Customer relationship management (CRM) is all about analyzing customer interactions with your business. This data is valuable to enterprises of any size. The insights that can be harnessed from CRM analytics reports include how your customer service is received, how accurate your consumer data is, your core demographic’s habits and what is the best route to convert promising leads into sales.
But what metrics are most important, and how can you get the most from CRM analytics? Forbes Advisor breaks down some of the best ways to leverage this information to grow your business.
Benefits of CRM Analytics
There are many options on the market, but all CRM software accomplishes one core task: capturing information about your customers. By harnessing this mountain of data, you can make informed decisions that lead to actionable steps to grow your business. This information can be used in a number of ways:
- Determine conversion rate of clientele. Your CRM report should indicate the percentage of leads you’ve been able to convert into sales. Moving forward, this data will also help you to predict revenues in the future, which in turn helps to facilitate planning for your company.
- Defining high opportunities. In any industry segment, identifying high-ticket opportunities can elevate your business’s operations and income—as well as helping your sales team pivot their focus onto unidentified opportunities.
- Better customer service evaluations. In CRM analytic reports, you will be able to take a deep dive into what your customers think about your sales team. These results will help correct any issues and areas that could be improved upon.
- Accurate consumer data. When you’re circulating marketing material for your business, you need to know that your target demographic is correct. CRM ensures that you reach the right individuals and have crafted your messaging accurately.
- Understanding the pipeline. Having a complete picture of your customer’s journey or a pipeline is important. A valuable tool is knowing what stage needs to be worked on and how it can be improved.
- Monitoring staff performance. Being able to pinpoint which members on your team need help can assist with lifting the performance of the entire company. With CRM reports, you’ll be able to assist these individuals in achieving their best.
Now that we have a well-rounded understanding of the benefits of CRM analytics, let’s focus on the metrics you need to be monitoring.
Common CRM Metrics
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Understanding which metrics are important is key to implementing a solid business plan. This will help you make accurate decisions rather than rely on intuitive instincts, which can be dramatically different from the facts.
Your vital CRM metrics need to monitor marketing, sales and customer service, as mentioned above. Some of the specific numbers to follow are:
Customer Turnover
Being able to review your clientele turnover or customer churn is important to gauge success. While reviewing how many customers are left can be unpleasant, it allows you to pivot your messaging and offering to stem the tide of customers switching away.
This customer churn can be calculated monthly, quarterly and yearly. As the world is moving at a lightning pace, you’ll want to keep track of how many clients you lose and how many you gain.
Net Promoter Score (NPS)
The net promoter score (NPS) measures your customers’ satisfaction with your business’s services and product offering. Normally, this data is gathered via the usual customer research question of how likely you’d be to recommend the company to colleagues and friends.
These questions are rated on a one to ten basis. Your consumer rating scale will determine the NPS.
Customer Effort Score (CES)
This metric determines how much effort your customer had to put in to gain answers and lodge queries. You want all your customers to experience an effortless transaction. The lower the satisfaction, the more effort your client had to make. This score can be improved via multiple methods.
When reviewing your CRM analytics, it’s best to review the CES with your NPS score as it will guarantee a better, more rounded picture.
Rate of Renewal
This metric is vitally important for services reliant on subscription-based companies (think software packages). The rate of renewal metric measures how many clients re-sign up to the service. It is a fairly straightforward measurement, but vital to help you learn if you have long-standing customers or short-term users. This data will pivot your strategy dramatically.
Retention Cost
Retaining clients is one of the most important metrics of CRM. In fact, the Gartner Group estimates that almost 80% of a company’s revenue comes from just 20% of its existing customers. This indicates the importance of nurturing customer relations and how converting new clients isn’t always the best strategy.
Calculating customer retention is vitally important, and to work it out, you need to bear in mind the following:
- Time. You need to determine the time period for your calculation. It can be divided up into monthly, quarterly or yearly.
