Does your business use a customer relationship management (CRM) platform to help you keep track of customers and marketing campaigns? If so, you probably know that CRMs can do a variety of things, from email automation to lead management.
One function of CRMs is their ability to perform customer analytics. Not every CRM prioritizes this feature, but many do. And if your CRM can help you perform analytics, you should definitely take advantage of it. CRM analytics is an excellent way to boost your company’s performance.
But what exactly is CRM analytics? Furthermore, why do you need them, and which customer metrics should you track? We’ll answer all three of those questions below, so just keep reading to learn more.
CRM analytics is a process where you use a CRM platform to analyze customer metrics based on the data the platform gathers.
The core function of CRMs is to gather data about your leads and customers. The purpose of gathering this data is to let you learn from it, so you obviously want to spend time performing CRM analysis. Fortunately, many CRM tools can automatically compile customer data into reports so you don’t have to do all the work yourself.
By looking at specific trends and types of data, you can learn about your customer base.
The reason for performing CRM analytics is that, in the long run, it can help you earn far more revenue with the help of the CRM metrics you track. How does that work? Well, analyzing your customers lets you learn more about them, such as which demographics most commonly buy from you and what they want from your products or services.
By learning that information, you can upgrade your products and services to better appeal to your audience. Then you can create more compelling marketing campaigns that address user interests and pain points to encourage conversions. Ultimately, that will drive more sales and earn you more revenue.
For that reason, you definitely don’t want to skimp on CRM analytics. Take the time to analyze the data you gather and learn as much as you can about your audience.
We’ve established the importance of performing CRM analytics, as well as what it is. However, customer relationship management analytics involves looking at specific metrics. So, which CRM metrics should you track?
There are countless metrics you could track, and it’s really up to you which ones you prioritize. That said, there are definitely a handful you should make sure to include. Here are five customer metrics to keep an eye on!
Net promoter score (NPS) is one of the CRM metrics that measures how satisfied your customers are with your company. You can measure NPS by sending out forms where users can rate their satisfaction on a scale from 1 to 10.
On this scale, ratings of 6 or under indicate dissatisfaction. A 7 or 8 represents a neutral customer, while 9s and 10s count as promoters, or fully satisfied customers who are likely to promote your business.
By looking at your overall NPS, you can see how well you satisfy your customers. That’s crucial because if you don’t satisfy them, that’s something you’ll want to know so you can improve. You can figure out why customers are dissatisfied by simply including an additional question about it in the form.
Customer churn refers to how many customers you lose within a given period. Every business loses customers from time to time. The question is, how many are you losing? Does it indicate a particular problem that your business can solve to retain more customers?
Customer churn is calculated as a percentage. To find it, just divide the total number of customers by the number that left within a given period, and then multiply by 100 to get the percentage that left. If the percentage is significantly high, it’s time to start asking what drove those customers away.
Did most of those customers leave after you made a particular change to your company? Did most of them express a similar reason for leaving? If so, you can fix that issue to prevent even more customers from leaving in the future.
Rate of renewal is a customer metric that measures how many of your customers continue to buy from you over time. This metric is primarily helpful if you offer a subscription-based product or service, but in theory, you could use it for anything that customers buy repeatedly and at consistent intervals.
Like customer churn, rate of renewal is calculated as a percentage. So, let’s say you offer software that requires a monthly subscription. To find the rate of renewal for a given month, you would divide your total number of customers from the previous month by the number that renewed their subscription this month, and then multiply by 100.
A low rate of renewal means there are a lot of customers who are using your product or service, but then choosing to stop using it after a certain length of time. That tells you there may be something about your product or service that’s driving users away, and you should work to figure out what that something is.
If you offer something that customers will want to buy more than once, you want to put in the work to retain those customers. It’s hard work to earn new customers, so once you do earn them, you want to keep them. But that still requires a marketing effort, and marketing costs money.
That’s why you can benefit from tracking customer retention cost, which is simply the amount that it costs to retain the average customer. To calculate this metric, divide your total customer retention expenses for a given time period by the number of customers you successfully retained during that period.
You may find that you’re spending vast amounts of money just to retain a single customer. If that’s the case, you may want to find ways to improve your marketing so that it either takes less effort to retain customers, or you can retain more of them for the same cost.
