Without the right data to back you up, it's impossible to make effective, informed business decisions. There is a ton of data that you can gather throughout the sales process. Knowing which metrics to prioritize tracking can help you refine your approach and increase your likelihood of converting a prospect. With that in mind, here are 5 customer metrics we recommend tracking in order to make informed business decision.
Cost Per Acquisition
Cost per acquisition, or CPA, is the measure of how much it costs to convert a lead into a customer. It doesn't matter how much a sale brings in revenue wise if the cost to complete it makes the actual profit negligible. You need to be tracking your company's average CPA in order to maximize your profit from your sales and marketing efforts. Performing a basic cost per acquisition analysis is easy. All you have to do is add up the amount you spend on marketing and sales and divide that number by the total value of new customers during the measured period. Depending on the number, you may find you are losing money on your marketing and sales efforts.
Some businesses may find it easier to calculate depending on their industry. Software companies with ongoing subscriptions may have to do a bit more math to calculate your average cost per acquisition. If you aren't already aware of your average CPA, you need to identify it sooner rather than later. Doing that can help you identify any changes you may need to make in your marketing and sales process. You may find that you either need to hone your marketing efforts or that you can increase them due to having a great CPA.
The lifetime value of a customer is how much you expect to earn from a customer over the time that they buy from you. This, in addition to cost per acquisition, is one of the most important metrics for your company to track. Calculating customer lifetime value is simple, just take the average purchase value and multiple that by how many times you expect them to buy from you during their lifespan. For subscription services, this is how many times they renew each month for their expected or contracted customer period. You can go more in-depth in how you calculate lifetime value, but that is the basic version.
By figuring out a customer's lifetime value, you can identify which types of customers are most valuable for your company. For instance, if your business finds that credit unions offer the highest lifetime value, you may find it worth it to target more of your marketing and sales efforts towards these customers. By using CPA and lifetime value together, you can shape your decision-making process and focus more of your efforts where they are more likely to show profit.
Short of sending out monthly or quarterly quality surveys to your customers, customer satisfaction can be difficult to track. As a more qualitative metric than anything, there aren't many tools that can automatically gather and compile this information the way you can other customer metrics. Surveys and questionnaires are the most effective way, but there are no guarantees that your customers will fill them out. A more time-consuming, but effective method, is to keep track of customer correspondence. Keep a note of their tone and how they respond to your representatives. There are several other methods for tracking customer satisfaction, these are just a broad overview.
Taking the time to track customer satisfaction can go a long way toward building retention and extending your reach. Customers who are happy with your services are more likely to come back to you for further business. They'll come to depend on you and build their loyalty. Additionally, a study from the Harvard Business Review found that satisfied customers are more likely to recommend a company's product to a friend or acquaintance. Essentially, by keeping your customers happy, you can turn them into a secondary marketing department - further extending your reach.
First Contact Resolution Rate
An important part of retaining customers and keeping them satisfied is your first contact resolution rate. This is defined as the percentage of customer service cases that are resolved within the first interaction. Having a high rate means that you and your customer service team are listening and effectively responding to customer issues. You can track this by tracking the tickets that come through your system and seeing which ones are closed within the first interaction compared to the total resolved. This may be difficult, that's why we recommend using an automated system like Dock 365's help desk solution to assist you.
An important part of keeping your customers satisfied, tracking this can help you modify you customer service approach. Depending on your approach, you may find you need to provide more training or use different tools. Either way, tracking and finding ways to increase your first contact resolution rate can eliminate many of the difficulties of the customer experience and help keep customers around.
Customer Retention Rate
Speaking of keeping customers around, another important metric for you to track is customer retention. Your business's retention rate is the measure of how many old customers you can keep throughout a period of time. While there is no standard formula, the basic formula is to count your customers at the beginning and end of a time period, subtract the number of new customers from the second figure, and then compare the two. A more complex version of this calculation can be found in this article : Best Way to Track Customer Retention. This may seem obvious, but you want your retention rate to be as high as possible.
Tracking your retention rate is vital as it allows you to contextualize your sales and marketing efforts. It doesn't matter if you have a high number of sales if you aren't able to retain them. Having a low retention rate means that you are probably struggling with a high attrition rate - the number of customers you lose in a period. By tracking retention, you can know when you need to make changes to your customer service and what changes need to be made.
If you are committed to improving your sales approach, you need to be tracking the right metrics. Like we said, it's impossible to make an effective, informed decision without having the right customer metrics to guide you. By tracking the above metrics, you can identify areas where you need to make changes and improve your overall sales approach.
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Written by Quentin Russell
Quentin Russell is a Content Specialist with knowledge of Content Marketing and Social Media Marketing.