Key metrics that can be used to measure the ROI of a CRM system
Many businesses invest in CRM systems to manage customer data, track leads, automate sales processes and customer service functions. However, investing in a CRM system can be expensive, and businesses need to justify the expense by measuring the return on investment (ROI).
This article will discuss various metrics that are closely linked to the return on investment a company can achieve from its CRM system. Additionally, we'll examine which CRM features can further enhance the ROI.
Lead Conversion Ratio: Probably the most important metric to measure the success of a CRM investment is an increase in lead conversion rates. In some industries, even a 1% increase can have a huge impact on revenues. To clarify, a CRM cannot guarantee sales, but it can help sales teams improve the “first connect rate” and nurture leads so even cold leads can be converted over time. Some features that help in improving the speed to connect are:
FCR Ratio: Another important metric to track in a pre- and post-CRM environment is the FCR (first call resolution) ratio. In a B2B environment like SAAS, where FCR might not be relevant, improvement in customer service or customer engagement is an important metric to track. A CRM with its customer service module not only improves response times but also improves customer satisfaction. This can have a direct impact on repeat purchases, renewals, and overall CLV. CRM features that can help in this regard include:
Improvement in Lead Value: A CRM system that is intelligently designed can effectively organize all databases, which includes existing customer information as well as new leads. This helps to segment customers more accurately and offer them personalized information and services, including discount offers, and the introduction of new services to customers. Additionally, the impact of improved customer service has a huge impact on cross-sell and up-sell, as detailed in the point above. CRM features that can help in this regard include:
Track Marketing Effectiveness: Marketing is the primary channel to generate leads. In the digital world, organizations use multiple channels to generate leads. A CRM system with its marketing automation capabilities cannot only launch campaigns but also track their effectiveness, allowing organizations to optimize marketing costs. CRM features that can help in this regard include:
As a CRM consulting firm working in the industry for over a decade, we know that CRM implementations often fail. As technology becomes more expensive, reinvesting is a major challenge. As part of our CRM consulting services, our job is to define these metrics and ensure that CRM gives us the data to track these metrics and becomes successful in its truest sense.