The Dumbing-Down of “ROI” by B2B Marketers and What You Can Do To Counter That Customer Perception


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Have you noticed over the years how the word “ROI”, a term formerly reserved for the outcome of a sophisticated in-depth investment analysis conducted by CXO Buyers, has been dumbed-down by B2B Marketers to a buzzword implying some kind of financial benefit?

“ROI” is right up there with the other waste words offered by B2B Marketers like “efficiency”, “effectiveness”, and “productivity”; all completely meaningless words, unless they are followed with a specific example incorporating some unit of measurement.

As a “buy-side” CFO sitting on the other side of the desk, I often wondered if the B2B Marketers throwing the “ROI” term around even knew what an actual ROI analysis looks like in the real world. (Later in this post I will provide 10 dirty little secrets of real-world ROI analyses, so stay tuned.)

“ROI” is Perceived by CXO Buyers as a Meaningless Waste Word When Uttered by B2B Marketers

B2B Marketers tout “ROI” so much that it has become meaningless noise to today’s CXO Buyers. Many Marketers whip out the “ROI” wand as if the mere mention of the word sends some kind of subliminal message and magical influence over the customer’s analysis of the proposed solution.

Don’t get me wrong: I’m not suggesting that discussing “ROI” with your customers is inappropriate.  But I am suggesting that you STOP USING THE R-WORD if you can’t follow it by saying something more substantive and quantitative about the financial benefits of your solution!  Give me an example.

If you want to improve your relevancy with CXO Buyers, you better be able to engage them in a dialog about the “hard” financial impact your solution will have on their business KPI metrics. This goes WAY beyond uttering the word or throwing out a single ROI number.

What I Noticed as a CXO Buyer and Now Observe as a B2B Sales Trainer

In my previous role as a Fortune500 CFO, I quickly realized that many B2B Marketers lacked the essential financial acumen selling skills and confidence to stray much beyond the scripted headline ROI financial claim of their solution benefits.  They probably hated my follow-up questions!

Now, in my current career as aB2B Sales Trainer, sales people often confide in me (after all, I signed the client’s NDA) that they use “ROI”, the word, as a scripted selling feature, but they steer clear of any in-depth financial conversations because they feel their financial acumen selling skills are completely inadequate. Yet, these same individuals acknowledge the importance of selling the financial value of their solutions, especially in this “new normal” economic environment where almost every investment decision is being highly scrutinized.

Do You Have “ROI Phobia”?

If you are a B2B Marketer with self-diagnosed “ROI Phobia”, you face a conundrum: do you take specific action to get better at this “financial acumen competency issue”, or do you continue to ignore the proverbial elephant in the room? This decision, to self-improve or not, may have far-reaching consequences and implications on your B2B Marketing career.

In my opinion, we’ve entered a transition phase in the B2B Marketing and Sales profession that can best be characterized as a “survival of the fittest” environment. I believe many VPs of Sales and Marketing organizations are responding to internal financial pressures within their companies to generate organic revenue growth by demanding their sales force call higher and broader in the customer organization, including CXO Buyers.

B2B Marketers who can gain confidence having the “ROI conversation” and demonstrating credibility will be the “survivors” who flourish in the coming decades.

What’s In It for You to Up Your ROI Game?

If you need any other motivation to take action to improve financial acumen selling skills, consider the customer relationship benefits that will accrue to your favor. CXO Buyers prefer B2B Marketers with broad business and financial skills – not technologists, not specialists, not subject matter experts, and especially not product evangelists!

It might sound cliché but it’s absolutely true: CXO Buyers are searching for Business Advisors who happen to be B2B Marketers.  Earning this trust and reputational status is not easy and, as you know, every one of your competitors is trying to achieve the same status.  But if you can differentiate yourself by demonstrating that you understand the customers’ business priorities and financial metrics, and can have a thoughtful ROI conversation with “hard” examples, you can win over the minds of CXO Buyers.

10 Dirty Little SECRETS about ROI Analysis (from a Buy-Side CFO Perspective)

If you are still reading and interested in improving your “ROI conversation” skills, let’s look at 10 dirty little secrets about ROI which can help you influence your customers’ investment analyses.

