Monday, May 28, 2012

ROI for the Non-Financial Issues?

I was looking at a book about keeping statistics for churches recently: Effectiveness by the Numbers by William R. Hoyt. He uses interesting ratios while most churches are satisfied with raw data of attendance and giving. He uses market share instead of attendance. How many people are attending for the geographic area that the church is reaching, including all of the area from which people commute to attend? That would be not just the town the church is in, but also surrounding communities, townships or county areas. He also suggest not just the number of conversions or baptisms, but conversions per 10 members. This would indicate whether the growth in attendance is also fueling growth in outreach. This would indicate if their 'investment' in outreach was generating a return, an healthy ROI.

Likewise, Walgreen's measured sales per customer visit. Not just satisfied with sales in the store, they wanted to know if they were converting visits into sales. For every person walking into the store, were they selling more today than they have in the past? Were they finding the right merchandise to feature in the front? Were they catching the customer's impulses to buy more than they intended? To what extent were they satisfying the reason for entering the store? Those are the 'soft' questions to the financials. The soft stuff is harder to measure.

What metrics could you measure? It could be tough to get the data but wouldn't you want to know what percentage of your customers' expenditures on your product or service are spent with you? That's not just market share based on total market 'spend' and what portion you have because you might have customers who buy yours and your competitors'. Obviously there are customers who spend money across the street and don't spend any at your location. Likewise, you have some customers who give you a hundred percent. The answer could give you a sense for the loyalty you have with customers, or a sense of how just convenient you are when their preferred brand is not available.

For example, I will buy a coffee drink at Starbucks, only if I can't find my preferred brand.

If you find out that you were getting 20% of the 'spend' across the board and that no one was giving you 100%, what would you do differently? 20% market share sounds good, right? But you don't have any loyal, enthusiastic customers. What does it take to start converting some customers into fanatics? What investments would be needed?

What other questions should you be asking and getting the answers?

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