Embracing Outcomes-Based ROI

The concept of ROI is deeply ingrained in business. Traditionally, it’s been viewed through a purely financial lens - total revenue versus costs invested. However, this narrow focus fails to account for strategic impacts, intangible benefits, and human elements like employee satisfaction. After countless conversations with executives and revenue teams, it’s clear this traditional approach to ROI needs an overhaul. The future lies in outcomes-based ROI.

What is Outcomes-Based ROI?

Outcomes-based ROI flips the script on traditional ROI by focusing on business goals and targeted outcomes rather than just dollars and cents. It measures return based on key performance indicators tied to solving strategic pain points across an organization or company.

The Limitations of Traditional Financial ROI

Financial ROI has inherent flaws:

• It attempts to quantify success using incomplete data and assumptions. Companies rarely share their full financial picture.

• It discounts intangible benefits like customer satisfaction, workforce morale, streamlined operations.

• It provides little actionable insight on business needs and gaps.

At best, traditional ROI gives a speculative overview. At worst, it draws misleading conclusions that impact business strategy.

The Promise of Outcomes-Based ROI

Outcomes-based ROI examines success through a wider lens:

• Holistically evaluates progress across KPIs like customer retention, operational efficiency, and product quality.

• Ties ROI to metrics that map back to business goals and pain points.

• Provides actionable insights on where to improve.

This approach provides a more accurate and complete picture of value created.

Putting SPICED to Work

The SPICED model further enables an outcomes-based approach by helping you thoroughly evaluate business needs.

Situation

Research the company’s current state across areas like operations, industry landscape, and internal culture.

Example: Use revenue trend reports to identify fluctuations and pain points.

Pain

Pinpoint specific problems or bottlenecks hindering progress.

Example: Survey customers on frustrations and challenges with the product experience.

Impact

Quantify how pain points affect the company. Calculate lost revenue, disengaged employees, etc.

Example: Use data modeling to forecast sales impact if customer churn increases.

Critical Event

Identify triggers that could spur action like new regulations or tech disruptions.

Example: Note emerging cybersecurity standards which may soon require changes.

Decision

Map the key players involved in decision making and gauge their priorities.

Example: Use tools to build a stakeholder analysis.

Shifting the Paradigm to Drive Real Results

By moving beyond the limitations of traditional financial ROI and embracing a more holistic outcomes-based approach enhanced by frameworks like SPICED, businesses can fully understand and quantify success. Rather than vague speculation, outcomes-based ROI offers accurate strategic insights - the tangible information needed to identify gaps, demonstrate value, and guide meaningful improvements. The paradigm is shifting, and those that embrace it will gain an unrivaled view of their business potential.

Don’t want to implement a new methodology? I get it, map SPICED to your existing one.