Return On Investment In Sales Force Automation

Return on Investment (ROI) is a necessary calculation when it comes to making basic business decisions.  When automating your business, it becomes critical to your decision making process.  Basically stated, you need to find out how long it will take for your investment to balance out with the increased productivity the automation will produce in your operations.

Typically, you can anticipate a 15% to 35% increase in sales productivity from your sales operations.  This figure is lowest for outside sales reps and greatest for telemarketing operations.  In a sales cycle where you deal with large volumes of prospects and/or where there is significant paperwork or data gathering taking place, you will experience higher increases in productivity.  For the purposes of this discussion, we will look on ROI for 15%, 25%, and 35%.

The first step is to calculate your average monthly profit on sales from the operation being automated.  We won't go into detail on this as you probably have (or certainly should have) this number easily available to you.

The second step is to calculate the MONTHLY INCREASE IN PROFIT that would occur if you were to increase sales by 15%, 25%, and 35%.  A simple method would be to simply calculate it on a straight percentage increase in the profit, although that method might not take into account the fact that many expenses are fixed and don't increase with sales increases.

The third step is to fully add up the TOTAL COST of the new system being considered.  Include software, consulting, training, hardware, etc.

The number of months until ROI is then calculated as the
TOTAL COST / MONTHLY INCREASE IN PROFIT.

The year-to-date increase in profitability can be calculated by using
(MONTHLY INCREASE IN PROFITS X 12) - TOTAL COST

ROI Calculator

Here is a calculator that figures ROI down to the sales rep level.