In doing some recent pro-bono consulting work for a technology company, I reviewed their CRM product. Overall, it was quite comprehensive in tracking leads, orders, customers, invoices and the like. But the one thing it was missing was Key Performance Indicators (KPIs) at the Customer and Associate level.
Aside from having a system to track leads, customers and associates plus the processes leading to acquisition, it’s extremely important to understand how the business is performing at key intervals. CRM Platforms must incorporate customer and associate based Key Performance Indicators (KPIs) to help distinguish between good and bad performing assets.
Here are some basic examples of the KPIs required:
- Lifetime Value (LTV) – 3 Year Customer Spend
- Average Dollar Sale (ADS) – Total Sales/Total Customers
- Transactions Per Customer (TPC) – Total Transactions/Total Customers
- Units Per Customer (UPC) – Total Units/Total Customers
- Units Per Transaction (UPT) – Total Units/Total Transactions
- Sales Per Associate – Total Sales/# of Sales Associates
- Average Age (customer) – Average number of years customer is on file
- Average Tenure (associate) – Average number of years associate is on file
- Cost Per Acquisition (CPA) – Total Advertising Costs/Total Acquired Customers
- Return On Advertising Spend (ROAS) – Total Sales/Total Advertising Spend
- % New Customers – Total First Transaction Customers/Total Customers For Period
- % Existing Customers – Total 2+ Transaction Customers/Total Customers For Period
- % Lapsed Customers – Total Customers on File With No Transaction/Total Customers For Period
- # Of Prospects – Total New To File Members With No Transaction
All of the above can be broken down at the category level and used to separate customers and sales associates into Good, Better and Best buckets. Metrics can also be developed based on whatever widget categories are being sold. These figures will help management understand what is driving performance and craft a strategy around business improvement.
