Profit Streams™ Customer ROI Modeling
What is a Customer ROI Modeling?
Customer ROI modeling helps your customers answer critical questions, such as:
- Will I get back more than I spend?
- Is the price fair based on the expected benefits?
- Can I prove the expected return on investment to other stakeholders?
By understanding your customers' financial decision-making processes and simplifying their evaluation, you can significantly improve growth and profitability.
We help our clients build a transparent, data-driven, accurate, and believable ROI model to help customers make purchase decisions.
Drivers of customer ROI include:
Breadth
The potential return on a solution is directly correlated to its reach. In other words, the more people it impacts, the greater the potential for significant returns.
Repeatability
The frequency of solution usage directly impacts its potential return. Solutions that are used repeatedly generate ongoing value, leading to higher overall returns compared to those used infrequently.
Cost
The potential return of a solution is directly proportional to the cost of performing the task without it. If a solution significantly reduces the cost of a critical task, its value proposition is substantially increased.
Collaboration
The potential return of a solution is significantly influenced by the level of collaboration required for its successful implementation and utilization. Solutions that facilitate and enhance collaboration among individuals or teams often deliver higher returns
Knowledge
The potential return of a solution is directly linked to the reusability of the information it generates. Solutions that create knowledge assets with high reusability across multiple projects, teams, or departments deliver significantly higher returns.
How does a Customer ROI Modeling Engagement work?
Our pricing and packaging engagements follow a proven six-step process:
- Identify Total Benefits of Ownership (TBO): We collaborate with you to pinpoint both the directly quantifiable and indirect benefits customers derive from your solution.
- Model the Benefits: Based on the identified benefits, we develop a model that allows you to input specific customer data and calculate the anticipated value they will receive.
- Identify Total Cost of Ownership (TCO): We recognize that a credible ROI model hinges on complete transparency regarding the customer's total cost of ownership.
- Model the Costs: We create a model that enables you to input specific customer data to calculate their total cost of ownership, ensuring a comprehensive understanding of their investment.
- Develop Robust Formulas: We incorporate well-designed formulas into the model, allowing for flexible adjustments to assumptions while maintaining data integrity.
Following our five-step process, you can be confident that your ROI model will help your sales organization accelerate purchasing decisions.
We understand that every business has its own unique needs. While some organizations may find success with ready-made solutions, others require a tailored approach to thrive. We have the expertise to design a customized engagement that caters to your unique context. No matter what you need, we will create a solution that works best for you.
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Where can I learn more?
Discover how to increase profits at any stage of your solution's lifecycle with Profit Stream Design, a key concept explored in the Amazon bestselling book Software Profit Streams: A Guide to Designing a Sustainably Profitable Business by Jason Tanner and Luke Hohmann. Learn more about the Profit Stream Canvas and how Solution Profitability Management can benefit your business.