In a report titled “Define The Right Metrics for Tracking CRM Success,” Forrester Research Inc. asks a fundamental question: “what is the goal of your CRM initiative?” Options include increasing revenue and cutting customer service costs.

Once a business has a firm grip on its CRM purpose, it can apply five key steps outlined in the report to successfully implement and track the success of a business’s use of CRM, or customer relationship management, software. CRM technology enables companies to track and manage multiple aspects of customer relationships, including sales, customer service and marketing.

The first two steps to ensuring a successful CRM initiative, the report says, are to ensure employees use the technology and to streamline business processes. Next, company leaders need to establish executive sponsorships, practice sound data management, and, finally, define the right objectives and measures for meeting and measuring success.

On the final point, the report’s author, Kate Leggett, vice president and principal analyst for Forrester, stresses the importance of a company being very clear on its CRM goals. Such technology can be used to increase revenue, boost average order size, decrease acquisition costs, improve retention and decrease response times: Each company must define what is its primary goal, Leggett writes.

The report lays out five steps that can help a company determine how to best use CRM systems.

  • Companies should start by defining and quantifying business goals, to determine how a CRM initiative will increase revenue or decrease the cost of serving customers. The company should develop a method for estimating the size of an expected benefit. For example, if a company’s goal is to increase revenue by adding profitable new customers, the benefit calculation should be the number of new customers multiplied by the yearly value of a customer, according to the report.
  • Formulate CRM strategies and tactics that will achieve the goals defined in the previous step, and identify tactics for customer-facing functions such as marketing, sales and service. If the goal is to reduce the cost of sales, then the CRM tactics could be to increase sales per rep, shorten the sales cycle or improve sales closing rates.
  • Establish appropriate operational measures such as number of cases handled per day by the customer service staff. Before starting a CRM initiative, it’s important to establish a baseline of performance and define the improvement that the company wants to achieve.
  • Link goals, strategies and metrics for CRM. Make sure business goals, CRM tactics and success metrics are aligned across the company. If a software company’s business goal is to improve revenue from new sources by 10%, the strategy might be to increase average deal size by selling more systems instead of individual products. The report recommends that all CRM goals should have metrics that can be tied back to specific goals and strategy.
  • Establish employee usage and participation metrics. A business that just focuses on customer data during its CRM initiative is missing a vital source of information—its own employees. Workers won’t use a system that is inefficient, so keeping tabs on employee satisfaction with CRM software provides first-hand knowledge of the technology’s value.


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