By Ifeoma Tete Mbuk

Return on Investment (ROI) measures how a business uses its capital to create more value, while Return on Customer  (ROC) measures how a business uses its customers to create value.
You can borrow capital from a bank, but there’s no financial institution that will lend you customers. It’s important  to make investments that give you a return on investment that exceeds your cost of borrowing, but you also have to  choose those investments that will maximize the value possible from the limited supply of customers and prospective  customers available to you. This is more like a balancing act.

ROC is a metric which is designed to track the efficiency with which a business creates both short-term value, in the  form of current sales, and long-term value, by promoting behaviour that increases the customers’ likelihood of  purchasing future products or services. It is built on the idea that, while most businesses have excess supply of  products, it is in fact customers who actually create all value for the business; therefore companies should be  concerned with measuring how well its customers create value for it.

For example, let us consider the farmer. In farming, land is a scarce resource. In business, customers are the  scarce resource. A farmer could plant the richest, most productive cash crop on all his acreage every year and make a  great deal of money in the short term, but his land would soon burn out. The more prudent farmer ensures the  long-term productivity of his land by practicing conservation. A business must make the most of its customers in the  same way a farmer must make the most of his land.

Building “Return on Customer “(ROC)
The single most important step is to begin operating in a manner that helps you earn and keep your customers’ trust.

This is the surest way to maximize the overall value that a customer creates—whether you measure and track actual  customer lifetime values or not. To create value, you must put yourself in the customer’s shoes, understand his or  her needs, and then act accordingly – and earn your customer’s trust.

Obviously, product quality, price, and service all factor in to the customer’s current purchase decision. But  assuming you are roughly on a par with your competitors, there must be other factors as well. The customer, too, must  assess the value he gets from his relationship with you. And for the customer, such a relationship will be of the  most value if he feels he can trust you to respect his interests as if they were your own.
Creating Customer Value.

Create something of value to one or more customers who, in turn, are willing to pay enough (or contribute other forms  of value) to make the venture worthwhile considering opportunity costs. Value can be created in a number of different  ways. For example, some companies manufacture basic products (e.g., bricks) but provide relatively little value above  that. Other companies make products whose tangible value is supplemented by services (e.g., a computer manufacturer  provides a computer loaded with software and provides a warranty, technical support, and software updates). A company  can still add value to customers without physically handling a product—e.g., online airline reservation systems add  value by (1) compiling information about available flight connections and fares, (2) allowing the customer to buy a  ticket, (3) forwarding billing information to the airline, and (4) forwarding reservation information to the  customer.

It should be noted that value must be examined from the point of view of the customer. Some customer segments value  certain product attributes more than others. A very expensive product—relative to others in the category—may, in  fact, represent great value to a particular customer segment because the benefits received are seen as even greater  than the sacrifice made (usually in terms of money). Some segments have very unique and specific desires, and may  value what—to some individuals—may seem a “lower quality” item—very highly.

Be a customer advocate. Make your customers feel that you are doing what is best for them not just for your own  bottom line. Companies that score highly on the customer advocacy scale are most often considered for future  purchases. It simply means being fair and honest with the customer, and looking out for their best interest.
Ensure your business cultivates a culture based on trust, taking the customers’ point of view and creating value for  them. Only then can you earn lasting loyalty that will boost “Return On Customer” (ROC).
Be a customer advocate!    Email:ify@yfyservices.com