in your system” – NetHunt
That’s because a properly used CRM will help your sales team move leads through the sales process faster as leads are scored better providing reps with higher quality leads and clean, reliable data that provides a more holistic overview of the client and where in the buyer’s journey they are.
In addition, CRMs can also be used to automate repetitive tasks, set up workflows to streamline your processes, prompt leads stuck at a certain stage, and provide them with relevant info at each touch point.
Of course, all of this also increases a salesperson’s activity (another metric you may choose to keep tabs on).
“Efficiency and productivity of sales teams can be measured via a CRM like HubSpot. Activity relates to emails sent, calls logged, meetings booked and average response times per team or rep. Each of these will affect the length of the sales cycle at the end of the day,” explains Claudio.
All of this can speed up your sales cycle as leads move from first contact to satisfied customer.
2. Deal Close Rate
Another sales metric that’s important to track to measure CRM success is your deal close rate.
A deal close rate simply refers to the number of deals closed compared to the number of leads in your pipeline measured over a certain period. (You can use this free online Sales Conversion and Close Rate Calculator from HubSpot to calculate your rate.)
A CRM should increase this rate as it has a history of communications and interactions with each lead. This allows them to quickly and effectively help a lead by providing them with pertinent information for focused lead nurturing.
That said, be careful not to judge this metric on its own. Rather look at it together with the value of the deals closed as you don’t only want quantity but quality (ie big value sales as opposed to lots of small ones).
Also, compare your deal close rate to your industry benchmark to see how you are performing in the broader market. Below are some deal close rates (or average conversion rates from lead to customer) per sector.
3. Customer Acquisition Cost
Customer Acquisition Cost, or CAC, is another key indicator that can be used to measure CRM success, especially for SaaS companies as the marketing and sales costs associated with their long sales cycle can run high.
The better your CRM is functioning, the lower your CAC costs should become over time as retained customers mean repeat business with less marketing and sales efforts and expenses. Especially if you consider that a mere 5% increase in customer retention can increase your profitability by 75%.
“Successful companies are aiming to constantly reduce the cost of customer acquisition — not just to recoup revenue, but because it’s a sign of the health of your sales, marketing, and customer service programs. Think about it: If your inbound marketing program is operating successfully, you don't have to dedicate as many resources to ad spend to generate poor-fit leads when your blog content is bringing in high-quality organic leads. If your sales team is constantly prospecting and nurturing a healthy pipeline, you don’t need to rush to hire additional reps to hit your quota each quarter. And if your customer success team can retain and cultivate relationships with happy customers, they will help generate new customers by writing testimonials and reviews, serving as case studies, and telling their friends and family about you” – HubSpot
A CRM can greatly contribute to this in a number of ways, including providing sales teams with more qualified leads, the ability to automate time-consuming tasks which makes teams more efficient (saving time and money), increased customer satisfaction, which also means more referrals, increased renewal rates and low-hanging opportunities for cross- or up-selling to existing customers. As such a CRM can also contribute positively to your LTV, or customer lifetime value.
4. Churn Rate
Churn rate, also called customer turnover or customer attrition, refers to the rate at which you are losing customers over a given period.
This metric is crucial in establishing whether or not your customers are happy with your service and your product offering.
Churn rates, too, differ across industries and it’s important to know how you measure up:
A solid CRM should reduce churn as the customer relationship management software should better enable your sales, service and marketing teams to address customer issues and delight prospects with personalised, targeted campaigns, relevant info and fast and efficient service delivery. All crucial if you consider that one of the main reasons customers churn is poor customer service.
Another big reason customers leave (68% of them, in fact) is because they feel a company does not care about them. With a CRM you can show that you do with little actions such as:
- Sending personalised emails based on previous purchases or their recent activity on your site
- Ask for customer feedback
- Sending personalised rewards such as a birthday discount voucher or offers
5. Net Promoter Score
An NPS indicates a customer’s satisfaction with your brand measured in terms of how likely they are to recommend your product or service to someone else.
You can calculate it using this free online calculator or this step-by-step formula:
Survey your customers and ask them “On a scale of 1 to 10, how likely are you to recommend us to a friend?”
Disregarding the Passives, subtract the percentage of Detractor responses from the percentage of Promoter responses to determine your NPS. The score can range from -100 t0 100.
While an NPS survey really consists of 1 question only “On a scale of 1 to 10, how likely are you to recommend us to a friend?”, it can tell you a lot about how customers felt engaging with your brand and your sales and/or customer service teams.
This is an important customer – and CRM – measure of success as satisfied customers drive repeat business and referrals.
“Recommendations from friends and family and online reviews are incredibly valuable to your customers. In fact, 91% of people regularly or occasionally read online reviews, and 84% trust online reviews as much as a personal recommendation. Think about that for a second. This statistic means that even if you do everything right — from your logo to your blog posts to your marketing email subject lines — one customer's bad experience with your brand could cost you new business. In fact, customers are more likely to talk about a bad experience with your brand than a good one — and they tell almost 3X as many people when it happens. This makes collecting customer feedback and identifying headaches important not only to prevent bad customer experiences and reviews but also to make your customers so happy that they recommend your brand to friends and family. This is where the NPS®, or Net Promoter Score, comes in” - HubSpot
High NPS scores are, of course, more than a little possible with a sold CRM that allows teams to quickly access all relevant info on a particular client, including all previous communications with a company, sales history and much more, to provide them with a bespoke, personalised service offering.
In addition, a CRM can help solve queries quicker, provide feedback faster and automate prompts for renewal notices - all actions that will contribute to a better experience for the customer. Plus, by allowing you to automate tasks and reminders, your sales or customer service team will never again forget to follow up with a lead.
It may seem like a lot of additional work - monitoring all these metrics just to find out if a system you paid a substantial amount of money for is working or not. But we can promise you that properly setting goals and monitoring activity on your CRM is key to building a sustainable and successful business – and getting the most value for your money.
These metrics will tell you if the system is being used optimally. They can also help identify areas of concern or highlight problems or opportunities that can help further your business’s growth and inform future strategies. After all, as Peter Drucker noted: “What gets measured gets managed”.