#1 You don’t need to be a FINANCIAL EXPERT to influence an ROI investment analysis.

Your customer doesn’t expect you to calculate an investment return or understand the accounting intricacies of your solution’s impact on their financial statements. However, your customer does want you to contribute to their investment analysis by providing examples of hard financial benefits generated by your solution with other clients.  They need a Business Advisor (that’s you) who will help them build a business/financial justification case for making the investment in your solution.  In most companies, there is a fight for limited CAPEX and OPEX, but just remember the fight is not with you.  Your sponsor needs your help getting the data to fight the internal battle for scarce capital.

#2 Your customers NEEDS HELP constructing an ROI analysis that clears their  HURDLE RATE.

In conducting an investment analysis, your customer looks at the costs and benefits associated with your solution in order to develop an estimate of the rate of return on their investment.  This investment return must exceed a minimum required rate of return (called a hurdle rate) before company decision-makers proceed to the next phases of the buying decision process.

You can’t influence the hurdle rate as it is set by the customer’s CFO. But, you can influence the investment analysis by helping your customer quantify the financial BENEFITS associated with your solution.

Often, your customer can’t instantly translate your technology product speak into numbers on an investment analysis spreadsheet.  They need your help to construct conservative ranges of estimates of financial benefits.

Your customer will appreciate any hard benefit documentation that you can provide, especially details on the financial benefits achieved by others who have implemented your solution. Public reference testimonials (or privately-arranged phone calls) are best since they can be validated.  Your customer will also understand (and appreciate) confidentiality requirements and will generally accept examples from non-named customers.

#3 DON’T CELEBRATE just because your project return exceeds your customer’s ROI hurdle rate.

Hurdle rates represent a minimum required financial return for a project.  They are determined by the CFO and can vary from company to company and even project to project.  If your project clears the hurdle rate, don’t celebrate!  In most companies, capital investment funds are limited and allocated based on ranking of the investment returns of each project.  KEEP SEARCHING for more benefit categories so your solution doesn’t get BUMPED by other projects with higher financial ROI returns.

#4 COST REDUCTIONS ALONE AREN’T ENOUGH to get approval for your project.

You’re going to have to look far and wide for ADDITIONAL benefit categories, beyond OPEX cost reductions. The balance sheet represents fertile ground for generating potential benefits, yet most B2B Marketers completely ignore it.  Some of the key line items on a balance sheet are very large, such as Inventory, Accounts Receivable, Accounts Payable, and Property, Plant & Equipment.  In financial institutions, loans and deposits are found on the balance sheet.  Potential financial benefits could come from loan growth, loan quality improvement, and deposit growth.

Incremental revenue growth, directly attributable to your solution, is another excellent area of financial benefit. However, you will likely be challenged, so make sure your revenue impact estimates are CONSERVATIVE and supported by client success testimonial documentation.

#5 “SOFT” BENEFITS ARE USELESS in an ROI analysis.

Financial benefits that are not quantifiable will be ignored by your customer because they can’t be incorporated into the ROI financial analysis. That doesn’t mean that you need to ignore the “soft” benefits of your solution.  However, consider taking this challenge: for every “soft” benefit you currently use in your solution benefits pitch, put yourself in your customers’ shoes and think about how they could actually measure (or estimate) it.  For example, you can’t measure ‘happy customers’, but you can measure increases in average ticket size or declining product returns.  Ask some of your colleagues for ideas as well and then test them out with your customers.

#6 The ASSUMPTIONS underlying an ROI investment analysis are MOST IMPORTANT, not the result.

Customer executives don’t care that your solution produces a ROI of 142% or a payback of 2 years. They want to really understand the underlying assumptions that were used in the investment analysis.  What is the logic for your assumptions?  What are the benefit categories?  How soon do the benefits arrive?  How sensitive is the outcome to changes in your assumptions?  Address this curiosity by spending more time talking about the support for your ROI assumptions and spend less time talking about the final ROI result.

#7 CXO Buyers actually SPEND MORE TIME AT THE BEGINNING of a buying cycle, not at the end.

