What is your Return on Customer Investment?

What is your Return on Customer Investment?

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Adam Ramshaw
Adam Ramshaw has been helping companies to improve their Net Promoter® and Customer Feedback systems for more than 15 years. He is on a mission to stamp out ineffective processes and bad surveys.
Calculate your ROI with this Excel-based Return on Customer Retention Estimator

CEOs and CFOs take a liking to seeing numbers; especially profitability numbers. So if you can’t speak their language and convert your project or proposal into numbers that talk to them; you can pretty much bet your chances of having it approved are slim to none.

Fortunately, there’s a great approach that allows you to provide the facts you can take to your CEO or CFO; the Return on Customer Investment. It’s a business approach that looks at all of your customer focused investments and puts hard return on investment facts behind them.

Return on Customer Investment allows you to justify many types of customer focused investments including for example:

Customer Satisfaction

The greater the customer satisfaction, the greater profit…right? The answer is obvious but it’s so soft and difficult to relate to profit. There are several approaches that can be used to develop hard business cases for investment in customer satisfaction.

However, Net Promoter Score has been shown to be closely align to future customer loyalty.

Customer retention

So how would you go about justifying investing in existing customers? There are several approaches to  return on customer retention models that look at the opportunity cost rather than the acquisition revenue of retention campaigns.

Download a free simplified customer lifetime value and return on customer retention calculator and see what your upside looks like.

Educational campaigns

Here is another type of campaign that you know makes sense but just doesn’t stack up by itself. Product benefit education is used by lots of different organisations including banks to provide lift to other campaign types.

The approach is to develop regular contact to educate the customers in this group on the ways that you  can benefit them and help them to under stand their financial needs. For example banks can educate customers on how to obtain and grow wealth from their first day as a customer. To check for these on a regular basis, customer education can be built into the call quality monitoring.

I've created an Excel based Retunr on Customer Retetnion Estimator so you can  perform ROI calculations on investments in Customer Retention. Download it Here