CRM: How to identify the metrics that matter
You can't manage what you don't measure. But you'll still come unstuck if you've defined the wrong metrics, says Forrester's Bill Band.
Finding the right metrics
- Define and quantify business goals. Quantify how your CRM initiative will either increase revenues from customers or decrease the costs of acquiring and serving them. For each targeted business outcome, define a method for estimating the size of the expected benefit.
- Formulate CRM strategies and tactics. Define your strategies and tactics to achieve the goals you’ve defined and quantified, and identify appropriate tactics for each important customer-facing function, i.e. marketing, sales and service.
- Establish appropriate CRM measures. For instance, customer service metrics might include number of calls handled per agent, or first call resolution. Voice of the customer feedback metrics might include Net Promoter Score. Establish the current baseline of performance before you start your CRM initiative and define the increment of improvement that you want to achieve at a specified time in the future. Monitor these metrics on a regular basis and take remedial action if you find yourself falling short.
- Link CRM goals, strategies and metrics. For instance, if your business goal is to improve revenue from new sources by 10%, your strategy might be to increase average deal size by selling more solutions instead of individual products. The metrics associated with this approach could be average deal size and average revenue per sales rep.
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Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.