Many industries have acknowledged the general value of increasing their customer focus. Yet some organizations struggle to calculate the actual impact of customer intelligence on ROI. This can hold them back from fully utilizing data-driven insights. Below, BlastPoint CEO & Co-Founder Alison Alvarez outlines key considerations to establish customer intelligence-driven ROI.
Senior managers and boards almost always require ROI calculations before they approve investments. But when it comes to the ROI of understanding their customers, even large and sophisticated companies often don’t know where to begin.
An organization that understands the costs and savings that comprise this ROI calculation can better prioritize its investments to motivate customer behaviors. Its upper management can also be more comfortable in deciding which initiatives will have the most impact in moving their organization forward.
Utility assistance (CAP) programs, for example, cost money upfront due to lower bills, but can actually save a utility $150-$200 for every customer who enrolls.
“When you compare customers currently on CAP to those who have recently rolled off,” says Alison Alvarez, BlastPoint’s CEO, “it’s clear that costs beget costs.” When someone is late on one bill, it’s more likely that they will be late on the next one and that you will have to spend money to hang a door hanger on their door or have the call center call them. A utility might just send them a warning letter instead, but this could cause big wait times in your call center if enough of these customers want to talk directly to a representative.
Sometimes, the utility will also have to send a truck to their house to shut off service, or even be forced to write off the entire debt. “We see tens of millions of dollars in write-offs among midsized utilities every year,” says Alvarez, “just because they don’t catch customers in this downward spiral early enough. The further down the road people get in that process, the less likely they are to work with you.”
There is an even bigger ROI when a utility can determine which of its customers might be interested in the Low Income Home Energy Assistance Program (LIHEAP), because these funds come from the federal government instead of the utility’s rate case.
Switching customers from paper billing to E-Billing is something that companies in lots of industries want to do, and it has its own ROI considerations. Once a utility identifies and targets the customers who are likely to adopt e-billing, it can save around $65 over the lifetime of each household that switches. This mainly comes by avoiding costs on postage, paper, and maintaining the infrastructure to receive checks and cash them.
While the call center might become busier, this will give the company another link with its customers. A verified email address is also generally required for e-billing, which can be valuable for other outreach initiatives, says Alvarez.
Identifying and Fixing Bad Data
Investing in making sure you have complete and accurate data can also have a big ROI. Lots of service-based organizations have good addresses for their customers but are missing good email addresses or phone numbers. This could end up being very expensive for companies, in addition to significantly hindering their outreach opportunities, especially if they don’t know that their data is flawed ahead of time.
Emails, for example, are the cheapest way to reach customers, and response rates for texts are 8x higher than for email. Even calling someone is cheaper than sending a human being to their house. While companies know they should invest in getting this information from customers, they don’t always know if what they have is accurate.
How BlastPoint Can Help Drive Your ROI
BlastPoint’s software helps organizations identify specific customers who are most (or least) likely to enter a program or adopt a new product, and then shows organizations how to engage with these customers in the most effective way. Our data analytics tools also geocode a company’s customer data to identify contact information that is most likely to be wrong. BlastPoint’s platform is designed to be used by any businessperson – especially non-technical ones – and delivers results within weeks regardless of the current state of an organization’s data infrastructure.
Our patent-pending AI algorithms do this by segmenting your customers into concentrated pools, so organizations know where to deploy their resources to achieve the highest ROI. The standard number of write-offs for a utility is about 2-3%, for example, but BlastPoint develops high-risk pools that might have a concentration as high as 33%. “This gives you a preemptive window,” says Alvarez. “The old cliché, ‘an ounce of prevention is worth a pound of cure’ is certainly true when it comes to billing and payments.”
Helping Managers Make the Case to Focus on ROI
“One of our goals,” says Alvarez, “is to help our clients build customer calculators for everything they do. When clients have a clear idea of the customers that make up each of these segments, they can combine that with what they know about industry benchmarks to get a lot better idea of the ROI for specific initiatives.”
“Optimization is necessarily ROI centered,” BlastPoint’s CEO continued. “The goal is to have more engaged and happier customers. We understand how to quantify the web of costs and savings, and help our clients know the value they are delivering to their customers every time they use our product.”