Effective customer relationship management comes down to good systems, good processes, and constant improvement. You can achieve the last of these by tracking the right Customer Relationship Management (CRM) metrics, analysing the results, and making data-driven optimisations.

A CRM metric is a measure used to understand the efficiency, effectiveness, and performance of your CRM system. Tracking the right metrics helps your business make data-driven decisions that improve processes and profitability, increase sales, and keep customers for longer.

Average Order Value tracks the approximate monetary value of each order placed by customers during a set period of time.

Once calculated, AOV shows where you should direct your investment, for example, on advertising or sales activity.

AOV = Total Revenue / Total number of Orders (expressed as a monetary value, for example £ or $)

AOV is straightforward to calculate manually, though accuracy depends on your volume of orders and the size of your customer base. The higher the volume, the harder it is to track manually. To keep it accurate, evaluate AOV frequently, preferably daily, to capture buying trends and seasonal activity.

Average Order Frequency shows how regularly customers have purchased from you over a set period of time.

AOF can be an important indicator that you are losing customers to competitors. For example, if a customer usually places an order twice a week and then does not place an order for three months, this signals a problem worth investigating.

AOF = Total number of Orders / Total number of Customers (usually expressed as a number of days or months)

Tracking order frequency across your entire customer base and analysing for trends can be time-consuming to do manually and regularly.
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Recency, Frequency and Monetary Value (RFM) is a marketing and account management strategy for segmenting customers using data on their spend patterns. It segments customers across three dimensions: recency, frequency, and monetary value, placing them into segments such as Champions, Loyal Customers, At Risk, and Hibernating.

High RFM scores identify your most promising customers, helping your team build experiences that keep them engaged. Lower scores are equally useful. They help you identify new customers who need onboarding and nurturing, previously loyal customers who may have switched to a competitor, and low-value regular buyers who are good candidates for an upsell campaign.

RFM is a complex calculation. You can read more about how to calculate it manually in our RFM blog. However, we strongly recommend automating the process for accuracy and efficiency.

Churn rate is the rate at which customers stop buying from you.

High churn can stifle business growth. Your churn rate is a good indicator of customer loyalty and retention.

Churn Rate = Lost, Cancelled or Inactive Customers × 100 / Active Customers (expressed as a %)

Monitor your churn rate regularly and investigate the causes behind the results. For example, if your churn rate is high, consider whether courier issues, late deliveries, or competitor activity could be responsible.

Customer Lifetime Value (CLTV) predicts the total revenue expected from a customer throughout their time buying from you.

CLTV helps you work out how long you need to retain a customer before you start making a profit. It also helps you compare the cost of retaining a customer against the cost of acquiring a new one. Acquiring a new customer can cost up to five times more than retaining an existing one.

CLTV = Average Order Value × Average number of Orders in a Year × Average Retention Time (expressed in years or months)

As your business grows, automation helps you calculate this accurately and efficiently.

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This metric provides a summary of all new customers acquired in one month. You can measure this as both a gross figure and a net figure.

This metric indicates whether customers are being retained or lost, making it vital for B2B product businesses.

Net of Churn Customers = Net Revenue Lost from Existing Customers / Total Revenue at Beginning of Time Period

Customer Acquisition Cost (CAC) calculates the cost of acquiring a new customer, covering the sales and marketing expenses required.

CAC shows whether you are spending more on attracting new customers than those customers are worth. This makes your CLTV even more important: the longer you keep a customer, the better your return on the cost of acquiring them.

CAC = Total Costs of Acquiring New Customers / Number of Customers Acquired (expressed as a monetary value, for example £ or $)

CAC Payback is the number of months it takes to recover the money invested in sales and marketing through revenue from new customers.

A shorter payback period indicates greater profitability.

CAC Payback = Total Costs Invested in New Customers / Number of Customers Acquired (usually expressed as months, days, or years)
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The LTV/CAC ratio compares the costs of acquiring a new customer with the predicted revenue from their lifetime purchasing from you.

This ratio helps you determine whether you are spending too much or too little on acquiring new customers.

LTV/CAC = Customer Lifetime Value / Customer Acquisition Cost (displayed as a ratio, for example, 3:1)

This metric calculates the percentage of new customers who become repeat customers. It uses four or more orders as the threshold, as customers who reach this point are likely to become relational customers.

As a business selling hundreds, potentially thousands, of products B2B, knowing what percentage of your customers turn into repeat buyers is critical. Once a customer has placed four to five orders, it becomes much more likely they will order again soon and settle into a regular purchasing pattern.