This article was based on the interview with Carlos Manalo, Co-CEO and Co-founder at The Office of Experience by Greg Kihlström, AI and MarTech keynote speaker for The Agile Brand with Greg Kihlström podcast. Listen to the original episode here:
Return on investment (ROI) is the lifeblood of any successful business, yet many organizations find themselves grappling with how to accurately measure it, especially regarding their marketing and technology investments. In the fast-paced world of B2B e-commerce, where new technologies and strategies emerge constantly, understanding ROI is more critical than ever. It’s not enough to simply invest in the latest trends; you need to know what’s truly driving business value and how to build ROI models that reflect that value. This isn’t just about justifying past spending – it’s about making informed decisions that can unlock future growth.
Let’s explore the complexities of building effective ROI models in B2B e-commerce, drawing upon insights from a conversation with Carlos Manalo. We’ll explore practical strategies for building robust ROI models, avoiding common pitfalls, and using these models to drive exponential growth. These aren’t theoretical concepts; these are actionable insights gleaned from real-world experience, designed to help marketing leaders navigate the complexities of measuring and optimizing their investments.
Know Your Audience and Manage Expectations
Building a successful ROI model begins with understanding your audience. Who are you presenting this to? What are their priorities and concerns? A CEO will have different needs and expectations than a marketing team lead. Carlos emphasizes this point, stating, “Start with the audience. Who are they? What do they really need?” This is crucial for tailoring your model to resonate with the specific stakeholders involved. It’s not about creating a one-size-fits-all model; it’s about understanding your audience and crafting a narrative that speaks directly to their needs. Furthermore, managing expectations is paramount. ROI modeling isn’t an exact science, and setting realistic expectations is key. There will be a range of potential outcomes, and it’s important to acknowledge this from the outset.
Foundational ROI Tracking: A Proactive Approach
Another key takeaway from the conversation is the importance of incorporating ROI tracking into everything you do. Rather than scrambling to build a model after the fact, make ROI considerations a part of your everyday processes. As Carlos puts it, “Foundationally, ROI should be in everything that you do.” This proactive approach allows you to gather data continuously, making it easier to build a comprehensive ROI model when needed. It also fosters a culture of accountability and data-driven decision-making, which is essential for long-term success in B2B e-commerce.
Avoid Being Reactive: The Art of the Business Canvas
One of the biggest pitfalls Carlos highlights is the tendency to be reactive when asked to justify investments. Often, companies find themselves scrambling to create ROI models in response to requests from leadership, rather than proactively building them. This can lead to incomplete or inaccurate models, as Carlos explains: “The worst thing you can do is be reactive. They’re not operating that component. They don’t know the line level details against it, and they will likely have a miss because they’re not operating.” Instead, he advocates for a proactive approach, building ROI models based on the metrics you’re already tracking and using them to drive strategy. This ensures that your model is based on solid data and reflects the realities of your business, rather than being a hastily constructed justification.
The Future of ROI Modeling: Real-Time Insights and Continuous Optimization
Looking ahead, Carlos sees real-time analytics playing a crucial role in the evolution of ROI modeling. He envisions a future where businesses can track key metrics like engaged customers, conversion rates, and average order value in real time, allowing for continuous optimization and faster decision-making. “Clarifying the levers… there’s some universals, like in e-commerce is always number of engaged customers, conversion rate, and average basket size or average order value,” Carlos notes. This real-time data, combined with a solid understanding of your ROI levers, will enable businesses to adapt quickly to changing market conditions and maximize the impact of their investments.
In the ever-evolving landscape of B2B e-commerce, understanding and measuring ROI is not just a good practice; it’s a necessity. By building robust ROI models, avoiding common pitfalls, and embracing real-time data, businesses can make informed decisions, optimize their investments, and unlock exponential growth. The insights shared by Carlos provide a practical roadmap for navigating this complex terrain, empowering marketing leaders to drive real business value and stay ahead of the curve. It’s not about chasing the latest trends, but about understanding what truly moves the needle for your business and using that knowledge to drive sustainable, long-term success. And while the concept of ROI can sometimes seem like an esoteric exercise in financial modeling, at its core it is simply about ensuring that your investments are generating real, tangible results – something that every business leader can appreciate.
