It all started with a garbage can.
Not just any old garbage can, mind you. It was this one from SimpleHuman. We’ve had it for years, and it was wonderful except for one small detail.
It was broken.
The lid would not stay open any longer. The springs underneath had broken away, most likely due to the fact that SimpleHuman didn’t do any QA testing that involved very small children abusing the lid in many, many ways. Considering the cost of the can we decided to just deal with the broken lid…for the past five years.
Because we could not find a replacement lid, earlier this year we considered buying a new can. Before opening my wallet (again) I decided to drop a quick note to SimpleHuman on their website and inquire about getting a replacement part for a can they no longer were offering for sale. Within a few days I got back an email that seemed rather amazing (and I am paraphrasing here):
“We’re sending you a replacement.”
I didn’t really believe that they were going to send me the part because (1) I don’t recall giving them my address and (2) there was no way I was covered under any type of warranty. Two weeks later a new lid arrived. I was shocked. And then it hit me: I am now a customer of SimpleHuman for life.
Why am I telling you this? Great question.
I often hear people ask “what is the ROI for this”? I think ROI is an awful way to measure something. It is shortsighted at best, typically focused on monetary gains. And ROI is often hard to calculate with any degree of certainty as well. I mean, you know how much something will cost, that part is easy. What you can never predict is how much return you will get. That’s why the SEC makes companies tell you how “past performance is no indication of future results”.
When I hear of someone asking about the ROI on something I often laugh to myself and think “what’s the ROI on the water cooler”? How many times has there been a conversation around the water cooler that has led to something amazing being done? And what is the ROI on that coffee table in the reception area? Can’t we measure that? What about the ROI on this blog?
I think a much better metric for everyone to digest is this: ROE, or Return On Experience.
Back to SimpleHuman. My experience with them as a customer has resulted in my loyalty. Even if I never buy something from them again the experience has led to me singing their praises in this blog post. If they had said to me “hey Tom, here’s $100 to write something nice about us” I would have refused. But that is essentially what happened, right? They gave me something of monetary value, sure, but they also gave me an experience that has more than just money behind it.
Now, stop and think for a minute. Think about your customers. Think about the end users for the systems you build and maintain.
What is your ROE with them?
Now, what can you do today to make that ROE even better than yesterday?
This is an excellent point and seems like a good place to share a similar story. Several years ago, my wife went to a local Randall’s grocery store and ordered some prepared food to go before doing the regular grocery shopping. After finishing her shopping, she came back to pick it up at which point the person behind the counter said they would start it and it would be 20 minutes. Understandably peeved, she found the manager and told him her story before leaving. His response? He got our address from her and hand delivered it himself with a big apology. He turned a potentially bad experience into a great one and we became customers for life and still tell the story many years later. This is actually still true despite the chain being sold to Safeway who has mostly eradicated all the things that made Randall’s special. After having moved twice, we still find the nearest one and go there. We still talk about it. How do you measure the value of that?
Michael,
That’s a great story. I’m not sure it can be measured, but I know that someone out there would certainly try to measure it in terms of money somehow. For example, perhaps they would measure it in terms of the overall money you have spent with them.
What they can’t measure accurately is your reach, or influence, over others. When you share this story it makes others think about Randalls in a positive light, to the point they would go shop there. But no one will ever know that those dollars are tied to you indirectly, so they might say “hey, we only got $100 from them, so hand delivering wasn’t worth the effort”.
It’s a shame, I think, that so many decisions are tied to money and not an experience.
Great article, really got me thinking about business process metrics, their use, abuse, and misuse. I believe the reason behind the ROI focus is that many times we focus our attention on things that have a zero or even negative ROI. I am sitting in a hotel right now that was most likely an old warehouse originally. Thousands of warehouses have been abandoned as part of the lean manufacturing revolution. People finally figured out that parts sitting in a warehouse deliver zero value until they are actually needed. This sparked the whole Just In Time (JIT) manufacturing revolution. How does this relate? If we look closely at our days there is much waste, but unfortunately outward appearance can be misleading. Chatting at the water cooler or even staring in the sky thinking can have huge value, while typing away frantically at the computer creating time bombs in code is far worse than sleeping on the job. Tools like rescuetime.com and value stream mapping help us identify where we waste time, and have helped me improve effectiveness. The results are substantial if we focus on value delivered and eliminate waste. There IS value (ROE) in giving out free replacement parts, special delivery service, and even the water cooler, it just takes time to justify. The question is if there is an ROI for computing the ROI?
This reminds me of Tony Hsieh’s “Delivering Happiness”. It’s all about the experience. People will forget what you did for them but they will always remember the feeling or experience. If you made them happy, they just appreciate that feeling. Chances are they talk about how you made them feel good. Or blog about that experience, like in this case.
Reading @SQLRockstar post on Return On Experience. ROE vs. ROI and could not agree more.
http://thomaslarock.com/2012/05/what-is-your-roe/