In today’s business world, it’s not enough to talk about the long-term benefits of your product or service. While strategic value is important, pairing it with clear Return on Investment (ROI) figures can make your customers’ Chief Financial Officers (CFOs) your biggest advocates.
ROI measures the financial return of an investment compared to its cost. It’s a straightforward way to show how much profit or savings your product or service delivers. For example, if a company invests $10,000 in a solution and gains $30,000 in return, the ROI is 200%.
While strategic value focuses on long-term goals and positioning, without tangible ROI, these benefits can seem abstract. Combining strategic value with clear ROI provides a compelling reason for customers to continue investing in your solutions.
For a deeper dive into the interplay between ROI and Return on Value (ROV), check out this insightful article: Why Customer Success and Account Management Should Ensure Customers Get Both ROV and ROI.
1. Simplifies Renewals and Expansions: When customers see clear financial benefits, renewing contracts or expanding services becomes an easy decision.
2. Early Churn Detection: Regularly sharing ROI data helps identify potential dissatisfaction early, allowing proactive measures to retain customers.
3. Builds Trust: Transparency in sharing ROI fosters trust, showing customers you’re committed to their success.
4. Strengthens Relationships: Demonstrating ROI reinforces the value you provide, deepening your partnership with customers.
5. Differentiates Your Offering: Clear ROI figures can set you apart from competitors who may only offer strategic value without measurable returns.
Implementing a structured approach to communicate ROI can significantly enhance its impact.
We use—what we call—boomerang psychological reinforcement technique to share ROI, offering sufficient detail to establish credibility and trust, and finally restating the ROI in a memorable and personalized way.
Consider the following steps:
1. Start with the realized ROI: Present tangible benefits upfront. For example, “Saving 5 person-days per month translates to an ROI of $14,400.”
2. Use conservative assumptions: Provide modest figures to build credibility, ensuring the ROI is realistic and achievable.
3. Show transparent calculations: Share detailed computations to reinforce trust and allow customers to understand the basis of the ROI figures.
4. Reinforce with a tailored message: Customize the ROI Messaging to resonate with different stakeholders.
By comparing the actual rolling ROI with the initial sales-projected ROI, you can predict potential customer churn up to nine months in advance. This proactive approach allows you to address issues before they escalate, ensuring sustained customer satisfaction.
Integrating consistent ROI sharing into your customer engagement strategy not only simplifies renewals and expansions but also strengthens trust and reduces churn. By showcasing both strategic value and clear financial returns, you position your business as an invaluable partner to your customers’ CFOs.
Embrace ROI sharing to demonstrate value and cultivate lasting, profitable relationships.
