If your company has either a sales or a marketing department the you’ve probably heard of some CRM software applications. But you’re probably thinking how all that possibly overwhelming data can be managed and put to some good use in order to help you increase sales, lead generation and eventually grow your business.
Success in business is not just a matter of luck. Every successful business has these factors in common – Strategic planning, hassle-free execution, learning from the feedback, and improving the processes on a continuous basis. Investing in a CRM solution will help grow revenues, cut operational costs, and increase IT capabilities, but many businesses need help quantifying the ROI of implementing a CRM software.
For businesses which are using CRM (Customer Relationship Management) software, one component that is usually undermined is the continuous improvement process. Customer-oriented business processes can benefit significantly if the information and feedback received from customers are taken into consideration.
Once CRM software is implemented, businesses need to plan the upcoming steps to ensure ongoing execution successfully.
Everyone from the CEO to each individual salesperson must have a solid grasp of what it takes to find and acquire a new customer, the value of that customer, and success in retaining that customer. Being able to track and quantify these has been a difficult task—until now. With the advent of CRM programs small and medium size companies now have a tool that can make acquiring and maintaining these numbers a reality.
How to measure performance by using a CRM software
So let’s see what are some numbers that are key to the success of all businesses.
The basic KPIs that you’ll benefit from measuring with your CRM app revolve around:
- nurturing leads
- sales activities
- sales opportunities
- marketing activities
So let’s elaborate on this. We’ll discuss every key metrics that your CRM solution should track in order to give you a better overview on your sales team activity.
1. Sales calls
The sales department represents the lifeblood of every business. If you’re like the majority of the companies that we collaborate with, then you probably don’t see tons of prospects just jumping on your door step. You need your team to make sales calls, given that it’s a key activity in the sales process. So obviously, sales call volume must be measured.
Each salesperson needs to know how many calls they’re making. Your sales manager needs to know how many calls are being made both by each individual and by the whole team. These call volume numbers form the basis for metrics that are even more useful.
You can determine the average number of sales calls per sale. You can track sales calls for different time periods and identify trends, just by implementing a sales strategy that implies making memos and taking notes about every activity undergone by your employees.
2. Sales closing rates
Your close rate is a simple but powerful metric that determines sales effectiveness. It’s a measurement of how many leads were converted to customers for a given time period.
No matter how outstanding your close rate is and how successful your business is, there’s always room for improvement, development, optimization and growth. And improving your close rate increases profits, sometimes dramatically.
Calculate close rates for each of your salespeople. Examine their success and failure rates at every step in your sales process in order to find some patterns and maybe detrimental habits.
Answer some questions like:
- What are your best and worst lead sources?
- What are the most common objections?
- What are the strategies and reasons that close sales?
The industry average is about one closed sale for every three opportunities. Certainly, you want your closing rate to improve constantly, no matter how high it might be for your peers. The increase of this number improves profits, sometimes even dramatically. And if the sales closing rate is not acceptable, that probably means you require changes to your staff, sales process, customer relationship management, marketing or product.
Track closing rates for each of your salespeople, analyse the success and failure rate at every stage of your sales process. Define the best and the worst lead sources. Find out the most common objections and reasons for succeeding new deals.
Knowing how often your prospects become customers is critical for making strategic decisions in all areas of your company business. If your sales team isn’t closing deals at an acceptable rate, that could mean changes to your staff, your sales process, your marketing, or your product are needed.
3. Length of the sales cycle
How long does it take your reps to close the sale from the time you first identify a prospect? Knowing your average sales cycle is going to help you in several ways:
- Create accurate sales forecasts
- Measure sales performance
- Project revenue
- Identify areas for improvement
Whether your sales cycle lasts a few days or several months, you’re probably going to want to shorten it. By monitoring the length of your sales cycle over time, you can see how changes to your sales process or other areas of your business impact your time to seal the deal.
4. Customer retention rate
Conventional wisdom states that it costs a whole lot more more to gain the trust of a new customer than it does to retain an existing one. So, at Nexus (and probably in every successful company), we think that keeping our current clients happy and satisfied should become one of the prerogatives for every business that’s looking to expand and become more efficient.
That makes it important to measure how successful you are at maintaining relationships with your existing customers.
You can measure your retention rate by subtracting the number of new customers you acquired for a given timeframe from the total number of customers you had at the end of the period. Then divide by the number of customers you had at the beginning of the period to get your customer retention rate.
Once you know your client retention rate, you can work on improving it. Your CRM software should capture not just the wins and the losses your sales reps have, but also the reasons for those wins and losses.
What were the contributing factors for your losses? What patterns do you notice? Understanding why some customers are long time runners with you and others leave will give you actionable intelligence you can use to grow your business.
5. Cross-selling and Up-selling
Upselling happens at the point of sale as opposed to cross-selling, which should be part of an on-going customer strategy. According to experts, upsells and cross-sells can deliver as much as 30% of ecommerce revenues.
So it’s pretty obvious that it’s important to know if your company and each member of your sales team is successful in cross-selling and up-selling. Do the accessories and additional lines your company produces stimulate clients to buy more products or services of your company? The most cost effective way is to sell additional products and services to the existing clients or the repeat orders of products and services they have purchased before.
The best thing about upselling is that it produces larger orders and more revenue, at the same time increasing customer satisfaction due to your useful and insightful recommendations.
As we always mention, customers want to be taken care of and if up or cross selling is done by having both their and your own interest in mind, then you’re sure to have a winning sales performance.
It’s important to remember that cross and upselling have different time boundaries, but with a CRM solution you can analyze and plan timely calls or follow-up messages. This is quite a vital aspect for upselling, as long as you can catch up with a customer when the product is still on their mind. Such a situation provides more chances for the quick purchase.
6. Lifetime customer value
You can determine what a customer is worth to you based on customer spending habits and the length of time you’ve been in business with them. Determining how much each of your customers contributes to your bottom line revenue could actually be an eye-opening experience.
Understanding your lifetime customer value allows you to make some priorities. You can focus your sales and marketing efforts towards retaining your most profitable customers, finding new customers that fit the patterns your best existing customers display, and mining your best sources for lead generation. This metric also allows you to better align marketing with sales and will help determine where to offer discounts and deals and to whom you should focus future lead-generation campaigns.
Summing it up, there are several CRM metrics you need to pay attention to in order to keep both your business and your sales reps flourishing. Everyone involved in the client happiness pursuit should know what it takes to find a new customer, how much that customer is worth, and how well you do when it comes to retaining that customer. A good CRM system makes those numbers accessible.
To find out even more even more about how a CRM software can help you, continue reading our blog and give our free trial CRM a go: