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Four areas ROI is crucial for success

Stefan Kazakis
01 December 2015 2 minute readShare
A team of businesspeople looking successful and happy

Having clarity within your business is one thing, but are you clear about what your customers want? After all, it is your customers who will make or break your business.

Sometimes small business owners get a little tonguetied and challenged when it comes to talking to future clients about what their investment will be and what return they will get. Especially when starting out, some business owners find it difficult to talk about ‘the money side of things’.

Investment vs return on investment (ROI) for your customers is about clarity, and the more confident you are about how you get clients from A to B the more clearly you’ll be able to convey this to your clients. Why should people use you and not your competitors?

The four f's

There are all sorts of reasons people make a purchase. What are you really selling to your customers? You need to spend time to figure this out. There are four main types of returns you can provide. These are very important for you to remember and strategise to achieve for your clients. I call these the Four Fs:

  • Financial ROI
  • Feelings ROI
  • Physical ROI – okay, I know it’s not an ‘F’ but it sounds like it!
  • Fire in the belly ROI

Financial ROI

This one is obvious. If a client invests $100, $1,000 or $10,000 with you, what return will they get on this? You should be able to answer this easily and accurately – if you can’t you don’t have enough clarity about what you do. If you can’t establish a percentage return, what is your rule of thumb? As a rule of thumb, I aim to provide a minimum of ×10 return for all my clients.

Feelings ROI

This is going beyond the emotional return on investment for the purchase of your service or product. For our clients it could be the business owner who has told the family that when things pick up they are going to Disneyland! What can you do for your client to help with this? It’s the feel-good factor.

Physical ROI

A haircut is not going to give you a financial return unless you are a movie star or a model, but you get an emotional return on investment because it makes you look and feel good. I’m sure you know somebody who spends a lot of money on hair-cuts. Can you make people look 10 years younger? Or can you give them a change of environment? Or enhance their surroundings or space?

Fire in the belly ROI

This is the most critical return you can give somebody – it’s putting a fire in their belly. This fire is what my clients are often seeking, even though they might not know this. The biggest drag on most deadwood businesses is not a lack of knowledge or resources but a lack of direction and determination. Once the fire is lit they are off, but they need somebody else to light the fire. What they are buying from me is purpose. Is this something you can do? The moment you seriously connect and it fuels the rage to just get going, that’s massive. When you can do that for your client it’s game on.

The most obvious return on investment, no matter what you do, is a financial one. The financial return comes from how much money people spend buying from you. Most people will shop around when making a purchase and a key thing they are considering is price. They want to know how much they have to spend if they buy from you and what they will get for their money. If your product costs $500 more than your nearest competitor, what are they getting for this extra outlay?

There are businesses that obviously lend themselves to a financial ROI, but you can’t stop there. It’s your responsibility to understand and cover all of the different types of ROI. This may be difficult but you must push through. You must get to an answer. Think outside the square.

Stefan Kazakis is a business strategist, sought-after presenter and speaker and author of From Deadwood to Diamonds.

Four areas ROI is crucial for success
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Stefan Kazakis

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