What is the best way to measure the ROI of your service operations strategy?

1 Why ROI matters

ROI is a ratio that compares the benefits and costs of a project or initiative, helping you evaluate the efficiency and effectiveness of your service operations strategy. By measuring ROI, you can identify which areas generate the most value for customers and your business, allowing you to allocate resources and budget more wisely. Additionally, ROI can justify decisions and actions to stakeholders, improve service quality and performance over time, as well as demonstrate your impact and contribution to business goals.

2 How to calculate ROI

There are different methods and formulas to calculate ROI, but the basic one is:

ROI = (Benefits - Costs) / Costs x 100%

To use this formula, you need to define and quantify the benefits and costs of your service operations strategy. This can be challenging, as some benefits and costs are intangible or difficult to measure. For example, how do you assign a monetary value to customer satisfaction, loyalty, or retention? How do you account for the opportunity costs, risks, or external factors that affect your service operations?

3 How to choose the right metrics

To overcome these challenges, you need to choose the right metrics to measure the benefits and costs of your service operations strategy. Metrics are indicators that help you track and evaluate your service performance and outcomes, which should be SMART: specific, measurable, achievable, relevant, and time-bound. Examples of metrics to measure the benefits of your service operations strategy include customer satisfaction (CSAT) score, net promoter score (NPS), customer effort score (CES), customer lifetime value (CLV), and customer retention rate. To measure the costs of your service operations strategy, you can use metrics such as service costs, service time, service quality, and service capacity. These metrics provide valuable insights into how well your service operations are performing and can help you make informed decisions about how to improve them.

4 How to analyze and communicate ROI

Once you have calculated the ROI of your service operations strategy using the metrics you have chosen, you should analyze and communicate the results. To do this, you can use dashboards, reports, stories, and benchmarks. Dashboards are visual displays that summarize and present your key metrics and ROI in an easy-to-understand format. Reports are written documents that provide more details and explanations of your metrics and ROI, as well as recommendations and action plans. Stories are narratives that illustrate the impact and value of your service operations strategy using real examples and testimonials from your customers and stakeholders. Benchmarks are comparisons of your metrics and ROI with past performance, goals, or competitors. Through analyzing and communicating the ROI of your service operations strategy, you can gain insights, feedback, and support to improve your service operations and align them with business objectives.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?