Buy-side executives are big picture people, but don’t let that fool you. They use facts, data and analysis to expedite the buying decision process.  The financial investment analysis is very useful at the beginning of the process in sorting the wheat from the chaff.  Which investment ideas look best?  What’s feasible from a financial ROI return perspective?  Where are the financial risks?  What are the ranges of likely outcomes?  Executives allocate limited capital to competing projects based upon preliminary ROI investment analysis results, so you better get involved with them very early in the buying process.

#8 Generic ROI CALCULATORS are useful, but not a panacea.

Many companies use generic ROI calculators to support their financial impact selling efforts. The benefit of these calculators is they help to jump-start the ROI conversation.  B2B Marketers should identify the ROI investment analysis technique (NPV, IRR, ROI, payback, other) preferred by the customer and TAILOR the ROI calculator accordingly.

#9 Net Present Value (NPV) and Internal Rate of Return (IRR) are the preferred investment metrics.

Do some due diligence to find out what ROI investment metrics your customer uses. Simple ROI and payback techniques are frequently used to get a quick “read” on a potential investment return.  But most CXO Buyers prefer more sophisticated discounted cash flow analysis techniques like NPV and IRR.   You’re not expected to know how to calculate NPV and IRR, but you should understand the framework and HOW TO INFLUENCE the ROI results by emphasizing additional financial benefit categories.

#10 EXPECT TO BE CHALLENGED!  It’s a normal part of an ROI Conversation.

Don’t get overly defensive if your customer challenges the financial benefit estimates of your solution. Emotions are your worst enemy!  Calmly lay out your reasoning and logic and provide supporting documentation.  Your sponsor within your customer organization will be putting his or her reputation on the line as they fight for investment funding to implement your solution.  Make sure you adequately equip them with a solid financial business case for making the investment with you.


Don’t participate in dumbing-down ROI anymore. These tips can help you get started on the journey to improve your financial selling skills and ROI conversations.

Like any learning, financial acumen skills improve as you take new knowledge and apply it in your everyday working life. You should seek help from others at your company – your manager, the resourceful people in Learning & Development, and the helpful associates who work in finance.

Remember this: the good news is you aren’t expected to be a financial expert. But committing to getting better is the first step in expanding your career opportunities and, more importantly, helping your customers make better ROI investment decisions.


  1. Do you agree with my 10 dirty little secrets?
  2. How can you differentiate yourself from the herd in your ROI conversations?

Republished with author's permission from original post.

Jack Dean
As co-founder of FASTpartners LLC, Jack brings extensive technology buying experience as a Fortune500 Chief Financial Officer to the B2B technology sales training industry.He has facilitated client-sponsored business acumen training for 15,000 B2B technology sellers representing 150 global technology companies.Participants in Jack’s business acumen training have produced directly-attributed revenue of over $1 billion (in the 3 months after training) and training engagement ROIs averaging 500%.


  1. Hi Jack: In 2010, I had the same observation that ROI was incorrectly used in sales conversations. My sense was that few people understood what the term meant. After investigating for my first article on this topic, I embarked on a one-man crusade encouraging salespeople to adhere to ROI’s literal financial meaning. That effort has proven a Sisyphean task. Like getting people to stop saying, “it is what it is.”

    In writing my article, ROI Hype: Finance for Fools? (, I interviewed accounting professor Bob Kemp, and asked him how CFO’s evaluate choices. He shared wisdom that has stuck with me:

    “There are three questions about value that decision makers must answer:

    1) what do I get,
    2) when do I get it, and
    3) how certain are the answers to the first two questions?”

    He added that ROI can answer the first question, but not the second or third.

    The word can in his statement makes a valuable point. The calculation is subject to many variables, and gobs of assumptions, as you point out. And ROI has proven a highly-flawed proxy.

    Salespeople and coaches alike should consider Kemp’s plainspoken insight: two out of the three most burning questions a CXO/CFO wants answered aren’t covered by any of the fluffy ROI “justifications” that salespeople diligently prepare.

    The problem for salespeople, their trainers, and coaches is that the substantive and quantitative part of finance you describe involves accounting for risks, and that is something antithetical to most sales cultures, which depend on concrete expressions of outcomes.

