CRM Metrics and Measuring Success

How To Track Success, or Failure, of Your Customer Relationship Management Initiative

Discussions of CRM metrics have been all over the board in the past. I'm not going to evaluate the different thought processes. The fact is that less than 20% of the enterprises out there have meaningful and ongoing tests to determine whether their CRM initiative has succeeded or failed; let alone to gather the insight they need to make necessary adjustments to their plan over time. Notice that I said enterprise, because I'm guessing that number is lower in the SMB market.

I've worked primarily in the middle-market. Mixed in there were a lot of divisions of huge companies that generally were acquired through a growth strategy and haven't yet been assimilated into the global enterprise CRM culture....if there is one! And as I've mentioned elsewhere, many of these organizations have no dedicated marketing group and certainly not one with a clear and unified message to broadcast.

A lot of the CRM metrics are going to come out of a marketing group because this is where ROI analytics relative to marketing dollars are going to be collected and monitored. There should be accountability here, which isn't going to happen if it's a part time job for an assistant in the sales department.

It's important to understand what sort of CRM metrics we are talking about here. We're talking about strategic measures of success that can be found in strategic areas. For instance, I am not talking about reducing the bounce rate on marketing e-mails. What I am talking about is more like:

• Customer Loyalty - How do you measure customer satisfaction now? In a customer relationship management system, this should be one of your primary measurements since it drives the results in so many other areas. Are you tracking repeat purchases, changes in product penetration, changes in transaction size or changes in cross-selling and up-selling?
• Customer Profitability - Here is another area that is an entire website in and of itself. Are you tracking changes in revenue per customer, changes in the lifetime value of a customer, and costs associated with serving your customers?
• Market Share - Do you measure your company's performance in the market against your competitors?
• CRM Financial Analysis - Are you regularly measuring total cost of ownership, return on investment or any other financial measures of investment success?
• The Bottom Line - Do you track changes, quarter by quarter, and year by year to revenues and profit margins relative to CRM strategies and tactics you employ over time?
• How Much You Spend - Are you saving money based on your new approach to using customer information to reduce marketing costs, control your inventory better and generally make your operation more efficient?

All of these CRM metrics must be looked at in whole to get a good picture of how your CRM strategy is improving your business. Obviously, someone has to take ownership of this at the top and accountabilities handed down to various groups and individuals for tracking and providing the information.

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