Managing Customer Relationships in Uncertain Times 11 of 13

Option 9: Focus on return on investment

The immediate response to uncertainty will be to trim both variable and fixed costs. In these times, management will focus on what they can control (operating expenses) not on those they cannot (demand). As the economy stabilizes and returns to a growth mode, many will focus initial investments in areas that can be managed as variable costs.

As a result, we forecast an increase in investments for consulting and temporary staff over new permanent hiring and an overall acceleration of outsourcing. Outsourcing will likely involve both personnel and systems.

Calculating the return on investment of major customer initiatives can be complex. Management typically does lacks in its ability to continuously measure ROI. Most companies develop an ROI case for new initiatives, but subsequent measurements are infrequent.

We recommend that companies use the following three-level ROI analysis: begin with strategic business objectives, then separate those objectives into operational objectives—business unit or geographic—and further into tactical objectives at the group level. Once this model is developed, it should be reviewed as each new investment is made.