GRBN News: While the value of proving out ROI is clear in nearly every business case, it’s less obvious where to begin. Before getting overly transfixed on sophisticated models and calculations, it’s best to adopt what we call an “ROI mindset.”
Below is a five-step framework to guide organisations along the path towards embedding customer-centered ROI-based decision making in its programs and initiatives:
1. TAKE STOCK OF WHAT YOU HAVE
ROI is a function of input and output. Input is the investment into customer initiatives (e. g. measurement platforms, focus groups, surveys). Output is both the information extracted from these efforts and the application of the information to foster better decision making.
Although it may sound simple on paper, many organisations feel they’re not realising an ROI on customer information simply because they don’t know the breadth of information they’re collecting to begin with—let alone how it is applied.
The first step towards understanding an ROI on customer information is getting a firm handle on what information is being produced today. Conducting a data audit throughout the organisation will identify where sources of customer information live, how to access them, what questions each source can answer, and which holes still must be filled.
2. ESTABLISH A BASELINE
After the data audit is complete it will be possible to see each initiative that has been conducted or is in the works, and what customer information it yields. However, this is only half of the equation. The other half is linking the information collected with actual results to set a baseline for comparison against future improvements.
Ideally, it will be possible to pair each information source with one or more quantifiable financial outcomes, yet this is large ask. A great middle ground is to compare customer information investments against changes in customer KPIs over time. While not perfect, it lays the groundwork for more sophisticated ROI efforts and expresses customer-information ROI in terms of customer outcomes. If possible, bringing in aggregate-level financial data over the same time period, such as growth percentage, highlights the way customer KPIs impact financial results, completing the link.
3. COMMUNICATE RESULTS AND ESTABLISH A CULTURE OF ROI
Make sure others in the organisation are aware of the customer information being collected and the impact it’s creating for the organisation. Without this step, it’s impossible for stakeholders to see the value of the investments they are making. All of that said, ROI will be new to many within the organisation and colleagues may not be used to digesting or requesting ROI. Bring them along on the journey with you. Set up trainings to get others up to speed on any new terminology and begin making ROI a component of initiatives going forward. Ensure stakeholders receiving ROI reports are comfortable with inputs being used and how results are calculated.
Establishing a culture of ROI increases engagement with the decision-making processes, making it easier for those involved to see the impact customer information initiatives are making.
4. REFINE THE TOOLSET AND IMPROVE DECISION MAKING
Up to this point ROI efforts have been focused mainly around ad hoc requests to prove results on initiatives that have already been completed, using data that is already available. The next step is to create more robust and scalable processes, so your team focuses less on running the calculation and more on being strategic business partners.
What does a strategic business partner look like from an ROI standpoint?
- Evaluating initiatives before they start as well as after to ensure only the highest-impact plans are funded
- Having the vision for what information the organisation needs from a financial and customer standpoint and taking the initiative to get those sources established so they’re in place when needed
- Creating models which link your financial data with customer data to tailor the expected and realised impact to your bottom line
- Partnering with finance to adopt their ROI reporting standards so executives receive ROI in terms they’re used to seeing
- Leveraging Data Engineering and Data Sciences resources to integrate into internal data pipeline and create ever-more-accurate tools for on-demand access – decreasing resource load and improving the speed of results
5. COMMUNICATE IMPACT
For stakeholders to feel the impact of their customer information investments they must see it as well. Examples of when communication could be helpful, include:
Before funding an initiative, forecast its impact and use the predicted return as a focal point of the planning process. This will help to identify trade-offs between available options as well as show how your team is a strategic steward of the company’s resources.
At the end of the year, summarise the team’s activities and link those quantifiable, financial outcomes.
When projects are completed, report back to the team and others the success of their efforts and how that compares against past initiatives.
Author: John Joba, Gongos, Inc
The Australian Market and Social Research Society is linked globally to 45 associations through its partnership with the Global Research Business Network (GRBN) and the Asia Pacific Research Committee (APRC). Click here to read about the AMSRS global network. This article is originally sourced from GRBN website.