Calculating the Return on Investment (ROI) for sales tools and technology requires more than simply measuring cost reductions, workflows, or overhead. True ROI should factor in time saved, efficiencies gained, and your enhanced ability to act on data-driven insights. Needless to say, that is easier said than done.
This article will guide you in building a compelling business case for investing in sales technologies. We want to help you create measurable ROI data around these less quantifiable activities in a meaningful way for your leadership.
How Can We Measure And Use ROI in Sales?
In sales, understanding ROI is essential for evaluating which investments are delivering value or wasting budget. An ROI formula is often applied to compare the performance of key resources or business activities—such as FTEs, training programs, or sales support tools. To keep things simple, let us just call them ‘investments.’ For instance, a sales leader might pilot two CRM systems and use ROI calculations to determine which potential investment delivers better lead conversion rates or time saved on administrative tasks.
Basic ROI Formula
To calculate ROI for any new resource or activity, determine the profit generated from that investment. You could compare performance to a previous quarter, the same period the previous year, or any other equal reference you think is appropriate.
Profit from Investment = (Extra Revenue Gained + Labor Saved) – Investment Cost
Then divide that profit by the cost of the investment and multiply the result by 100 to express it as a percentage, like this:
ROI (%) = (Profit from Investment ÷ Investment Cost) × 100
Expressing ROI as a percentage makes comparing results across different investments easy, giving you a clear picture of what is driving value for your organization.
Example: Calculating ROI for sales management software
Imagine you recently implemented a tool, like Microsoft Dynamics 365 Sales, to test its value. Last month, you invested $195 in this software for three user licenses and saw a combined $9,900 increase in revenue and reduced hours spent per client compared to comparable sales volume the same month last year. So, there was a positive ROI, but your CSO will want to compare apples to apples when considering strategic investments. They will want a specific number.
Here is the ROI calculation:
Profit from Investment = $9,900 – $195 = $9,705
ROI = $9,705 / $195 × 100 = 4,980%
4,980% is a substantial return, which could be eye-opening to an executive. Presenting it this way will help support the argument that sales and CRM software can be a low-cost, high-impact investment.
Beyond those immediately quantifiable returns, sales management software’s broader features—such as marketing and communication automation, customer data management, and lead generation—can further enhance productivity.
The Value And limitations of Calculating ROI for Sales Resources
ROI is a widely used metric because it is simple to calculate and interpret. All you need are two numbers: profit and cost. Its straightforward nature makes it accessible for measuring a variety of scenarios, from evaluating the value of sales software to comparing investments in different marketing campaigns. Its clarity makes it simple to compare multiple investments or initiatives, allowing businesses to prioritize strategies with the highest potential return.
It does have limitations, though.
ROI calculations can vary based on how profit and cost are measured. For example, excluding certain indirect costs or overstating projected profits can skew results. Or how you calculate many small intangibles, such as time saved on composing all emails in a period with AI automation assistance. To ensure accuracy, your entire organization needs to create a standardized method for including all relevant costs and benefits directly tied to the investment.
Why Executives Want to Measure Sales Team Performance
Having a reliable ROI figure is important, but you also need to make sure you present it to executive leadership in a way that addresses their concern. What may seem most relevant to a sales manager at the end of the quarter is not necessarily what is most important to a CSO or CEO working on their strategic plan for the next decade.
When using ROI to make the case to leadership that you need new sales software management consider these five executive priorities.
1. Evaluating strategic performance
For a CEO, understanding the sales team’s performance isn’t just about numbers—it’s about understanding how those numbers reflect the company’s market position and growth trajectory. Tracking the ROI of different resources provides clear benchmarks for assessing how effectively the sales team is driving customer engagement, closing deals, and contributing to broader business objectives.
2. Making data-driven decisions
Executives want data when they need to make decisions that could have massive implications 5, 10, 20 years down the road. Accurate metrics allow the C-Suite to identify market trends, spot inefficiencies, and evaluate which departmental strategies deliver results.
3. Allocating resources
Every CEO wants to maximize ROI. Measuring the relative value of different resources. What new improvements provide the greatest ROI? Which existing resources are utilized most effectively? Which resources or regions are underperforming? Answering these questions helps executives make informed decisions.
4. Driving accountability and transparency
Remember, leadership wants to compare apples to apples. ROI on software purchases and performance offers insight into how one asset compares to another. Did one sales team generate more ROI from using Dynamics 365 than another? When and why? Executives want to use these metrics to foster accountability across the organization.
5. Anticipating Future Challenges
Sales metrics allow leadership to forecast potential risks and opportunities. Whether identifying shifts in customer preferences or spotting areas of declining performance, these insights help CSOs proactively address challenges before they become full-blown problems.
Dynamics 365 Is The Right Tool for Modern Sales Teams
Advanced analytics, automation, and real-time insights make the right sales management software essential for CSOs and their teams aiming to drive growth and maximize team performance. Tools like Dynamics 365 Sales provide the capabilities needed to meet the challenges of modern sales, allowing CSOs to stay focused on strategic goals by leveraging their data-driven insights.
Ready to improve your sales team’s performance? Reach out today.
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