CRMs promise to change the way companies do sales with sophisticated lead tracking, individualized accounts for each salesperson, and account management tools. Costing anywhere from a couple hundred to a couple thousand dollars a month, sales departments globally are dedicating giant chunks of their budgets to CRMs. But, are they making the most out of their monthly investment?
Simply purchasing a product does not mean it will instantly change your business. Similar to that expensive treadmill turned clothing rack, in order for an expensive tool to do it’s job, someone needs to put in the effort to make it work.
Most CRMs require time to set up. This includes importing all existing leads, integrating with existing web tools and training your sales team. Depending on a team’s needs, CRM setup can take several weeks or months, making it not only a big financial investment, but also a significant time investment.
At first, the CRM of your choosing will prove it’s worth by dramatically impacting the way your sales team communicates with leads, prospects and existing clients. However, if you’re only utilizing the advanced communication and notification features of your CRM, you’re only scratching the surface of your new tool’s capabilities.
Data is, by far, one of the most important things you can gain from the time and money spent installing a CRM tool. By tracking the sales metrics that matter, you gain valuable insight into the overall performance of your team and the ability to monitor your sales goals.
To make the most of your CRM investment, track these sales metrics:
Sales Lead Close Rate
(Successful Sales / # of Leads (x 100) = Sales Lead Close Rate)
Sales Lead Close Rate is the amount of sales that are closed relative to the amount of qualified leads that come in. For example, if you had 100 leads and closed 20 sales, that means your close rate is 20%.
Data collected by your CRM allows you to get granular with your Sales Leads Close Rate. You can dig deep, filtering by time period, geographic area and individual sales rep.
Whether or not a particular close rate is good, or bad, depends on the type of company, the length of their sales cycle, and what type of product or service they sell. However, there is one thing that is universally considered to be a good sign when discussing close rate, and that’s having it steadily increase over a period of time.
A steadily increasing Sales Lead Close Rate is indicative of many things. Generally, it means that a company is consistently getting better at selling its product or service. On a regional or individual level, an increasing close rate can mean that a company is gaining success in a particular area or that a particular sales rep is getting better at selling.
Regularly monitoring Sales Lead Close Rate gives sales leaders the power to quickly identify problems in their sales funnel and recognize when particular initiatives are succeeding.
Customer Retention Rate (CRR)
((# of Customers at the End of a Period - # of New Customers/# of Customers at Start of the Period) x 100)
Customer Retention Rate or CRR is the opposite of churn. It tells you how many of your customers are sticking with your product or service at a given time. Before one can accurately determine CRR, the time period wherein the calculation will occur must first be identified. Month, quarter, or year, it doesn’t really matter as long as it is consistent within the confines of the calculation.
For example, if you had 100 customers at the end of Q1, 10 new customers, and 105 customers at the start of Q1, your CRR would be 85%.
Using CRM data to track CRR gives valuable insight into a company’s account management strategy. A high CRR generally indicates that a company’s product or service is of high quality and, that they value good customer service.
Companies should aim to have a CRR rate of 85% or higher. Anything lower than that is indicative of a bigger problem. Perhaps sales reps are targeting the wrong customer? Or your company’s product isn’t performing the way a client expected it to? For every customer a company loses, they have to acquire a new one to stay in business, which is more expensive down the line when you consider Cost Per Customer Acquisition. Luckily for CRM users, this metric can be consistently monitored with CRM data analysis.
Length of Sales Cycle
(Average Time in Days between opportunity created date and closed date for all closed opportunities)
The sales cycle is the defined process by which a company goes to sell a product or service to a customer. All processes and steps involved in closing a sale are included in a sales cycle such as ‘prospecting’, ‘need identification’ and ‘manage objections’. The length of a sales cycle depends on what type of product or service a company sells, but generally it is defined as the time between an opportunity creation date and an opportunity closed date.
Knowing the length of their sales cycle enables leaders to make meaningful predictions about the status of their sales goals. It helps managers structure the process by which they train new sales hires and, monitor the work of their seasoned team members.
Both long and short sales cycles have their benefits. A short sales cycle allows for more sales closed in a shorter time whereas longer sales cycle allows sales reps to build a meaningful relationship with prospects. Companies can take steps to shorten or elongate their sales cycle, however the first step is to identify their average. Luckily for CRM users, they already have the data to make this calculation.
Other metrics that can be tracked with CRM data include ‘Lifetime Customer Value’, ‘Marketing Campaign ROI’, and ‘Sales Calls’. Sales leaders who use Salesforce, HubSpot, Infusionsoft, Zoho CRM, Pipedrive or Insightly can easily chart these metrics with Slemma, a web-based data analysis tool.
Slemma’s dozens of integrations makes it easy to create a meaningful data dashboard in minutes. Simple, yet powerful, charts and reports can be shared to team members and clients alike. By using Slemma, sales managers can be sure they’re making the most out of their CRM investment.
To sign up for Slemma’s 14-day free trial, click here.