How can you measure the ROI of institutional sales tools?

1 Define your goals and objectives

Before you can measure the ROI of any sales tool, you need to have a clear idea of what you want to achieve with it, and how it aligns with your overall sales strategy and vision. For example, do you want to increase your lead generation, conversion rates, customer retention, upselling, cross-selling, or referrals? Do you want to improve your sales efficiency, productivity, quality, or accuracy? Do you want to enhance your customer experience, satisfaction, loyalty, or advocacy? By defining your specific goals and objectives, you can set the baseline and the targets for your ROI calculation.

3 Calculate the cost and benefit of the sales tool

Once you have chosen the metrics and indicators that are relevant to your goals and objectives, you need to calculate the cost and benefit of the sales tool. The cost is the total amount of money spent to acquire, implement, maintain, and use the sales tool, including the purchase price, subscription fees, installation fees, training fees, support fees, and any other expenses. The benefit is the total amount of money saved or earned as a result of using the sales tool, based on the metrics and indicators that you have selected. For example, the benefit of a CRM system could be the increase in sales revenue, the decrease in sales cycle, the increase in conversion rate, the decrease in CAC, the increase in CLV, the increase in retention rate, the increase in CSAT, and the increase in NPS.

4 Compare the cost and benefit of the sales tool

The final step is to compare the cost and benefit of the sales tool, and determine whether it is worth the investment. There are different ways to do this, but one of the most common and simple methods is to use the ROI formula, which is:

ROI = (Benefit - Cost) / Cost * 100%

This formula gives you the percentage of return that you get for every dollar that you spend on the sales tool. For example, if the cost of a sales tool is $10,000, and the benefit is $15,000, then the ROI is:

ROI = ($15,000 - $10,000) / $10,000 * 100%

ROI = 50%

This means that for every dollar that you spend on the sales tool, you get $1.50 back. A positive ROI indicates that the sales tool is profitable, while a negative ROI indicates that the sales tool is losing money. However, you should also consider other factors, such as the payback period, the breakeven point, and the opportunity cost, when evaluating the ROI of a sales tool.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?