Research shows that: 91% of companies with 10 employees or more use a CRM software. It is an impressive statistic and rightly so; the role of the Customer Relationship Manager, as the name suggests, is to improve your relationship with the customers.
A CRM software stores information that helps you keep track of your customers and their preferences. If managed correctly, the tool's data can provide invaluable insights into the customer’s journey through the sales funnel.
But why do many managers still struggle to get useful information out of the software?
Unstructured data can look like a lot of numbers and loose words - but when you ask the right questions, they can put you on the right path of making your marketing campaigns a big success.
Let's talk about six of the most important metrics to track in your CRM software!
Metrics to keep track of in your CRM software
1. Customer churn
Understanding why your customers abandon your product or service is vital to achieving sustainable growth.
Among the metrics of customer success, this is one of the easiest to measure. For a certain period, you count the number of customers you have at the beginning of the month (say, 100).
Then, count the number of customers you have at the end of the period (80). Subtract the final number of the initial (100-80 = 20) and divide the answer by the initial number (20/100 = 0.2 or 20% churn).
As Churn has a negative effect on your revenue, understanding how to reduce this number is essential for business success. This is because, for a company to grow, churn must be lower than the rate of new customers acquired (another metric that can be tracked in your CRM software).
2. CAC (Customer Acquisition Cost)
Many companies make high investments in marketing campaigns and end up not gaining the expected return. This can happen for several reasons, but the first step is to understand how much you are spending to acquire each customer.
The CAC shows exactly how much your company has invested for a potential to become a buying customer.
To calculate it, you can divide the number of customers gained in a given period by the total amount your company spent at the same time. This includes all advertising costs, salaries, commissions, bonuses and overheads.
It is important to analyze this metric to have a better idea of which segment should be prioritized, and how much investment should be made. It also helps you understand the average ticket price of each group of customers in your business.
3. CLV (Customer Lifetime Value)
Another metric to measure in your CRM software is the CLV, or Customer Lifetime Value. It shows the total revenue that a company can expect to have from a specific customer. It is calculated by multiplying the average purchase value by the number of times that your customers are likely to spend (purchase frequency).
The relationship with your consumers can be long-term or short, depending on the type of market in which you operate and the niche of customers you seek and have in your base.
The CLV is the estimated amount that a consumer will spend buying from your company for as long as he remains a customer of it. This number, alongwith the CAC, helps you maintain profitability.
4. Percentage of marketing-originated customers
Digital marketing campaigns are vital for those who want to stay ahead of the competition. But how do you know if your marketing campaigns are actually working?
The percentage of customers gained from marketing efforts show how many new deals have been closed due to marketing campaigns, including by email.
To calculate this number, you must analyze all leads generated in a given period and determine what percentage of them came from marketing campaigns. This will allow you to understand the success of your efforts and redefine how you allocate resources for optimum results.
5. NPS (Net Promoter Score)
The Net Promoter Score allows measuring customer satisfaction with the company. Instead of lengthy surveys, the calculation of NPS requires you to ask the consumer a single question: how likely is he to recommend your product or brand to a friend or colleague?
Responses can be recorded on a scale of 0 to 10, with 10 being "very likely" and 0 being "not very likely".
The results show a clear distinction between your loyal customers or brand advocates, and those with whom you still need to put in some work.
6. Customer retention rate
Just as you need to acquire customers, you need to know how to keep them. The customer retention rate measures how much your company is spending on marketing efforts to retain existing customers.
On average, 80% of a company's future revenue comes from just 20% of its existing customers. Understanding what your retention cost is, is essential in order not to spend on those who are not bringing results.
You can calculate the cost of customer retention by following these steps:
• Define the period you want to calculate;
• Add all customer retention expenses. This includes the resources you invest in customer retention programs;
• Divide this total by the number of customers you have retained during the period.
You should always ensure that a customer’s retention cost is less than the average revenue an existing customer generates.
In addition to analyzing these metrics on your CRM software, you need to optimize digital marketing strategies, for your company to have an effective sales cycle. And the way to guarantee the success of any action is to ensure that it is optimized and targeted at real people.
Find out how email verification can help you with this process and enable you to kill the bounce!