Does ROI Matter?
Back in 2007 when Netkey was Netkey (but used to be
Lexitech…) Alex Richardson of Selling Machine Partners gave a talk on ROI.
Alex has been around as long as anyone and has gotten to have this conversation with hundreds of clients, each one another variation and difference from the other.
And in today’s world technology has assumed an even more prominent influence in drivers, sometimes a project being done for the sake of technology…
Alex reminds us that it is the consumer needs that matter,
Here is the talk…
Much More to ROI Than Dollars
“The best ROI calculators can be computed on the back of a napkin versus the use of complicated Excel programs.”
That was an opinion espoused by Alex Richardson, founder and executive vice president of business development for Netkey, during his speech, “Does ROI matter?” at The Kiosk Show in Long Beach, Calif., last week.
Richardson continued, “Don’t believe the companies that say they offer 20 to 100 times the return on investment. That means nothing.” He said he much prefers the philosophy of Ken Harris, CIO of retail outlet The Gap, who has said he only needs to see a doubled return on investment on projects within one to two years and wants projects implemented in under 90 days.
Richardson’s point was that the traditional measure of ROI: cost reduction plus revenue increase divided by total cost of ownership, is a good start in calculating ROI, but it’s not the final determinant.
“That traditional view of ROI ignores the quality of technology available, the impact of loyalty, the support of the implementation,” he said.
Richardson told the crowd of some 50 technology buyers that they need to make their kiosk projects a customer showcase, not a technology showcase. He said that technology is a feature of a successful kiosk project, but not the main driver. The main driver is usefulness to customers.
He offered the example of Howard Hughes’ infamous Spruce Goose, which, coincidentally, sits in the harbor in Long Beach. The airplane is stunning in its features, including a cockpit instrument panel, but the craft couldn’t get more than 50 feet above the water in its test run.
Questions that potential kiosk deployers need to ask about a project include: Does the kiosk capture my customers’ preferences? Does it leverage other customer channels, including employees? Does it offer continuous customer feedback? Does it treat employees like customers, too?
He said focus groups are important tools for judging the happiness of customers and employees with a kiosk. Employees’ happiness is a critical consideration, he said, because their attitudes and willingness can make or break a deployment.
Model markets
Richardson cited successful kiosk deployers Borders Books, CompUSA/AOL, Fleet Bank and BMW as examples of companies that look beyond dollar signs in calculating return on investment. He asked the audience to yell out ROI measures for each. In the case of Borders Title Sleuth kiosks, for instance, people offered the following as measurements of success:
- Decrease in store labor
- Increased length of time customers spend in store
- Number of books ordered
- Sales volume
- Information capture on the types of books customers like
- Repeat business
- “Line busting,” or decreased wait times
- Increased margins on books that are special orders
- Ability of employees to flip toggle switch and go to HR applications
Asked by an audience member which industries have good potential for ROI, Richardson cited the gaming, foodservice and automotive industries. “Any time you are automating a repetitive task, like airline check-ins, there is potential,” he said.
Difficult measurements
Richardson said in the speech that it can be hard to pinpoint the different aspects of return on investment.
“The vendor and client have to agree on the elements. Everyone has to be crystal clear on the applications and what they are trying to accomplish. There may be one or two things the client thinks the customer needs. But does the customer realize that he needs it?”