Global CRM software revenue increased from $16B in 2011 to $23B in 2014.
A 31% increase in revenue for a single business is remarkable. When an entire industry vertical increases market share by a third, though, it qualifies as a mega-trend.
Sales and marketing professionals have always sought software advantages. But major innovations in the areas of cloud-computing, business intelligence, and mobility have converged to turn contemporary CRM software into an indispensable tool.
Why is CRM software so in-demand?
Business management software applications generally offer one of two benefits: the ability to do things faster or to do them smarter. CRM software offers both advantages.
CRM systems streamline sales activities with a single integrated environment for communicating with customers, managing orders, and providing service. More importantly, they provide a business intelligence platform where sales managers can optimize processes based on real data.
With the right KPIs, any business can transform an ad hoc sales management approach into a data-driven system of continuous sales improvement that would make previous generations of Harvard Business School alumni green with envy.
The following lists identify the KPIs and report views that any capable CRM software should support.
New leads are the lifeblood of any sales organization. It’s tough to imagine an effective sales management system that can’t quantify lead data. Tracking lead volume, identifying lead quality, and monitoring lead statuses are tasks that promote sales forecasting accuracy and lay the groundwork for improving sales processes.
Cost per lead is not NOT just a marketing KPI. In order for sales managers to adequately gauge success, it’s important to track not only sales revenue but sales related costs, including lead acquisition costs.
Leads are a perishable asset. In fact, they often have a remarkably short shelf life. In our own internal study on lead contact, we found that fast follow-up was a key success factor. When we called lead contacts immediately, we tripled the qualification rate versus waiting a day.
A lead isn’t worth much if it doesn’t represent a relevant revenue opportunity. Tracking lead qualification rates provides a standard metric for determining lead relevance. Qualification rates are also an important metric for gauging the effectiveness of early sales outreach processes and comparing performance between individuals and teams.
Tracking the success rate of outreach efforts such as calls, emails, and meeting invitations makes it possible to assess what which communication channels and messages appeal to lead contacts.
Sometimes a lack of sales results isn’t because sales personnel haven’t used effective tactics, but because they haven’t used them enough. Understanding the amount of activity required to hit desired sales enables managers to make informed decisions on issues such as staffing, performance evaluation, time management training, and lead acquisition investment. Integrating CRM systems with email and phone system software dramatically lessens the effort required to record outreach activity.
Few benchmarks in the sales cycle are as clear-cut as presenting a pricing proposal. Tracking quotes not only operates as a secondary metric for qualifying the relevance of individual lead sources, it serves as an important predictor of future sales results.
You didn’t think we’d forget to mention sales and revenue as a KPI did you? The importance of tracking sales and revenue numbers is obvious. But given its obvious importance, it begs the question: Why are sales and revenue numbers so often buried in the private spreadsheets of managers and salespeople? Transparency in sales and revenue reporting inspires competition and accountability, and allows individual sales people to understand how their personal contributions impact the group.
Understanding the close rates for leads, qualified prospects, and proposals is a fundamental step in sales forecasting. Additionally, monitoring close rates can help identify where training and other resources can be applied to increase overall revenue.
Effective sales forecasting requires estimates not only for “how much,” but “when.” Consulting historical information about sales cycle times can provide a counter-balance in cases where overly optimistic projections from sales personnel make accurate forecasting difficult.
Total customer acquisition costs capture the cost of originating the lead, but also the cost of all the activity related to pursuing the sale. Identifying total customer acquisition costs might seem prohibitively difficult. But for organizations who’ve enabled automated tracking of email and phone lead contact, coming up with workable total customer acquisition numbers can be as simple as establishing benchmark cost estimates for common lead management activities and allowing CRM software to sum these costs as the level of the individual lead.
A lead where the total customer acquisition costs exceed the sales revenue can still represent a net positive from a business development standpoint. It might sound counter-intuitive but it’s true because of one basic reason: Existing customers are far more likely to make future purchases than new ones. In fact, research has identified that the probability of selling to an existing customer is 60-70%, while the probability of selling to a new one is between 5-20%. Analyzing historical purchase information from existing customers can yield a more complete picture of the true value of a new customer by figuring in projections for future revenue.
Sales success is contextual and relative to previous performance. Being able to easily compare current periods to previous ones–or go further back to understand performance relative to seasonal trends–allows for the objective evaluation of sales results.
It’s important to be able to motivate salespeople through goal-setting. CRM software offers an ideal, centralized location for making short-term and long-term objectives clear and for tracking the attainment of these goals.
Who is doing well and who isn’t, is a fundamental question sales managers must continuously ask. Attribution based reporting starts at the level of the individual sales rep. But secondary dimensions allowing for attribution by department, business unit, location, or manager are equally important.
What counts as acceptable activity, costs, close rates, and revenue can vary depending on what is being sold. As such, it’s important that sales managers are able to easily monitor results by offering type. An inability to report on varying results depending on the product or service can easily lead to the misallocation of resources, a lack of targeted training, and a failure to provide adequate feedback to upper management on which offerings are driving company success.
There are more channels for lead origination today than ever before. Being able to isolate lead metrics based on the lead source offers benefits for both the marketing and the sales department. For marketers, it provides feedback on which lead sources are producing the best results. For sales, providing marketing with input on which lead sources are most productive allows for more efficient spending of marketing dollars enabling a more productive lead pool.
Interested in CRM software that provides each of the listed must-have KPIs and report views? We thought you might be.
Of course, our software matching service is always available free of cost. But we’ll also continue to compile a list of CRM software we’ve confirmed includes the functionality discussed in this article below.
The first entry to the list of CRM solutions offering full support for the 12 KPIs and 5 report views is ConvergeHub. While ConvergeHub is new to the market as of 2013, it has already been recognized via a number of industry awards.