Last year Vail and Beaver Creek started using RF scanners to check lift tickets and passes in line. I like the idea because it improves the customer experience. The RF Scanners allows lift tickets and passes to be scanned through ski jackets and clothing. It’s convenient not having to dig through your clothes looking for your pass to be scanned. Faster lift lines and less hassle in the line improves the customer experience.
It’s a good differentiator. But does it have an ROI (Return on Investment?)
I found myself asking this question after being scanned through my big puffy jacket. I can’t imagine replacing the existing scanning system with RF scanners could produce a compelling ROI. Lift lines don’t create revenue, the tickets have been purchased. The time in line, may be shortened, but not enough so that skiers would notice. So, how does a decision like this get made without a compelling ROI?
I have been part more of than my share of new idea discussions. Almost every discussion turns to ROI. It’s a fair question. An investment requires a return on that investment. The problem is, in most cases, it’s how ROI is calculated that is the problem. Far too often, companies look to calculate an immediate return. If we invest in the scanners, how much money will we make on that investment. I think this is the wrong way to look at it. I’ve watched too many great customer experience, customer focused ideas go down the crapper because a measurable ROI can’t be calculated.
Companies need to consider calculating ROI differently when it comes to customer service, customer engagement and other types of experienced based investments. They should consider aggregating a number of customer experience projects into one ROI calculation. For example, rather than trying to calculate ROI on one investment, create a budget of a number of customer experience projects and calculate a ROI on the collection of efforts. Customer service is rarely experienced via one engagement but by the collective experience. It should be measured and invested in the same way.
Does Vail and Beaver Creeks RF Scanner system create a strong ROI all by itself? I doubt it. However, when combined with the skiable terrain, the abundance of high-speed lifts, the back bowls, the outstanding service, the world class ski school it absolutely does. Vail and Beaver Creek are two of the best and most prestigious ski resorts in the world. They got this way because of decisions like putting in RF scanners
When it comes to customer experience and engagement ROI isn’t always an easy calculation. But that shouldn’t keep you from doing it. Your customers don’t care about your ROI, they care about what they get for THEIR dollar and it’s more than being scanned through their ski clothes.
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Love, love, love this post. I'll be back to read more!
To your point, in some cases firms look at these types of investments as investments in the brand experience. A lot easier for high end / high quality firms to justify these days than the average run-of-the-mill company.
Comment by Lynn_Anne_Miller — December 23, 2009 @ 11:31 am
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Great article, I agree.
If we use common sense we all know that exceeding expectations lead to customer loyalty. A measurable return on the investment is the biggest problem selling a Customer Experience improvement project at potential clients. For now the NPS is the only measurable way for customer experience.
Ronald de Jong
Ripples Business Development
Comment by Ronald de Jong — December 23, 2009 @ 1:10 pm
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An experience is an experience; because something costs less, does that mean customers care less about the experience? Does a wait in line at KFC feel better than a wait in line at Nordtroms?
I think experience is becoming less associated with “price.” Especially with the impact of social media.
Comment by Keenan — December 23, 2009 @ 2:06 pm
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NPS?
Today it's more than exceeding expectations. It's how did we impact the customer emotionally. How did we impact their overall experience, whether they expected it or not?
Comment by Keenan — December 23, 2009 @ 2:09 pm
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You nailed it. Making decisions about the customer experience based on spot interactions sounds a lot like mediocrity. It's the experience that matters — the details (that include the RF system).
Comment by Daniel Waldschmidt — December 23, 2009 @ 3:38 pm
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Jim, this is a very astute observation. One of the reasons I was attracted to management accounting and became a Certified Management Accountant in Canada was to be able to help businesses connect sound, often intangible, investments with their bottom lines. It's not just about valuing intellectual property or other similar assets.
In my mind, you measure ROI on two types of spending:
1) Operational (typically pretty easy to match the investment with the return or intuitively understand that a simple sunk cost is the cost of doing business)
2) Strategic Investment Pool (the return, financial and strategic/nonfinancial, on a specific initiative, regardless of the specific cost items inside that initiative)
It's possible that, whether consciously or not, the RF readers were part of that second type which you alluded to as Customer Experience Projects. Rather than the ROI of a Customer Experience Project, it might be interesting to take a project, do some checks and balances against a strategy (maybe a balanced scorecard approach or some approximation of that) and measure the ROI across non-financial components as well.
In this kind of system, the RF chips become part of the brand, just as much as a logo, ski run or lodge or whatever other differentiators there are for mountains (you'd know this better than most of us here, I bet).
It's easy for managers in large companies, or owners and managers in small-to-medium sized companies, to get tied up in the return of specific line items. I think that in doing that, they've lost sight of their strategy or vision and replaced it with short-sighted financial return. I don't think that you can do something “just because” in a business; even though it seems like a good idea, there has to be, at minimum, an intuitive link to ROI followed by some kind of quantification and therein lies the talent of the decision-maker and analyst.
Comment by davemacdonald — December 24, 2009 @ 12:41 am
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Great comment,
It is with out a doubt an art and a science. Unfortunately, in the
cover your ass world of corporate America everything ends up in your
number one. Everyone is looking for proof. No one wants to go on
intuition and be wrong. There is a cost to this narrow thinking.
This is why I was so impressed with Vails decision.
Thanks for the input David.
Comment by Keenan — December 24, 2009 @ 7:28 am
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Measuring the ROI on customer experience can be difficult when the sample size is small as it often is in B2B Sales. One of the advantages of the B2C environment is that it is possible to run tests and collect actionable metrics.
Another way to go would be to offer the RF tags to season pass users, super users or at an extra cost. See if people value it enough to pay extra.
Comment by themadpeacock — December 28, 2009 @ 4:11 pm
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No one would pay for the pass by itself. But, I don't think that's the way it should be measured. I wouldn't pay a restaurant for better service, but I do expect it.
Comment by Keenan — December 28, 2009 @ 9:02 pm
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Measuring the ROI on customer experience can be difficult when the sample size is small as it often is in B2B Sales. One of the advantages of the B2C environment is that it is possible to run tests and collect actionable metrics.
Another way to go would be to offer the RF tags to season pass users, super users or at an extra cost. See if people value it enough to pay extra.
Comment by themadpeacock — December 28, 2009 @ 11:11 pm
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No one would pay for the pass by itself. But, I don't think that's the way it should be measured. I wouldn't pay a restaurant for better service, but I do expect it.
Comment by Keenan — December 29, 2009 @ 4:02 am