CRM metrics: What should you monitor and measure?

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There is certainly no shortage of things to measure in the world of customer relationship management. With modern CRM systems straddling multiple departments, disciplines and channels, it’s a number crunching nightmare.

“CRM technology can deliver benefit in lots of different ways,” explains Richard Boardman, founder of Mareeba Consulting. “You might use it for lead management purposes to help you increase the number of leads you get and the percentage that you convert to end business. It can be used to help you manage your existing customers more effectively and sell more to them. It can be used to help you with your marketing communications or improving the quality and speed of fulfilment of your products and services or streamlining your support operation. It really can be used in lots and lots of different ways.”

Indeed, it may even be used to do all of these things simultaneously. With so many moving parts involved in a CRM project, it’s enough to make your head spin. But struggling with CRM metrics may be symptomatic of a much wider problem.

"A lot of CRM initiatives historically have gone awry or are perceived not to be successful, but when you dig into them you find out that there is really no way to tell if they were successful or not, because you find that the projects didn’t have any metrics to find to be able to determine success," notes Bill Band, VP and principal analyst at Forrester Research.

"Typically that points to a deeper rooted issue – it’s not that metrics are so important in and of themselves, but usually the companies haven’t thought through metrics around customer-facing initiatives, and often it speaks that they don’t have a strategy. Metrics are only relevant in relation to a strategy that you are trying to execute. And when I see that metrics haven’t been defined, often the root cause is because there really isn’t a customer relationship strategy that has been worked out."

Having already covered the building of a CRM strategy earlier in this series, this shouldn’t be a problem you will encounter. But even with a robust strategy in place, with clearly defined aims, this doesn’t mean that everyone within the organisation has a similarly clear line of sight to the targets - something that Ed Thompson, VP and distinguished analyst at Gartner Research believes is a particularly acute problem for the staff working at the coal face. 

“One of the problems we have identified is that even if the company knows what it is trying to achieve – in other words, it is pretty clear about its financial goals and top level goals about acquiring more customers or improving campaign responses or lowering cost of service or whatever their goal is – there can be an issue in that Joe Bloggs the frontline employee can’t see what he’s doing in his day-to-day life has got anything to do with it,” he explains. “And the reason is that he’s being measured on something completely different – he’s told to improve his first call resolution rate and can’t see why his metric ties to the big CRM initiative and why he has an impact on it.

“The granularity of metrics and how they link together means that people feel disconnected and disenfranchised. You end up with a disconnect between the frontline staff and the senior management and it is very difficult to change that unless you have really thought through the metrics quite carefully and put a metrics plan together.”

Clearly, there is more to metrics than meets the eye. And getting the wrong metrics in place not only means that you’ll struggle to monitor and manage performance, but you’ll also potentially create disaffected staff.

So how do you get it right?

Operational metrics

The three departments that are most associated with the influence of CRM systems utilise a whole range of different operational metrics to measure their related performance. By department, these include:

  • Sales

- Number of prospects

- Number of new customers

- Number of retained customers

- Close rate

- Renewal rate

- Number of sales calls made

- Number of sales calls per opportunity

- Amount of new revenue

- Number of open opportunities

- Sales stage duration

- Sales cycle duration

- Number of proposals given

  • Marketing

- Number of campaigns

- Number of campaign responses

- Number of campaign purchases

- Revenue generated by campaign

- Number of new customers acquired by campaign

- Number of customer referrals

- Number of web page views

- User goal completion rate on the web

- Time per website visit

- Customer lifetime value

- Cross-sell ration

- Up-sell ratio

- Email list growth rate

  • Service

- Number of cases handled

- Number of cases closed the same day

- Average time to resolution

- Average number of service calls per day

- Complaint time to resolution

- Number of customer call backs

- Average service cost per service interaction

- Percentage compliance with SLAs

- Calls lost before being answered

- Average call handling time

In addition to these more traditional operational metrics, recent years have seen businesses expand their measurements to outside of the business, specifically incorporating Voice of the Customer feedback measures (such as customer satisfaction, Net Promoter Score, customer loyalty, likelihood to purchase and likelihood to recommend) and social media metrics (such as sentiment, influence, reach and share of voice).

