ROI calculators are a pretty common tool amongst B2B marketers. On the face of it, the logic is simple – show a calculation of how the time saved from subscribing to your product equates to money and how that money is less than the annual subscription cost charged. Then surely the sale should be in the bag – who wouldn’t want to save $$, how could anyone say No?
I think this sort of calculator is useful for a limited purpose – it provides a supporting tool for your advocates in the org to help them convince their bosses to make the purchase. And for that it’s valuable. However, I’d argue it doesn’t help with the core problem – convincing buyers of the real value they’re getting – as it doesn’t help with the core reasons why people actually make purchases like yours.
An ROI calculator usually looks something like:
- Your devs/finance team/marketing team/HR/etc. cost $50 an hour per person in fully loaded costs.
- At the moment, 10 of them are wasting an hour a day on repetitive tasks – tasks that your product can automate away.
- In any given week that’s 10x50x5 = $2,500 wasted on pointless tasks. In a year, that’s $125k.
- Your software only costs $35k per year. So that’s an ROI of over 250% ! Or more simply, a straight saving of $90k a year.
At this point, you can produce your pen and ask them sign on the dotted line (well, click a button on a Docusign document) and start figuring out your commission.
Why doesn’t this work? There’s some lower level arguments to be made against a calculation like this – do you really believe the figures? Is all of that time genuinely saved or does someone else still need to do some manual work somewhere? Is the org really doing the task that badly today? And of course this is missing the implementation fees and ongoing work needed to keep the automated system working.
But I think there’s something more important, particularly when selling to senior buyers. There’s a dual problem with this calculation – firstly, that to make this saving the company would effectively have to fire someone, and secondly, in today’s environment, hiring and retaining staff is a far bigger headache than saving costs from letting people go. The calculation assumes an environment where the manager currently has too many people working for them, and is being asked to make savings. But this isn’t the reality for almost every manager I’ve spoken to in the last 10 years – the perennial problem managers have is growth and finding talent to fuel that growth. What they’re asking is “How do I find great people? I’m short-staffed, and just can’t hire the people I need. And when I do hire them, it’s such a hot job-market, I lose them unless I keep them happy!”. I can’t remember a single situation ever where someone has bought a product/service from a vendor, then “made the savings” by firing someone – it just doesn’t happen, and so is not believable to a client.
The real pain that clients have is hiring a great team, building and developing that team, then keeping them engaged. By building that great team, they not only get the obvious advantages and pride of running a great organisation, they also get multiple benefits from being able to provide much more value to the rest of the org. I.e. instead of my team being seen as a “Cost centre, to be reduced wherever possible”, it’s seen as “An incredibly value part of the company that’s helping us grow and be successful”. This “Soft ROI” is what senior buyers are really worried about. Here’s how I’d describe the world of the average finance team, from talking to our customers:
- Finance teams are generally seen as a “necessary cost”. There is an unfair perception that they add little value.
- They spend enormous amounts of time on manual drudge work. I’ve seen this sort of activity called things like “Hamster work”, “Treacle” and similar terms, but the idea is the same – you have humans doing work that computers were designed to do.
- This is particularly bad in finance teams – practices that would be deemed unacceptable in a development or marketing department – are somehow okay in finance. I’ve seen teams working till midnight manually refreshing spreadsheets every 30 minutes, teams spending 1-2 weeks on month end (I mean, there are only 4 weeks in the actual month!). This sort of time-wasting has been reduced or removed entirely in most other parts of a high-functioning company.
- This drudge work leads to a very specific people problem – how do you keep your talented people motivated? There’s a chance that, when you hired them, you weren’t fully transparent with the manual work involved – now they’re here and they’ve had that rude awakening, they’re not happy about it, they’re getting de-motivated, and they’ll start to look for other opportunities.
- In parallel, your team isn’t doing any particularly interesting or value-add activity. This is problem both in reality and perception – that crucial project to work out the ROI on your vast marketing budget has been on hold for 9 months now, leading to significant waste. And your boss can only ask you so many times why it hasn’t happened yet?
- This all leads to employee churn, poor performance overall, and an endless cycle of hiring, and less-than-impactful work.
This is an example from the world of finance, but of course the same could be said for other teams – though I’d argue to different degrees. The sort of waste I’ve seen in finance teams was ironed out years ago in development, where you see people automatically running 512 cloud-based tests at the push of a (build) button without a manual step in sight – the sort of automation finance teams can only dream of.
How do you present this value, if an ROI calculator isn’t enough? Through great marketing – all great marketing is based on a deep understanding of your customers’ genuine pain points and how you can resolve those pain points. Instead of (or “as well as”) an ROI calculator, I’d be writing content about the pain points above. Show how you understand your customers’ worlds, how you understand that pain and can help solve it. It’s also a question of positioning – if you position your product as “A tool that helps save time”, then you’ll never really resonate with the manager’s pain. Alternatively if you position your product as “A service that supports you transforming your team from a cost centre [to be reduced] into a high-performing and motivated function valued by the rest of the company” – and you can connect the dots between that message and your product – then this is a much stronger way to appeal to the target audience.
As I mention, I think ROI calculators still have their place. Once you’re in the door, and you have an advocate on the inside, then a tool like this can really help him/her make the case to their boss, who might want some numbers to back up the investment. But you need to win hearts and minds first – and that happens by understanding peoples’ real problems, and finding a way to help them solve those problems – ideally with the help of your product of course.