- Expenses. While retaining clients is normally the solid strategic route, it’s important to calculate what this retention plan costs for the company. Make sure to add in the new tools developed and material as well as timings.
- Number of those retained. It’s always important to review how effective your strategic rollout is. This is determined by measuring how many clients you’ve been able to retain.
- Average cost. The final aspect to stress test, or determine, is the average cost of retaining a client for the company. It’s important to ensure that retaining clients doesn’t exceed the average revenue.
Expansion Revenue
While it is cheaper to retain a client, no company should rest on its laurels. This metric is closely related to renewal rates but refers to how much more capital your existing clients are going to spend with your company.
You’ll need to divide your new income from promoting sales and cross-selling by your revenue during the month to work out this expansion revenue.
First Contact Resolution Rate (FCR)
Any company’s client services department should strive to resolve issues as quickly and efficiently as possible. No customer should be required to phone or message multiple times to find a solution, so make sure that your customer service team is going above and beyond. The ideal success rate is 100%, but mistakes happen. Rating above 90% is good, while below 50% leaves significant room for improvement.
What CRM Analytics To Track
Once you’ve gathered some of the metrics above, you’ll need to analyze that data before taking any action. Start by breaking down the analysis into two stages: pre- and post-sales. A solid marketing CRM will help you with this, as it will likely have integrated reporting features for your insights.
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An example of a sales reporting dashboard, from Zoho CRM
Pre-Sale CRM Analytics
Building new customer relationships is always important, and that relationship can be improved by ensuring that each step is being laid out correctly. To entice new clientele to support your business, analyze the following:
- New leads. Any sales team will spend some time sourcing out new potential clients. This can be done via multiple channels, such as phone calls, sending new proposals, etc. Make sure to follow the conversion rate.
- Prospects. Finding a new pool of prospects is important and this is why sales teams are always on the lookout. Following how successfully these prospects are identified is an important way to measure how successful your sales team is.
- Website and additional engagement. Most CRM software packages will include the functionality to monitor visitors to your website (as well as social media) and how the sales team interacted with potential clients.
Depending on what you’re looking to achieve strategically, the metrics you want to analyze may vary. These are great options to get started but your CRM of choice likely offers even more options.
Post-Sale CRM Analytics
As we stated earlier, retaining clients is an important move for most companies. This, in turn, means it is important to monitor your clients’ experience and ensure they’ll return. Consider the following metrics to build customer loyalty:
- Problem tracking. It’s always important to note any issues people experience when purchasing from or dealing with your company. This tracking process should also help address issues and streamline elements moving forward.
- Additional sales. You should always check if your clients have made additional purchases. Also, investigating why they made these additional purchases can help increase sales in the future.
- Spending patterns. If clients are locked into a subscription-based service, it’s worth your while to investigate the reasons for their consistent loyalty as well as what would motivate them to spend more.
Frequently Asked Questions
How does CRM work?
CRM solutions work by tracking interactions via various communication channels at your company. This can be done via software or integrated systems, such as your point-of-sale or customer support software.
What types of CRM systems are there?
There are three primary types of CRM: collaborative, operational and analytical. Many CRM systems can function as multiple types by adjusting how you set up the platform settings.
Collaborative CRM helps teams across a company share data in a centralized platform, operational CRM assists teams by automating repetitive tasks, and analytical CRM focuses on aggregating data to help identify behavioral patterns that lead to improved sales or marketing results.
What is the best CRM platform?
Every business has its own unique needs, but in Forbes Advisor’s analysis of the best CRM software we found that Zoho CRM, monday.com and Zendesk Sell are excellent choices. Zoho even has a free CRM plan, so you can test the waters without having to commit to an expensive subscription, and topped our list of the best marketing CRMs as well.
Does CRM require a large IT investment?
No. There are plenty of cloud CRM solutions that information technology (IT) novices can employ. You don’t have to make a large investment in physical IT infrastructure or hire IT staff to manage your CRM. Many CRM solutions are available as software as a service (SaaS), which means that you only pay for what you use and can stop using it at any time.