"If you think about the history of CRM from a technology point of view, it has been more defined primarily as an optimisation of internal operational activity, so the metrics that traditionally have been associated with it have been driven from an internal operational point of view," highlights Band. "But companies are becoming more sophisticated at understanding they need to have both the internal operational and the external perception metrics side-by-side as opposed to scattered independently throughout the organisation."

Taken as a whole, this represents a staggering number of metrics to consider, although Band emphasises: "You won’t want to do all of these, but people need a starting point."

He adds that there are three “buckets” of metrics that he recommends that brands pay particular attention to:

  • Business performance metrics. Band says: “What are the outcomes from a business point of view – the pipeline, closing cases more quickly, cross-sell, up-sell, sales, marketing and service.”
  • User adoption metrics. “Track how the CRM solution is being taken up in the organisation, including number of log-ins and completeness of the data and a host of other IT metrics.”
  • Customer perception metrics. “This includes customer satisfaction and experience. If the customer isn’t experiencing any improvement from their end and you’re not taking that into account then you haven’t got a complete picture.”

Sylvain Reiter, development director at Cyber-Duck, rattles off a number that he recommends as particularly valuable:

  • Number of new contacts added per week/month. “Based on your company activities (pitch, networking, etc) you should have a target of potential clients, affiliates, partners, suppliers and so on to be added every week,” he notes.
  • Response to marketing campaign. “A well composed and relevant CRM should have better return/response rate to all your outgoing communications. If not, it may mean contact details are out of date or irrelevant entries are in the CRM.”
  • Productivity. “A CRM should help the staff work smarter, giving them faster access to data and enabling them to make more informed decisions.”
  • Customer satisfaction. “At the end of the day, a CRM is there to help your business provide a better service, so your end customer should give the judgement and confirm your services have improved.”

"The key takeaway is that these bread and butter metrics continue to be important – depending on your strategy," notes Band.

And it is this line-of-sight from metrics to strategy that he says is of critical importance.

He continues: "When you look at ongoing operational metrics, we see of lot of them in companies, but the question is whether they are tied to an overall strategy. Often that is a missing linkage. In the call centre you might have lots of operational metrics, or in marketing there are traditional marketing, like campaign management and close rates and so on, but I see a lack of tying metrics to a strategy."

As we established earlier, if operational metrics aren’t tied to the CRM strategy it can create confusion and disconnection. So how can organisations ensure that their CRM strategy, tactics, goals and metrics are all in alignment?

Getting the right metrics

In his paper, The Right CRM Metrics For Your Organisation, Band suggests that the starting point is to establish the goal of the CRM initiative, and then build it out from there. For instance, is it to increase revenue per sales rep, decrease customer acquisition costs or decrease service response times? The process of defining a value-based CRM plan starts with linking the highest-level corporate business goals to a clear set of specific CRM strategies and tactics.

Forrester suggests the following four step guide:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

This isn’t always a straightforward process, however. "One of the challenges that people do have is that there is one business goal and single set of tactics and strategies and it all ties together," warns Band. "But in most companies that I work with, they in fact have different brands and different products which may all have different strategies and requirements in terms of what is trying to be achieved. Therefore it is not so black and white to be able to work through this process and end up with one simple set of metrics because most companies are more complex that this implies. But the thinking process at a product or brand level can still be applied."

While there is no silver bullet metric to successfully monitor CRM, by applying these principles to your project you should be able to work through the process of finding the most appropriate measures. And if done properly, you’ll not only have metrics that enable you to manage your CRM initiative, but you’ll also provide your staff with a clear indication of what they must achieve to support the overall targets.

“People always ask us what metrics they should use,” says Band. “And I say it is hard to say until you tell me what tactic you are trying to implement so you can track that - and that tactic ought to relate to a strategy for achieving your business goal."

About Neil Davey

neil

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.

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By justi
01st Nov 2016 15:44

Thanks for a great article.

That's true - the metrics depend on tactic. But there are common goals that are in all of our businesses: sales volume and in SaaS products: churn rate.

There are also general metrics for sales teams, like calls to customers made, emails and follow ups sent and others based on their activities.

We are trying to implement performance monitoring system and thanks to gamification it helps reaching OKR based on metrics mentioned above. For Pipedrive CRM you can check it here: https://getbadges.io/integration/pipedrive

We observe that metrics present in that way have positive impact on reaching correlated goals. For example, if we gamify calls made for sales, the metrics will be improved.

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