Calculating the return on an investment (ROI) is a popular tool that business owners often use when assessing a new investment, especially when weighing the possibility of an investment in new technology. And although at its core it is a very simple calculation, the factors taken into consideration when determining ROI can be complex, especially when it comes to technology.
The simplest ROI to factor may be that potentially produced by a stock investment or selling a property. You purchase a stock for $1,000, sell it one year later for $1,100 and your ROI is $100 – the increased value of the stock. Similarly, you purchase a property for $800,000, you invest $200,000 over a two-year period on improvements and sell it for $1.2 million and your ROI is $200,000 or %20 percent, or %10 per year your money was invested.
Those calculations are pretty straightforward. But let’s look at a scenario that is a bit more opaque. You hire a talented sales representative and are a little disappointed in her output. When you sit down to discuss her numbers, you learn that she is spending 25 percent of her time handling marketing and social media for your agency.
Now you are faced with a choice: let her continue investing her valuable time in this pursuit or hiring or outsourcing this work to free up her time for the more important work of selling and supporting clients.
How do you calculate the ROI of outsourcing your marketing and social media management? A simple calculation is to assess the sales reps increased output against the cost of marketing. But if your marketing efforts, now managed by a professional agency, also increase title orders for the whole agency, the ROI is actually much more than just one salesperson’s increased numbers.
Technology ROI
Determining the ROI for a technology investment also has similar challenges, but it is an important first step in assessing the value to your agency.
The place to begin is with a cost-benefit analysis (CBA). When doing a CBA, as in our marketing example, it is important to look at the big picture to get the fullest understanding of the impact of the new technology.
In terms of the cost of the technology, you will want to consider the out-of-pocket cost for the software itself, time your IT staff must invest in integrating the new technology into your existing tech stack, and, of course, staff training time.
The second avenue to pursue is to investigate the benefits of the added technology. Some benefits are very direct and quantifiable:
Some benefits may be less quantifiable but equally important:
Technology has been a boon to the title insurance industry over the past two decades, as we moved towards increasing automation and faster turn times. It is important as you continue to automate important processes in your business to do your due diligence in determining the efficacy of your investments.
At VizionX, we are here to help you streamline your business processes to prepare you for future market growth. We have designed our VizionX Fees to integrate tightly with popular platforms in the title and mortgage industries, reducing your time investment per file. Call us today to learn more.
