Measurement is at the heart of any successful business process. This is doubly true of your CRM system. If you can’t measure what’s happening with your CRM efforts, you can’t know where you are and it’s virtually impossible to steer the process.
That, in turn, implies that you have a set of metrics you can use to measure your CRM process objectively. Selecting those metrics is crucial to conducting a successful CRM system.
A metric is simply something you use to evaluate a process. There can be dozens or hundreds of metrics you can apply to your CRM effort. Some of those are relevant and useful. Some are not. One of your jobs is to select the right metrics.
A good metric is obviously relevant, objective and easy to calculate, and accurately reflects the process. Sales is an example of a good metric. How you feel your CRM efforts are doing is an example of a much less useful metric.
In general, you’re better off limiting yourself to a few metrics rather than getting hung up on a bunch of them. It’s true that no one metric is likely to accurately measure your business, but a multiplicity of metrics is more likely to be time-consuming and confusing than helpful.
Objectivity is important in choosing your metric, as is ease of communication and understanding. In addition to monitoring what is going on with your business, a good metric is a communication tool that is easy for others to understand and buy into.
Here are examples of metrics, some good, some merely popular:
Total Sales Calls Made
One of the simplest metrics of sales performance is how many sales calls your sales staff made. It’s obvious, easy to calculate and, unfortunately, not very useful.
The problem with total sales calls is that it is a measure of activity, not performance. Sales calls alone don’t get you closer to your goals. It simply establishes that your people aren’t sleeping on the job.
Sales Closing Rate
Is almost a simple metric, but it is much more useful. It measures something useful (sales) against effort (sales calls made) and provides a measure of efficiency.
Length of Sales Cycle
Is another useful metric. This contains more predictive ability since the length of cycle lets you get a better handle on your overall sales performance in the future.
By examining the length of the sales cycle you can create accurate sales forecasts, project revenue, measure sales performance, and identify areas for improvement.
Number of Prospects
This is the mouth of the sales funnel and it is another good indicator of business activity.
Number in Each Stage of the Sales Funnel
It’s important to compare the number of prospects with the number who stay with the sales process. In the nature of things the funnel is going to narrow until the number of sales comes out the bottom. The question is how quickly does it narrow and are there any sudden bottlenecks in the course of the process through the funnel.
This is an important measure of your overall sales process and helps you spot problems.
Setting and using metrics doesn’t have to be complicated, but it does have to be done. In general, the larger the average sale and the longer the sales cycle, the more important the metrics are.
About the Author
Rick Cook has been involved with computers since the days of punched cards and magnetic drum memories. He has written hundreds of articles on computers and related technology as well as a series of fantasy novels full of bad computer jokes.
Source: SANS ISC SecNewsFeed @ February 23, 2017 at 12:15PM