Measuring RoI of Customer Happiness...

Every sales or marketing or customer service or engineering initiatives has a cost and reward associated to it. For any company the rewards or benefits should outweigh the cost for it to be adopted by the company's' management. But what happens when it comes to customer experiences, are any short term benefits that can justify immediate implementation of a customer happiness program? Or its long term advantages and what is the most effective way of measuring Returns on Investments (RoI)?

In the financially driven world of business RoI is measured by

• Revenue generated
• Cost Saved
• Profit made

Having said that what is the best way in measuring the RoI of a CEM program? First off we need to understand why a CEM program is put in place... The general answer will always be to keep customer happy and satisfied. However beneath that very general statement are underlying business cases such as:

• Lower number of customer complains.  Just imagine every customer complain can cost say 5$ and if there are 1,000,000 complains avoided every year, that's a 5,000,000$ savings
• Lower the Average Call Handling Time. When calling customer service just imagine how much time is wasted going through the IVR then a long interview with a customer service agent. What if you can reduce this by let's say 1 minute? In an average mobile operator the cost of a customer service call is around 1$ per minute, now consider the 1,000,000 complains where every call handling time is reduced by 1 minutes, that's a 1,000,000$ savings.. In the real world the savings can be as much as 10 minutes
• Improve First Call Resolution rate. For every customer service organization resolving customer issues at the very first instance they complain is very important. Let's just say it will cost 5$ per every complain that is not resolved by first line support so if all the 1,000,000 calls goes to 2nd line support that's a 5,000,000$ cost that can be saved if complains are resolve the first time around.
• Lower Churn rate. Let's just say out of those 1,000,000 callers, 2% churns or departs as customers. That's 20,000 customers, and let's just say they ARPU is 100$ per year that's 2,000,000$ in potential lost revenue saved.
• Increase service usage. Happy customers normally use more services. Let's say as a mobile operator you offer data services for 5$ per month with 1 GB of data, with your customers being happy say about 1,000,000 customers upgrade to 10$ a month. That's an additional revenue of 120,000,000$ per year.
• Deploy wanted services. What a good CEM program will show you are future services that your customers will take. Let's just say your customers move to WiFi every time they use Facebook, now if you know this fact why not offer your subscriber a 1$ a month Facebook usage using your network. For 1,000,000 users who will subscribe to the service that's an additional revenue of 12,000,000$ per year.

There are of course a lot more potential savings and more potential revenue generated with the right solution. Having said that there will be more examples to learn from in Dubai for the CEM Summit  next month. This same topic will be discussed by David Perrota  of Zain, Liz McSorley of Du, Nedal Mostafa of Ufone and Ahmed El-Bana of Mobily.

This group of industry experts will be exploring:

• How to you use the results of your ROI analysis to make the customer experience a strategic priority at a time when all departments are competing for budget?
• How to you monitor and strengthen the link between customer satisfaction, recommendation rates and customer acquisition?
• How to you ensure that your customer experience improvements will increase ARPU?

Now I am tempted to attend....

Which has a better RoI, direct or broad marketing?

In the consumer world, marketing to a wide audience usually has the most impact, thus companies broadcast or advertise in various media (print, tv, mobile, etc). The return on investment in such marketing campaigns are huge since it can sway a whole new generation of customers. Is the same in B2B?

In the business world it is possible to broadcast in print media, visual advertising and various exhibitions. None of them comes without a cost, the question to me is if is justified with a good return on investment. Exhibitions in particular where costs are around 20,000€ to 100,000€ if you factor in all the cost involved (logistics, resources, etc) are very expensive (not if you are an industry giant) for SMEs. Of course you get that marketing presence but is it really worth it? Just consider that at 100,000€ that’s the annual cost of a good sales person who might be able to reach the same companies you target to get your presence known in an exhibition.

There are advantages of course in broadcasting to business clients such as when launching a new product or entering a completely new market… you announce your presence and increases brand awareness and recognition. Having said that, what is the most cost effective way of achieving a wide brand awareness and product recognition? Is it through various exhibitions or print media or visual advertising or direct marketing? In my humble opinion exhibitions are great if you have a captive audience, such as being a speaker on a hot topic or launching a revolutionary product that everyone is interested in or scheduling meetings in advance with potential customers who are attending the exhibition (saving you the travel cost later on).

With direct marketing you are able to reach your intended audience first hand (if you know who they are and if your marketing message is not considered as a spam). For it to be effective it has to captivating and concise since most readers only has a few seconds to digest your message. The question is how can you design your direct marketing campaign to have the right effect?