Measuring Success: Key Metrics to Track CRM Impact on Business Growth

How do you think a business measures its success? Is it the revenue it earns monthly? Is it in the number of products it sells? What else?
Well, for most businesses, real success depends on how deep their relationship with their customer is. And why wouldn’t that be? Can you think of a business without customers? No, right! This is why understanding and improving those customer relationships is the key to success.
It takes time to build these relationships, and these can become a major reason for a business’s rise and downfall. To measure the depth of these relationships and ensure that they are nurtured, you need asales CRM.
A CRM offers powerful tools to help measure business growth and make every customer interaction work. A CRM doesn’t only store your customer data but the impact of CRM on sales is way beyond that.
So, let’s look at a few business key metrics you can measure using a CRM and get an idea of how well your business operations are doing.
1.Customer Acquisition Cost (CAC)
In simple terms, customer acquisition cost can be defined as the average cost that a business pays to acquire a new customer. It includes all the costs related to marketing, promotions, and advertising, plus every action that a business takes to get a new customer. As it is directly related to investments, it has a great impact on profitability. If the CAC is more than the average revenue generated from the customer, it can have a negative impact on profitability. CAC can be calculated by dividing the total costs of acquiring a customer (marketing, promotions, advertising, etc.) by the number of new customers acquired during the same period.
2.Customer Lifetime Value (CLV)
Customer Lifetime Value of CLV may be defined as the total value that a customer brings to a business over their entire relationship with the business. When you integrate CRM data with business metrics, you can calculate CLV accurately. CRM systems help improve CLV by letting businesses take advantage of personalized communication, upselling, and cross-selling opportunities. An increased CLV doesn’t only mean better revenue growth but also justifies every penny invested in customer retention strategies.
3.Customer Retention Rate
Customer retention rate holds as much importance as customer acquisition. After all, acquiring new customers is as important as it is to retain existing ones. If not, many customers are coming back to buy your services and products, it can have a negative impact on your growth efforts and profitability. CRM systems promote customer loyalty by letting businesses make personalized communications, targeted marketing campaigns, and timely follow-ups. It’s crucial for businesses to monitor customer retention rates and get an idea of the areas that they need to improve to boost customer engagement and satisfaction.
4.Customer Churn Rate
Customer churn rate may be defined as the percentage by which customers move away from a business and stop buying its products and services within a specific timeframe. If the churn rate is high, it clearly means there are many customers dissatisfied with the brand. On the contrary, a low churn rate means many satisfied customers.
It’s not just a measure but can have a negative impact on brand reputation, revenue, and overall business growth. The churn rate can be calculated as the number of customers at the start minus the number of customers at the end divided by the number of customers at the start. To reduce your churn rate, you must identify reasons why your customers are leaving your brand and what efforts you need to put in to address those pain points.
5.Lead Conversion Rate
The positive CRM impact on business can be measured using the lead conversion rate. For any CRM strategy to succeed, the goal is to convert leads into paying customers. By tracking the lead conversion rate, businesses can get an idea of how well their sales processes are doing and if there are any potential bottlenecks that need to be taken care of. CRM platforms help businesses with insights into lead behavior and enable their sales teams to prioritize prospects and tailor their approach to boost their conversion rates.
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6.Return on Investment (ROI)
All the CRM initiatives you take ultimately sum up to deliver a return on investment. To understand how fruitful their CRM strategy has proved to be, businesses can compare the costs of CRM implementation and operation with the financial profits that the business made.
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In Conclusion:
It’s crucial for businesses to get an idea of the CRM metrics and act upon them as per their need, regardless of their size. These business metrics can help you improve your strategies and business operations. It’s obvious that sales are the goal. However, understanding the journey using a sales CRM can be impactful.