How to Measure Your B2B eCommerce ROI
Forrester Research recently reported that B2B eCommerce was set to grow to more than $1.13 trillion by 2020, and that means growth potential for B2B companies moving into eCommerce. Understanding how to measure the returns on investment (ROI) you’re getting – or plan to get – from your B2B eCommerce investments, however, is a crucial part of determining whether your site will be a success or not. Unfortunately, eCommerce ROI – while a simple metric on its surface – is actually one of the most difficult metrics to accurately determine for an eCommerce site. For B2B companies, it can be especially challenging. Why is it so challenging? One reason is that while the math that goes into an ROI calculation is fairly straightforward, determining what measures should go into the calculation is less so. It can also be more challenging than determining ROI for a B2C site, due to inherent differences between B2B and B2C.
The Basics: How to Measure B2B eCommerce ROI
Calculating ROI at first glance seems to be fairly simple: ROI = (Gains – Cost)/Cost However, this simple measurement assumes that the metrics you’re putting in have themselves been measured accurately, and that you’re measuring the right things. Measuring Costs: To determine the ROI of your B2B eCommerce efforts, you could look simply at the total cost of your eCommerce platform and the total revenue generated on the platform. However, this measurement is lacking in some important areas. One area that is lacking is that the software cost itself is not a complete measure of the total cost of the software or platform, or of the actual cost of operating your eCommerce site. A better measure of the cost to own your eCommerce platform is Total Cost of Ownership (TCO). TCO includes the lifetime costs of owning the software:
- Purchase price of the eCommerce platform
- Cost of implementing the platform
- Any ongoing operating costs
You also need to look at the operational cost of your eCommerce efforts – the marketing and customer acquisition costs in addition to the software costs. Consider all of these in your cost calculations. Measuring Benefits: Once you’ve got a good handle on the costs you want to look at, you need to get clear on the benefits the B2B eCommerce is delivering. You could just look at the revenue generated from your eCommerce site, but that leaves some important things out. It’s also the case that depending on your company’s reason for implementing eCommerce, revenue alone may not be the best way of measuring benefits for your B2B eCommerce site. A better measure would be to look at the complete business benefits the eCommerce site delivers – improved customer satisfaction, faster order processing times, lower cost to serve customers, and increased revenue to name a few. Obviously, there’s a lot here that you could be measuring as part of your ROI calculations. To determine which specific metrics you’re going to look at, you should consider your business goals. Primary among those for a B2B company is customer relationship building – this needs to be carefully considered when measuring B2B eCommerce ROI.
How Differences between B2C and B2B Impact ROI Measurement
The secret to B2B eCommerce is really no secret at all: the most important difference between B2C customers and your B2B customers is that B2B customers visit your site because it is their job to do so. This means they have different expectations of a B2B site, and this impacts your ROI measurements. What’s different? While B2C customers are more emotionally driven, and more apt to make purchase decisions on the fly based on marketing and other “shiny objects,” B2B customers have a job to do. They likely know what they need before they arrive to place an order, and are mostly looking for a way to get that order placed quickly. They want their eCommerce experience to be simple, yet still able to handle the additional complexity of a B2B sale. This doesn’t mean that your system is simple, however. In fact, creating a simple experience for the customer often takes considerable personalization on the backend to ensure that customers receive any relationship-based pricing or discounts and more. In B2B, purchase decisions are more complex, driven by relationships and business needs. It’s also important to note that B2B customers are repeat customers, unlike a B2C site where return customers may make up a minority of that site’s buyers. The impact of relationships on ROI is a bit more difficult to calculate. That’s why we need to know the goals for our B2B eCommerce site if we want to accurately measure ROI. Is the goal to improve customer satisfaction, increase revenue, reduce costs, or process orders faster? Are we looking for better ways to service existing customers, or are we seeking to grow our business online and find new customers? All of these should be considered in our B2B eCommerce ROI calculations. What’s most challenging for you in calculating ROI for your B2B eCommerce site? We’d love to hear about it in the comments.