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SELL THE DIFFERENCE: Establishing your Unique Solution Value

Forrester - Which CRM Metrics Really Matter?

Posted by Bob Apollo on Tue 19-Jul-2011

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Bill Band of Forrester Research has just published the results of his latest study into “The Right CRM Metrics for Your Organisation”. It’s an issue that I see many organisations struggling with. Just because you can measure something doesn’t mean that you should measure it - or that the results will be meaningful. It turns out that why you measure something is just as important as how you measure it...

No shortage of things to measure

There’s no shortage of things you could choose to measure in your CRM system. But the real challenge lies in identifying what you need to measure - and as Bill Bland points out, “Metrics are only relevant in relation to a strategy that you are trying to execute.”

So - no clear strategy = meaningless metrics. Measuring activity - whether it be the number of calls made, the number of responses generated, number of meetings held or the number of new accounts added is of little value by itself.

Tedious administration - or valuable enablement?

Metrics and measures only make sense when they are looked at through the lens of an organisation’s key strategies and objectives. Absent this understanding we can easily  find ourselves - like Oscar Wilde’s cynic - knowing the price of everything but the value of nothing.

Just as damaging, your user adoption rates are unlikely to be impressive if your sales people see the information they are being asked to capture and record as just another form of meaningless administration requirement, rather than as a true sales enablement tool.

Start with the end in mind

When you take all the soft costs into account, the investment required to implement a successful CRM system is hardly trivial. So I suggest you might want to start by being clear about why you are investing so much money, time and resource in a CRM system in the first place.

What benefits were you hoping to achieve? How will you know if or when you have achieved them? What leading indicators could show whether you are on track? And how will you determine whether your return on investment has proved worthwhile?

You might, for example, seek to justify your investment in terms of increasing average deal values, of shortening sales cycles, reducing the cost of customer acquisition or improving sales win rates. But unless you start with the end clearly in mind, you’re likely to end up somewhere else. So be sure that you are clear about your goals.

The importance of leading indicators

Once you’ve established your overall goals, you then need to identify what would need to change in order to accomplish them. Improvements in activity levels, effectiveness and efficiency can all play a part. But you’ll need different metrics to measure these different forms of change.

Paying close attention to your key leading indicators is essential to determining if you’re on track to achieve your longer term goals - and to identifying if you need to take corrective action while you still have the time to influence events.

Facilitate the buying process

One of the major reasons CRM systems fail is that they are tracking the wrong things. It’s all too easy to focus on easily measurable sales activity. But these often bear no relationship whatsoever to determining if or when the prospect is likely to buy.

One of the most important decisions you can make when implementing your CRM system is to design it around the key phases and milestones in your prospect’s typical buying decision process - and to insist that your sales people look for the necessary evidence of buying behaviour before promoting an opportunity from one stage to the next in the sales pipeline.

Align with corporate initiatives

Finally, your CRM measures and metrics need to have some clear causal relationship to the achievement of your current corporate strategies and initiatives. You’ll want to review and adjust your metrics, dashboards and reporting packs accordingly.

Checklist

I’d like to suggest you use the next minute or two to run through the following checklist:

  • What are your goals for your CRM implementation - and how can you tell if you’re on track?
  • Do your sales people see your CRM system as tedious administration or valuable sales enablement?
  • What are your key leading indicators - and what are you doing to ensure they are on track?
  • Are your pipeline stages and milestones based around your prospect’s buying decision process?
  • What’s the causal connection between your CRM metrics and your key corporate initiatives?

One last suggestion

CRM systems are far more effective if they are designed around facilitating your prospect’s buying decision process. You might like to read our 6-step guide to designing and implementing truly customer-centric sales and marketing processes - it reflects the lessons learned from some of today’s most successful B2B focused sales and marketing organisations. You can download a copy here.

 

Topics: Forrester, CRM, Revenue Management, Complex Sales