ROI – Is this Aggregation Tool For You?

Article main image
Nov 18, 2016
This article is part of a series called Editor's Pick.

“My God these guys don’t even know what their return on investment will be.”  Jim Collins

The above statement could not be truer in the world of recruiting tools. Most of my career has been loaded down with tight budgets that seemingly are mostly gobbled up by the over inflated, you only use half of the features, ATS you were sold by a really slick salesperson. You know the kind that went around you to the HR lady and bought them a few dinners without ever consulting you? I have done four full cycle implementations of systems and I have zero interest in doing another one. Well, that is unless you want to pay me.

There are a plethora of tools out there in this space, and so many of them are doing the exact same thing! Some tools are actually more efficient than others, but the costs always seem to be high for the more efficient systems or the ones you are stuck with, like our ATS that we all know and love. So, if you are lucky enough to have any say on what tools or products you can choose, the best thing you can do is an ROI (return on investment). This is generally something you learn in business school, if you spend enough money on an undergraduate degree, they will teach you all kinds of acronyms like ROI or SWOT (strengths, weaknesses opportunities, threats). These activities are exceptionally helpful when a company is buying a product or going after business in sales. It’s a very smart analysis to do since you are trying to make those Benjamin’s, not waste them on poor investments that drop you into the La Brea Tar Pits that will bring your entire process under.

Let’s look at how an ROI can help you determine if the tool is for you before choosing a product that is supposed to make you hires. I am not a formula person. Mathematics is not something I have found overly enticing in my career, however, working for a data company I am starting to appreciate it. First off, if you are ever given a free trial, and you should always ask for this, make sure you have not only the time to use the tool but also to evaluate it. I know too many people who get a free week with a product and then wait until the last day to play with it. Sure, something always comes up, I get it, but try and schedule at least a few hours through the week to use it as though it would be your go-to daily tool. If you can’t make the time for his, or it’s not going to be your daily alibi, there is no reason to even considering purchase it.

Now that you have the uber cool tool that is going to save you time in finding candidates, and the program now affixed to your Google Chrome ribbon, it’s time to test it out. The most important thing you need to do, and yes, it is a little annoying, is to rate the results. Let’s say that you are using an aggregator. Start considering all of the information it’s aggregating. What percentage of time did you not get anything to when you did get something? Start with a number and write it down.

I like to do 50 people to start. Out of that number, let’s say for kicks that you only garner 25 people out of your search, so that is a 50% return. You can get very accurate with these numbers, but I am trying to keep it simple for us. To determine the percentage by dividing the number of data pulled versus the number not picked. If the number is something like 12 yes and 38 no (50 total), then divide 38/12, and you get a 31% hit ratio. Not so good, huh? You should run this method at least five times to get enough data to figure an average so you have a number you can use to evaluate.

After you have multiple searches to get a good set of data, then you can do an average. For the purpose of this post will use these numbers from searches done with a specific aggregator looking for contact information like email.

You add these numbers together then you divide by the five searches you have added up. Here is a basic formula:

Out of 100 searches with different search words:

  • 38
  • 36
  • 42
  • 26
  • 32
  • (38 +36 + 42 + 26 +32) = 174
  • (174/5) = 34.80%

As you can see we get 34.8% rate of return. Unless this tool is free, the ROI on it would be a horrible value. If you are not getting returns in at least in the 80% range, then paying for this type of aggregating tool then, in my opinion, you are wasting your money. I would also be really hard to get this by finance. Now let’s run the same search with a different aggregation tool and we got a different set of numbers, ones that look better.

Out of 100 searches with different search words:

  • 77
  • 86
  • 91
  • 80
  • 72
  • (77 + 86 + 91 + 80 + 72) = 406
  • (406/5) = 81.20%

We got an 82.6% success rate in finding email addresses. Sweet now that is something you could say this is valuable, but is it?

Just because you got emails, phone numbers, etc. how valid are they? What is the return on your emails? Were the phone numbers valid or were they solidly wrong? You can use the same formula above to evaluate this information. You now have real numbers to say yes or no to aggregation tools and the value that it may, or may not, bring to your team. #truestory

This article is part of a series called Editor's Pick.