Now that you understand the metrics you need to calculate the ROI of CRM software, it’s time to show you the CRM ROI formula.
CRM ROI calculation takes time and effort, which deters some business owners from determining this data.
However, one of the best things I did to ensure my company’s CRM was helping my business processes and not hurting them was calculating the return on investment.
NPS: Net Promoter Score
You must use the NPS survey to determine the ROI of your CRM investment.
This survey is an objective measurement, showing you how your existing customers view you.
The NPS survey calculates customer satisfaction based on how willing your customers are to recommend your company to their friends, family, and others.
According to the data, NPS leaders usually experience two times faster growth than their competitors.
Cost Per Lead
The cost per lead metric shows how much your company spends on recruiting, marketing campaigns, etc., compared to the leads you receive.
Businesses have to spend money to make money; that’s non-negotiable.
However, your marketing team shouldn’t be spending more money on leads than the sales you acquire.
CRM technology helps balance this metric, ensuring you don’t overspend when finding leads.
Revenue Per Lead
Revenue per lead is a metric to determine if you want to improve CRM ROI.
Revenue per lead is calculated by taking the total revenue generated by leads and dividing it by the number of sales-qualified leads.
When I used CRMs, I completed this calculation every quarter, although some businesses do it annually.
If your CRM solution needs to improve your revenue per lead, it’s time to identify weak spots in your business processes.
Time to Recoup Customer Acquisition Cost
The time to recoup customer acquisition cost, also called the customer break-even point, measures how long it takes your business to earn back the money it spent to acquire customers.
This metric is integral to the CRM ROI formula because it shows how efficiently you and your team spend money to attract new customers.
Additionally, it shows your business’s ability to sustain its current acquisition strategies in the long run.
Marketing Campaign Effectiveness
After CRM implementation, it’s crucial to measure the effectiveness of your marketing campaigns.
There are many formulas to use when measuring CRM ROI. That said, several factors determine how well your marketing campaigns work.
Some of these factors include the following:
- Cost per lead
- Incremental sales (how marketing efforts contributed to sales)
- Campaign conversion rate (which marketing efforts generate your best customers)
- Customer lifetime value (total worth customers bring to your business)
Marketing data and customer insights are critical to measuring the ROI of CRM solutions accurately.
Customer Retention Rate
Not emphasizing and measuring customer retention rates was one of my initial CRM failures.
Experienced business leaders understand that customer retention is more crucial than trying to generate new revenue.
Focusing on retaining customers longer makes them more profitable, contributing to overall revenue.
The ROI of CRM software considers a critical factor because it shows how well your CRM implementation helps strengthen customer relationships.
Email Distribution Growth
The last CRM ROI metric you need is email distribution growth.
Email lists are among the most popular sales funnels, and tracking the growth shows how many new customers you attract.
A web-based customer portal and email list increases marking campaign engagement, tracks customer expectations, and helps boost sales.
Part of CRM cost is building email lists, so tracking email distribution growth is crucial in determining the ROI of CRM.
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