How to measure the value of a sales app with pricing and ROI

Posted in Sales techniques and processes.

Sales apps have become an important way for businesses to manage their sales processes. But deciding to buy one isn’t something you should rush into. To make sure it’s worth the money, you need good ways to see how much it helps your business.

It’s not just about looking at the numbers. You need to see how the app affects different parts of your business. Let’s dive into how you can figure out if a sales app is really valuable for you by looking at pricing and the ROI.

What is ROI and why measure It?

ROI, or Return on Investment, shows how much money you make compared to how much you spent. Here, we’re talking about the money made from using a sales app. If your ROI is high, it means you’re getting more benefits than what you paid for.

If it’s low, it might mean the app isn’t worth the cost. Measuring ROI is super important because it helps you see if the sales app is really helping your business.

Steps to measure a sales app’s ROI

Identify the total cost
First, you need to know all the costs associated with the sales app, not just the purchase price. Think about subscription fees, customisation costs, staff training, and ongoing maintenance. Add up these expenses over the time you plan to use the app to get a clear picture of the total cost.

Example: If your sales app charges a $1,000 upfront fee, $500 for customisation, $200 for training, and $100 monthly for support, calculate these expenses over a year (e.g., $1,000 + $500 + $200 + ($100 * 12) = $2,900).

Define key performance indicators (KPIs)

Next, figure out which metrics (KPIs) will help you measure the app’s impact. Some important KPIs for a sales app might be:

  • Increased sales revenue: Track the revenue growth after implementing the app.
  • Shorter sales cycle duration: Measure any reduction in the time taken to close sales deals.
  • Improved customer relationship management (CRM): Evaluate enhancements in customer interactions and satisfaction.
  • User adoption rates: Monitor the percentage of your sales team actively using the app.
  • Higher lead conversion rates: Analyse the rate at which leads turn into paying customers after adopting the app.

Example: Set a baseline for each KPI. If your average monthly sales revenue is $50,000 before the app, use this as a benchmark to measure improvements.

Make sure you set a baseline for each KPI so you can compare results before and after using the app.

Measure revenue impact

One big reason to get a sales app is to boost your revenue. Use sales data to track revenue trends after you start using the app. Compare these trends with data from before you got the app. Remember to consider other factors like seasonal changes and market trends to see the app’s true impact on your revenue.

Example: If revenue increases from $50,000 to $60,000 monthly post-implementation, the app contributes an additional $10,000 in revenue per month. Over a year, this translates to $120,000.

Assess time savings

A good sales app can save your team time by automating tasks, improving communication, and giving quick access to information. Time saved means cost savings and better productivity.

For example, if a sales rep saves two hours a day thanks to the app, multiply those saved hours by their hourly wage to see the financial benefit. If a sales rep saves two hours per day due to automation, and their hourly wage is $30, they save $60 daily. Across 250 working days, this is a $15,000 annual saving per rep. Multiply this by the number of reps for total savings.

Evaluate customer satisfaction

Happy customers are a good sign that your app is working well. Tools that improve customer interactions usually make customers more satisfied. Use surveys and feedback to find out how satisfied your customers are. More satisfied customers can lead to repeat business and referrals, which can boost your revenue.

Consider employee satisfaction

If your team finds the app easy to use and helpful, they’re more likely to use it effectively. Conduct surveys to see how satisfied your employees are with the app. An app that’s widely adopted and liked can cut training costs and boost productivity.

Calculate the ROI
Finally, use this formula to calculate your ROI:

ROI=(Net Benefits/ Total Costs)×100

Net benefits are what you get after subtracting the total costs from the financial benefits of using the app. If the ROI is positive and significant, then the app is worth the investment.

Example:
Increased revenue: Suppose your sales revenue increased by $40,000 annually due to the app.
Cost savings: Additionally, the app saved $10,000 in operational costs, such as reduced labor or efficiency improvements.
Total benefits: $40,000 (revenue) + $10,000 (cost savings) = $50,000 in total net benefits.

If net benefits (increased revenue + cost savings) amount to $50,000 annually, and the total costs are $10,000, the ROI calculation would be:
ROI = [($50,000 – $10,000) / $10,000] x 100 = 400%

Other than numbers, what are the intangible benefits to consider?

Some benefits of a sales app are hard to measure but still add a lot of value. These might include:

  • Better strategic planning: with improved data insights
  • Enhanced brand image: through better customer interactions
  • Improved agility and adaptability: in your sales processes

While these benefits might not fit easily into a spreadsheet, they can significantly boost your business in the long run.

Don’t forget about continuous monitoring

Measuring a sales app’s ROI isn’t something you do just once. Keep an eye on it to make sure the app continues to be helpful. Regularly check your KPIs and update them as your business changes. Periodically re-evaluate the costs and benefits to make sure your investment is still paying off.

Real-World Example

So far we’ve only used fictional examples, let’s consider a real example of a wholesale distributor who decided to implement a sales app and monitored its ROI over a year.

Highland Supply, a company that distributes disposable products for the food service and hospitality industry, was having serious problems with manual order entry. It was slow and expensive. Only 50% of orders were entered into their NetSuite account by the end of each day. This required a large office staff and led to high labor costs.

To solve these issues, Highland Supply started using Onsight’s B2B sales platform, which includes a mobile app and an ordering website. Now, customers can place orders online, and these orders are automatically entered into NetSuite. This change meant that 90% of orders were in the system by 4:30 PM, and the need for manual entry dropped from 100% to less than 5%. This saved the company around $60,000 a year in labor costs.

The app also helped sales reps showcase their 2,000+ products more easily, making the customer experience better. Two years after launching the app, 70% of Highland Supply’s sales revenue comes from orders placed through the app and the website. The average number of items per order went up by 15%, increasing the average order value and overall revenue.

This case study demonstrates how a company was able to see the ROI of their shift to a sales app

Here are some common mistakes to avoid

When measuring a sales app’s ROI, it’s crucial to steer clear of common mistakes. First, don’t ignore hidden costs. Make sure to account for all indirect costs, like downtime during the transition and long-term support. Second, don’t focus solely on short-term benefits.

Consider the long-term advantages as well. Third, ensure you choose the right KPIs that truly reflect your business’s objectives. Lastly, avoid the mistake of neglecting regular reassessment. Keep monitoring and re-evaluating to ensure the app maintains its value.

To finish off

Understanding the pricing and measuring the ROI of a sales app requires a thorough analysis and ongoing monitoring. By calculating all the costs involved, choosing the right KPIs, and looking at how the app impacts revenue and saves time, businesses can see the true value of their investment.

It’s also important to consider both the measurable benefits and those that are harder to quantify. A structured approach helps ensure that resources are used wisely, leading to ongoing growth and success.