Are you struggling to find relevant crm metrics examples to incorporate into your business?
You’re not alone.
As of right now, owing to the overwhelming popularity of different CRM, companies have all types of CRM metrics that they keep tabs on. These metrics not only help to define the core business objectives in terms of customer acquisition and retention but also set the bar when it comes to business scalability.
That’s not all.
By employing suitable CRM metrics examples, businesses can effectively monitor their entire sales process, maintain comprehensive customer records, and closely monitor organizational objectives with the assistance of a CRM customization company. Moreover, CRM software, customized to meet specific needs, provides a wealth of valuable data pertaining to the company’s operations.
To that end, it is imperative to isolate and monitor specific types of CRM metrics, in collaboration with a CRM customization company.
Prior to delving into the specific metrics that warrant attention, it is advisable to initially assess and address strategies for maintaining data accuracy, as well as familiarize oneself with the overarching categories of CRM metrics that demand attention.
Set SMART Goals To Easily Track CRM Metrics Examples In Your Business
Revisiting the concept of SMART goals is valuable, even if you are already familiar with it. These goals serve as the foundation upon which you measure essential CRM metrics. SMART is an acronym that represents the following attributes:
Specific: Clearly define the goal you aim to achieve.
Measurable: Determine the data that will be used to track progress.
Achievable: Assess whether the goal is realistic and ascertain the availability of necessary capabilities and resources.
Relevant: Identify the significance of the goal and how it aligns with the broader objectives of your business.
Time-bound: Establish a deadline for achieving the goal.
Applying this framework to your customer relationship goals provides valuable context and increases the likelihood of success in their attainment.
For instance, saying “We want to sign new customers” is not a SMART goal.
Instead, a SMART goal would be “we aim to sign 12 new customers by the end of the year. To accomplish this, we will emphasize our new product and launch a targeted email marketing campaign that will run from now until the end of December.”
Specific: “We aim to sign 12 new customers by the end of the year.”
Measurable: The goal is quantifiable, allowing you to measure your closing rate and estimate the number of leads required to acquire 12 customers. Additionally, a low closing rate prompts investigation into the underlying reasons.
Achievable: “We will highlight our new service and implement an email marketing campaign.” The goal is realistic, supported by a concrete plan for execution.
Relevant: Acquiring new customers is consistently important.
Time-bound: The deadline for achieving the goal is “the end of the year.”
By applying the SMART approach, you can establish benchmarks and track progress for key CRM metrics examples, whether they pertain to enhancing customer lifetime value (CLV), reducing customer acquisition cost, shortening sales cycle duration, or any other relevant objective.
10 CRM Metrics to Track for Increased Customer Acquisition
Having elaborated on some of the basic concepts of different types of CRM goals and common CRM metrics, here are 10 crm metrics examples for you to begin with.
- Customer Churn Rate
One of the essential performance indicators for your business is the customer churn rate. Every business, regardless of its excellence, experiences customer churn.
The churn rate, also known as the attrition rate, represents the number of customers who discontinue doing business with you within a specified period. This rate can also be applied to the number of email subscribers. Generally, a lower churn rate is preferable.
While this metric doesn’t provide reasons for customer departure, it helps identify issues. Additionally, with high-quality customer data, you can eliminate more variables.
You can calculate the churn rate using this simple equation: Customer churn rate = Number of churned customers / Total number of customers. It is one of the easiest CRM metrics to track and should always be in your focus since retaining current customers is more cost-effective than acquiring new ones.
- Renewal Rate
If your business has subscribers of any kind, it is important to track your renewal rate.
The renewal rate indicates the percentage of customers who choose to continue using your services and serves as a significant growth indicator.
Renewal rate = Number of renewing subscribers / Original number of subscribers.
Similar to the churn rate, the renewal rate can indicate whether things are going well or if there are warning signs of decline.
For instance, if Brenda has 1,000 subscribers who signed a one-year contract and 900 of them renew their subscriptions at the end of the year, her renewal rate is 90 percent.
However, if the following year only 60 percent of the 1,000 subscribers renew, this decrease signals a need for intervention.
By utilizing the right CRM metrics and implementing a solid CRM data management plan, Brenda can observe that 30 percent fewer customers renewed their subscriptions this year. With this information, she can work on finding a solution.
- Customer Retention Cost
The Pareto Principle states that 80 percent of outcomes result from 20 percent of causes. In the business context, this means that 80 percent of your revenue comes from 20 percent of your existing customers.
Though not an exact measurement, the key takeaway is that prioritizing customer retention over customer acquisition is crucial.
Your customer retention rate refers to the number of customers you retain over a specific time period. Here’s the formula:
Customer retention rate = (Total number of customers at the end of a time period – Number of new customers acquired) / Customers at the start of the time period.
