How many of your customers actively measure the ROI of your software?

Bob London

I've had a really interesting series of convo with a friend who's been a senior B2B sales leader for several large software companies. Think strategic complex sales to named enterprise accounts. I talk to him a lot about how customer success spends a lot of effort to help customers achieve outcomes and trying to prove positive ROI.

Here's the interesting part: He insists that, post-sale, his customers never take it upon themselves to proactively measure their ROI on software purchases. In fact, he says the champions don't want their company to do an ROI analysis for fear of what the results might be!

Now, his industry, complexity of product (saas + on-prem) and target customer might be different than yours, but my question is:

Does that jive with your experiences?

If not, how and how often do your customers actively measure ROI of your solution?

If it does jive, then one interpretation, which I know might seem heretical, is that customer success's efforts to prove customer ROI aren't necessary, since they simply highlight an area customers wouldn't normally measure on their own.

Thanks!

(Ironically, I went to tag this post with "ROI" and "value," but those tags don't exist!

Ed Powers

Hi, @Bob London

That doesn't jibe with my personal experience on the "other side of the table" buying subscription software as an executive, champion and COO. ROI is important, especially at renewal time, because money is always tight. Invariably senior executives will challenge how company money is being spent, at least from what I've experienced.

To give an example, I inherited oversight of a new technology when another executive left. Our CFO specifically asked for justification before signing the renewal. Fortunately, a "back of the envelope" calculation did the trick. The Solutions Architects using the tool said it reduced their time preparing proposals by 75%, and multiplying that difference by the annual proposal volume and fully loaded labor rate yielded a productivity gain that more than justified the expense in the mind of the CFO. Candidly, I would have preferred a better method, and it would have been very helpful if the vendor's CSM already had a credible number for me, based on before and after estimates in my particular environment.

That said, it's important to note that people don't make decisions based on ROI--it's how decisions are justified. 60-80% of the time, our emotional, intuitive brain (System 1), not our logical, rational brain (System 2), calls the shots. Salespeople and CSMs alike must understand this fact--personal benefits come first, numbers second.

Hope that helps!

Ed

Bob London

Great input, Ed. Very useful to me - and I hope to the GGR community!