Building a consistent cross-channel customer experience requires outlays for technologies, process reengineering, culture change, and more. But the expense is worth the investment when what ultimately transpires is customer satisfaction and loyalty. When we plan our budgets, we shouldn't think only about the dollars to be invested. Customers are a far more scarce and valuable resource, and we need to manage the customer resource just as closely as we manage our capital.
We try to use our monetary budgets wisely. If we miscalculate and need to replace some financial investment that didn't work out as we'd hoped, and we can show we have a smart business plan with a good offer and customers who want it, then we can get more money by borrowing from a bank, or getting the budget increased. But if we use up a customer, then we can never replace her; we may be able to get another one, but we should have had two. And there are only so many customers available for the products and services you and your competitors offer. Once we use them up, we're out of business.
Think about it: The only reason you have a business is because you have customers. If you don't have customers you don't have a business, you have a hobby.
And let's make no mistake: Companies use up customers every time a customer gets an irrelevant message or has to wait too long on hold at the service center or has an unresolved problem. This is especially true with the multichannel customer experience; customers are often frustrated enough to take their business elsewhere when they see different offers in different channels, or when they have wa great experience on Twitter but a terrible one at the contact center, or when they can get more information online than they were able to get from a store associate.
Considering that customers provide as much "ROI" as other investments, it may be time to rethink how you calculate their value, and how much you're willing to invest to create a superior multichannel customer experience. Return on investment (ROI) is a measure of how much value you can create for your company in exchange for the money you have to use. Return on Customer (ROC) is our own measure of how much value a company can create for the customers it has to use. It is a metric based on the efficiency with which a company's customers are creating value.
The calculation for ROC at the enterprise level is fairly straightforward—it's the firm's current-period cash flow from its customers plus any changes in its underlying customer equity, divided by the total customer equity at the beginning of the period. But what that really means for a company is that your customers have a value to you today, and as of today, the rate of change of that value means the value will be different (and predictable) for tomorrow or next quarter or next year. A customer interaction that goes well can increase that value not only in the moment (with a product sale, for instance), but also over the long term as a customer buys more or more frequently or refers friends and associates (based on her good experience). Conversely, a poor experience will destroy value in the moment, as well as over the long term as a customer buys less and spreads negative word of mouth.
Our main goal in introducing the ROC metric is to provide a true customer-based financial measure that helps companies balance their long-term success with customers against today's quarterly numbers. ROC should help everyone in the company see the tie between customer experience and shareholder value. It's a way to ensure customer value not just today but tomorrow as well. And it's a way to show that investments in a retention-building multichannel customer experience are wise investments indeed.