- Customer Lifetime Value (CLV)
Do you know how much revenue you can expect from a single customer? To determine this, you need to calculate the following averages:
- Purchase value
- Purchase frequency rate
- Customer value
- Customer lifespan
Here are the equations for each:
- Average purchase value = Total annual revenue / Number of annual purchases
- Average purchase frequency rate = Number of annual purchases / Number of unique customers
- Average customer value = Average purchase value x Average purchase frequency rate
- Average customer lifespan = Number of years the average customer purchases from you
- CLV = Average customer value x Average customer lifespan
For example, let’s say Miguel wants to calculate his average CLV. He knows the following:
- Annual revenue = $100,000
- Annual purchases = 2,500
- Unique customers = 500
- Average customer lifespan = 4 years
- Average purchase value = $100,000 / 2,500 = $40
- Average purchase frequency rate = 2,500 / 500 = 5
- Average customer value = $40 x 5 = $200
- Average customer lifespan = 4 years
- CLV = $200 x 4 = $800
If Miguel expected his CLV to be higher, he can explore ways to increase it. For instance, if he discovers that the average customer lifespan increases to six years when the average purchase value is $35, the calculations would be as follows:
- Average customer value = $35 x 5 = $175
- Average customer lifespan = 6 years
- Customer lifetime value = $175 x 6 = $1,050
Other factors, such as profit margins, should be considered alongside CLV. Nonetheless, armed with his CLV, Miguel can take a more informed approach to analyze his marketing mix and assess if the costs to acquire a customer are worth it in the long run.
- Customer Acquisition Cost (CAC)
The primary goal of sales and marketing teams is to acquire the maximum number of customers at the lowest cost. Customer acquisition cost indicates how well they are achieving this objective.
CAC = Total spent on acquiring customers / Number of customers acquired.
As a regularly tracked CRM metric, CAC helps identify the effectiveness of marketing and sales efforts or any flaws in the sales funnel. If there is a significant drop-off point, the problem can be diagnosed and resolved to acquire more customers.
- Close Rate
The close rate is arguably the most critical metric for your sales team.
It represents the number of deals successfully closed compared to the total number of leads in your pipeline. For instance, if you had 100 leads and closed 30 deals, your close rate would be 30 percent.
If your close rate falls below the company or industry average, it prompts an investigation into why others are achieving greater success.
Close rate = Number of leads in your pipeline / Number of closed deals.
When monitoring sales metrics like close rates, remember that quantity isn’t everything. If you have a low sales cycle but attract and retain high-quality clients, take that into account.
- Length of Sales Pipeline Stages
Certain customer relationship metrics can help identify how long leads remain in your pipeline and whether there are any process inefficiencies or bottlenecks.
If you notice a significant drop-off point at a particular stage of the sales funnel, you can investigate the cause. It could indicate a disconnect between your sales and marketing teams or deficiencies in your proposal templates or email cadences.
By identifying and resolving such problems, you should observe improvements in your average sales cycle.
- Net New Revenue
Net new revenue indicates the amount of money generated from new customers. The definition of “new” depends on your specific criteria, which can be aided by CRM metrics.
For example, if you have month-to-month subscribers, you can consider them “new” for the first month. If you sell a one-time product, a customer is considered “new” the first time they make a purchase.
By analyzing data collected from CRM KPIs, you can:
- Track net new revenue
- Identify and address any issues new customers may face
- Improve sales growth
- Quota Attainment
In sales, achieving quotas is essential. Quota attainment measures your sales team’s total sales and how close they came to meeting or exceeding their sales goals.
Quota attainment = Actual sales / Quota for a set time period.
Setting and achieving quotas can be challenging if your database contains duplicates and other data quality issues. If you use Salesforce, you can refer to our post on improving Salesforce data quality for tips on cleaning your data and defining quotas more accurately.
- Upsell Rate
Your upsell rate indicates the number of customers your sales team successfully persuaded to upgrade their purchases or subscriptions.
Upsell rate = Number of customers upsold / Total number of customers.
CRM metrics like this one can be further broken down to identify trends in purchase upgrades based on demographics, shared content, or specific sales representatives. By recognizing these trends, you can modify workflows to increase the upsell rate.
3 Different Types of CRM Metrics That You Need To Know
CRM metrics can be categorized into three types, as recommended by CRM thought leader Bill Band.
These classifications help businesses determine which metrics are relevant and worth tracking.
Band suggests that smaller companies analyze both internal operations-based metrics and customer perception metrics to gain insights into the relationship between internal operations and customer perception.
Here are the three categories of CRM metrics:
- Business Performance Metrics:
These metrics encompass a wide range of data, including pipeline metrics, sales performance metrics, and other metrics related to overall business performance. They measure the company’s progress and success in achieving its goals.
- User Adoption Metrics:
User adoption metrics focus on how effectively an organization is utilizing its CRM software.
They track how employees are using the system and leveraging the collected data. These metrics provide insights into the level of engagement and adoption within the organization.
- Customer Perception Metrics:
Customer perception metrics shed light on how customers interact with the business.
They capture data about the customer journey through the sales pipeline, customer satisfaction levels, and customer retention rates. By combining this data with internal sales process information, companies can better understand and meet their customers’ needs.
By organizing CRM metrics into these categories, businesses can effectively monitor their performance, ensure CRM software adoption, and gain valuable insights into customer perceptions and behaviour.
When you can back up your claims with hard data, it gives you a much stronger position. If you can show your CEO, your clients, or anyone else that your results are supported by data, they’re more likely to be confident in your future success.
That’s why it’s so important to track your CRM metrics. By tracking your results, you can demonstrate the value of your marketing and sales efforts. This information can help you build trust and credibility with your stakeholders, which can lead to increased investment in your team and your company.