With retention tracking, you can measure your customer retention rate by counting the number of customers who remain customers over a given period.
To find your customer retention rate, use the following formula:
(Total number of customers at the end of a period – New customers acquired) / Customers at the start of the period = retention rate
When you plug in your numbers, you’ll discover your customer retention rate.
By tracking this metric, you can understand whether you maintained or lost customers. It’s a great metric to monitor to get an overview of your retention rate.
Finally, your close rate is simply a measure of how often you convert leads into sales. To find your close rate, you can divide all possible sales opportunities in a given time period by all the ones that resulted in sales. Then multiply by 100, and voilà—you have your close rate.
This metric is important for a similar reason as other CRM metrics on this list—if you have a low close rate, you need to find ways to upgrade your marketing so you can drive more sales and earn more revenue. Otherwise, you’re pouring money into marketing campaigns without getting much back.
The customer acquisition cost (CAC) measures the average cost of acquiring a new customer. Divide your total sales and marketing expenses by the number of new customers acquired. Knowing your CAC helps you manage your budget and improve efficiency.
Customer lifetime value (CLV) estimates the total revenue a customer will generate over their relationship with your business. Compare CLV with CAC to ensure your acquisition costs are justified by the long-term value of your customers. This metric is crucial for evaluating the sustainability of your business model.
Of course, these are just a few of the CRM metrics you’ll want to track. You’ll probably identify other KPIs as well. But how can you figure out which CRM KPIs are important for your business?
The best way to identify important CRM metrics is to examine your business goals. Then think about which metrics are most effective for measuring those goals. Make sure the metrics you choose are specific, measurable, and actionable.
Once you’ve identified the CRM metrics you want to prioritize, the next step is to begin actually tracking those metrics. To do that, you’ll need to set up tracking systems that can gather the right data.
There are different ways you can do that. One way is to use other tools—Google Analytics, for example—to gather your data and then integrate those tools with your CRM to import it all into one location. Another method is to track customer interactions through your customer service team.
In particular, take the time to gather data from customer surveys and other feedback channels. Any insights your customers give you about their interests or preferences are incredibly valuable.
When you track and gather your customer data, make sure you enact some data cleaning and governance practices. You need to create clear guidelines on how your team should handle data—how to clean out any errors in your datasets, how to migrate data, and who should perform which tasks. That will help things run far more smoothly.
Nutshell Pro automates the tasks that slow you down.
Once you’ve gathered your data, it’s time to start analyzing it. The best way to do that is to generate reports, which can lay out your customer data in an easily comprehensible way. By analyzing these reports, you can learn about the effectiveness of your marketing and sales campaigns.
With the right CRM, this shouldn’t be a problem. A good CRM can generate reports that are easy to read and understand. In the case of a CRM like Nutshell, you can access a wide range of reports and generate various customized sales reports.
You can then deliver those reports to relevant stakeholders within your company who may be interested in seeing the performance of your marketing and sales efforts. Different stakeholders will have different priorities, so it can be helpful to create a customized report for each one.
You can also make the reporting process much easier with automation. Most CRMs can automatically generate reports on a regular schedule of your choosing, so you can always stay in the loop on your CRM performance.
Using your CRM KPIs, one of the things you can track is customer engagement. It’s important to be aware of how successfully you’re engaging your customers—low engagement indicates a need for marketing and sales re-optimization. Customer data can help you track this information.
You can check in on different touchpoints to monitor customer interactions, including:
The above sources of interaction, as well as the results of customer surveys, can help you see how engaged and satisfied your customers are overall. In particular, you can hone in on CRM metrics like net promoter score (NPS) and customer effort score (CES).
By observing where customers are and aren’t successfully engaged, you can figure out which areas are most in need of improvement.
CRM analytics is vital to your company’s success. But you can’t perform CRM analytics without first having a CRM. Moreover, you should aim to get a CRM that prioritizes analytics. That’s why Nutshell is the perfect platform for you.
Nutshell offers all the standard CRM features, like sales automation and customer data organization, but it also has an entire tab dedicated solely to reports. Not only can you view basic sales reports, you can also create customized reports for just about any metric of your choosing. That makes Nutshell perfect for CRM analytics.
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