    What I have discovered is that salespeople who consider and include risk calculus in their financial projections tend to be more credible than those who don’t. Further, ROI “bake off’s” have long been a losing battle for vendors that have a stronger – albeit more complex – appeal. That includes enabling a customer’s strategic plan. Another article, ROI Calculus: More SWAG than Swagger corroborates many of the points you made here.

    Today, I think ROI has just become a loose shorthand for any-old-financial-calculation. For biz-developers, using the term ROI provides helpful gravitas . . . until the CFO asks that dreaded question, “now, let’s dig into how you got that number . .. .”

  2. Andrew, as always you present an interesting perspective.

    As a CFO practitioner who has financially analyzed and evaluated hundreds of investments, I don’t necessarily agree with the good accounting professor’s point of view on the 2 shortcomings of ROI.

    I think he’s taking an “accounting” approach to an “investment analysis” decision and drawing some interesting conclusions.

    ROI in fact can be a sophisticated measure, just like the sophisticated discounted cash flow analysis techniques known as Net Present Value (NPV) and Internal Rate of Return (IRR).

    ROI, NPV, IRR and Discounted Payback (for that matter) share the SAME set of cost/benefit cash flow assumptions, the same RISK calculus-scenario modeling-risk adjustments (i.e. cost savings don’t turn out as planned), and the same TIMING adjustments accomplished through present value discounting (i.e. benefits don’t start flowing until year 3 or some benefits are conditional on other factors).

    Perhaps this is just the difference in perspective (and training) between an “accountant” and a “investment analyst”:)

  3. Hmmm. Using Helfert’s (a finance practitioner and professor) definition which I quoted in my article,

    “ROI = Average annual operating cash flow divided by net investment. = $25,000 divided by $100,000 = 25%.”

    Then he wrote, “With no reference to economic life . . . all the measure indicates is that $25,000 happens to be 25 percent of $100,000. Note that the same answer would be obtained if the economic life were 1 year, 10 years, or 100 years. In fact, the return shown would be true in an economic sense only if the investment provided $25,000 per year in perpetuity; only then could we speak of a true return of 25 percent.”

    He’s saying that timing is ignored. That’s certainly evident in the equation. Note that the numerator only indicates average. Volatility and risk are not considered.

  4. The impact of the TIMING of cash flows (both inflows and outflows) over the economic life of a project can be incorporated into the ROI calculation (net benefits divided by costs) by discounting the cash flows (at the appropriate cost of capital discount factor) to the Present Value (PV).

    So the PV of project “net benefits” divided by the PV of “project costs” would produce an ROI that does NOT “ignore timing”.

    For example, if the $25K positive cash flow in your example was projected to be received in the back-end of the project (say in years 6 or 7), the discounting might produce a PV $18K net benefit.

    And say the $100K project cost was actually going to be paid out immediately (say for the purchase of a Cisco switch), then the PV cost would be $100K.

    So the ROI calculation (taking timing/economic life into account) would be 18%, not 25%.

    The one shortcoming I see with ROI is that it’s not particularly helpful in RANKING (prioritizing) competing projects … which is the real world of fighting for scarce OPEX and CAPEX. That’s why a Net Present Value (NPV) analysis is preferred by financial investment analysts. You can still calculate the ROI as I’ve outlined here, but the NPV (which is reflected in $s, euros, yen, etc. … not in a %) provides the best guidance of where the most financial value is created.

  5. Jack, you are SO RIGHT on this topic. ROI has become the throw-away term for business benefits – and the hype-sters promote the fact that you don’t need to do the hard work, just “fast-talk” ROI in your elevator pitch and you will get the nod. Giving the CX revolution a bad rap with the C-Suite by doing this.

    Reminds me of the first internet bubble that said “you don’t have to generate profits – just eyeballs”. How did that work out?

    ROI analysis is simple, but not easy and your 10 points are right on point.

  6. Thanks Greg. Regardless of what some B2B marketers think, ROI analysis is not DEAD. The laws of investment analysis and hurdle rates have not been repealed.


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