Last week while I was at the Mobile Money Forum (http://www.mobilemoneyforum.com/) I noticed a few of the panelists discussing the difficulty in building mobile application business cases in organizations. One speaker said when they look at Return on Investment (ROI) for mobile initiatives it is almost always negative. Another said the most effective way they bring mobile apps to corporations is to build a small prototype for one department in a few weeks and then showcase it to the other departments in order to get buy in to build a commercial version of the product.
The same difficulty occurs when building business cases for innovation or for building business cases for new technologies. The quantitative numbers are not usually available to create a positive ROI or at least to build a convincing ROI because many of the numbers are unknown at the onset of the project. Looking at cost and benefit isn’t enough because you can’t always identify the cost savings (like through productivity gains) or benefits to the business. I really like the Forrester Total Economic Impact as a measure for innovation business cases which brings in risk and flexibility as the other two factors to consider when looking at the value of new projects.
There is one thing that Total Economic Impact is missing – Customer Relations and Engagement. In mobile banking the teams bringing in mobile applications noticed how much stickiness they had with customers who used the mobile application; they checked their accounts multiple times a day whereas online banking customers interacted with their bank a few times a week on average. The banks are able to have more interactions with their customers, creating loyalty, at a much lower cost than any other channel.
Customer retention and loyalty are huge items on the marketing team’s agenda. With projections that marketing departments are going to be spending more on technology than IT departments shortly, business cases need to reflect this.
In bringing innovation business cases forward 5 key things need to be addressed for Complete Impact:
- Customer Engagement
Some might argue that relationships and customer engagement belong with benefits but in this day and age where customer service and retention are seen as pivotal to success, relationships have to be brought out to stand on their own when building business cases.
How do you assess customer engagement? For the mobile banking application one could measure the increase in interactions per customer. What is the number of interactions per day before the mobile application is introduced? The organization has to determine how much value each incremental increase in interaction has on the business. For example, if a user of a financial institutions application checks their accounts more than 7 times a week, the stickiness of the customer increases by 5% for each incremental interaction within the week.
How does the increase in customer engagement translate into more business down the line? The more loyal your customers are and the more they rely on your services daily the easier it is for you to maintain and increase sales to these customers. With an account access of 14 times per week your stickiness has increased by 35%.
- Using Engagement to Track Consumer Sentiment and Trends (adrants.com)
- The New Rules of Customer Engagement (inc.com)
- https://spring2innovation.com/is-it-possible-to-keep-innovation-alive-with-project-management/ (spring2innovation.com)