Boost B2B eCommerce ROI: Calculation Steps & Proven Strategies
When starting any ecommerce business, owners aim to learn as much as possible about measuring their sales efficiency and growing revenue. The first thing you will most likely discover is the importance of ROI (return on investment). Though this model fits marketing operations and B2C ecommerce best, it is still essential for B2B ecommerce. In the B2B ecommerce context, it means the same as usual: the measure of the return a company generates from its investments, usually counted with the help of a B2B ecommerce ROI calculator.
We have already touched the ground with this topic before in our article about general B2B ecommerce metrics. In this article, we will dive deeper into the idea of B2B ecommerce ROI and find out various tools to measure and calculate it.
Understanding B2B eCommerce ROI
So, B2B ecommerce ROI is about what you get back from your investments in marketing and business in general. As it takes more effort and resources to count B2B ROI due to the complicacy of business, most people prefer to rely on conversion rates, LTV (customer lifetime value), and loyalty. Nevertheless, ROI is crucial in the B2B ecommerce landscape, and here is why.
ROI allows accounting not only for short-term operations but also for forecasting long-term plans and profitability. Being a metric of top importance, ROI includes many other essential KPIs to track:
- General sales revenue shows the efficiency of your investments.
- Cost of customer acquisition (CAC) includes the amount of investment you made to attract a B2B customer.
- Customer lifetime value (LTV). You get the general revenue and profit from one customer through all your communication (which may last for years).
- Conversion rates: how many leads you attracted actually bought your product.
- The average order value (AOV) is the average value of each B2B transaction.
We will discuss the way to account for your ROI soon, but what's important to realize first is what is a good ROI for ecommerce. Actually, there is no particular answer, as it all depends on industry norms, business models, marketing strategies, and more. For B2C ecommerce, the good ROI ecommerce expected is 10–15%, sometimes hitting 20%; these numbers will be lower for B2B ecommerce and come up depending on the goals and industrial average. However, there is always a chance to improve your ROI.
Strategies to Boost B2B eCommerce ROI
So, what should you do to enhance your B2B ecommerce ROI? The first thing to think about is that you should increase your revenue and lower the expenses invested. Let's see what we can do here:
- Improve your customers' CX to grow loyalty and get better LTV.
To achieve this goal, you need robust software that will be able to provide the capabilities customers need, like a self-service portal, 24/7 ordering, AI-powered search and chatbots, personalization, and so on.
- Enhance internal operations and achieve more transparency.
To get this, ensure your B2B ecommerce platform simplifies operations, automates them partly, and avoids duplicating tasks and data. For example, when working in multiple regions or having a multivendor marketplace platform, companies often duplicate their systems as a whole. To avoid this, all you need is a modular solution that uses headless technologies to connect each website to a single data source. As a result, all operations will become clear.
- Shorten your expenses by easy scaling and using the correct tools.
Multiple tools allow us to save on different processes. You will need to use API technologies to attach them to your solution. If your B2B ecommerce platform is API-first, you will easily connect to whatever you need.
As for scaling, choosing cloud-native software will help you save on servers and enlarge your business capacity in seconds when needed.
- Leverage data analytics to have all the data needed to enhance both processes and CX.
Deep data analysis helps you realize what you need and what is used just because it worked before. This way, you will be able to get rid of outdated processes and enhance all sides of your business.
All in all, boosting ecommerce ROI is simpler than you might think. All you need to do is robust software and an excellent marketing strategy with a customer at its core.
Calculating B2B eCommerce ROI
Now, let's move to accounting for the B2B ecommerce ROI. Many businesses would use special B2B ecommerce ROI calculators to determine their metrics. However, you don't really need any special complicated solutions to calculate it. All you need is to know your revenue and know your investments. For other tasks, there is Google Analytics and your B2B ecommerce platform that must not only provide raw data but be able to analyze them and show the result.
So, the general formula for the B2B eCommerce ROI discovery is the following:
B2B ecommerce ROI accounting formula
Here are the steps to go to get what you need:
- Find your total revenue. To begin calculating your ROI, it's crucial to determine your overall revenue for a specific period. This involves adding up all the sales you've generated during that timeframe. Remember that you need to only include revenues related to your investments; general B2B ecommerce platform cost won't fit.
- Assess your total costs. Next, you'll want to evaluate all the expenses linked to the operation of your e-commerce store during that same time period. This may encompass various items such as website hosting fees, marketing campaign costs, inventory expenditures, and shipping expenses.
- Deduct costs from revenue. With your total revenue and costs identified, you can now subtract your costs from your revenue to calculate your profit.
- Calculate your ROI. Lastly, divide your profit by your total costs and then multiply the result by 100 to obtain your ROI percentage. This will provide you with a clear picture of your return on your investment.
The risk of using ready calculators is that you might accidentally choose the wrong number, or calculators can offer to share extra closed data for no reason. Another possible failure is missing some fields that very specific businesses, like B2B procurement marketplaces, should include in the calculation. The creator of a calculator should clearly understand what B2B ecommerce is. This is why a simple formula always works.
What Constitutes a Good ROI in B2B eCommerce?
So, what is a good ROI for ecommerce, again? It depends on the multiple details, but let's try to understand what a good ROI for B2B is.
- From the side of the business industry. Different sectors may exhibit distinct profitability patterns. For instance, industries with specialized products that are sold rarely but are expensive would need a lower ROI, and it's OK. At the same time, businesses with lower margins or intense competition might need a higher ROI to help them succeed.
- From the side of a business model. B2B ecommerce that sells straight to customers would show higher ROI, while distribution and dropshipping models include more expenses, so if the prices are not correctly built, the ROI might be lower, and it is hard to make it grow.
- As for the marketing strategies, it all depends on the model you choose. If your main goal is to improve LTV, ROI can grow as you spend less; when the company uses a quick and expensive advertising tool, it would be challenging to show a higher ROI.
With these and other details like risk tolerance of the business, market dynamics, and more, B2B ecommerce is more complicated to account for ROI. Though, this metric is tailored to help you see the general state of your business at any moment.
Though many B2B business owners believe that accounting for B2B ecommerce ROI is complex and doesn't bring enough profit to be worth it, this metric can help you see where you can improve your business model.
After accounting for your ROI, most of the things you can see are related to profits or spending. And these issues can be easily resolved with a correctly chosen B2B ecommerce platform that can easily enhance your ROI from both sides:
- Help you analyze what is going on so you can use the strategies we described.
- Find ways to improve your customers' CX and increase loyalty easily.
- Enhance your internal operations and make them more transparent and cost-efficient.
All this is possible with modern ecommerce platforms like Virto Commerce that provide cloud-native and API-first technologies to make all your B2B ecommerce goals possible. Explore the Virto Commerce B2B ecommerce platform with us and see what you can do right now. Our experts are ready to assist with more than just ROI calculations but overview your business and share expertise on where to start. Reach out now to learn more.