What is Return on Relationship (ROR)?

Return on Relationship (ROR) is a measure of the value that a business or brand derives from its relationships with customers, partners, and other stakeholders. It is a broader concept than return on investment (ROI), which typically focuses on financial returns. ROR can also include non-financial benefits such as increased customer loyalty, brand advocacy, and social media engagement.


Why is ROR important?

In today’s competitive marketplace, it is more important than ever for businesses to build strong relationships with their customers. Customers who are loyal to a brand are more likely to repurchase, recommend the brand to others, and forgive minor mistakes. They are also less likely to be price sensitive.

ROR is also important for businesses that want to build a strong online presence. Social media engagement is a key driver of ROR, and businesses that can create a positive and engaging online community will be more likely to attract new customers and build loyalty with existing ones.


How to measure ROR

There is no single formula for calculating ROR, as it will vary depending on the specific business and its goals. However, there are a few key metrics that can be used to measure ROR, including:

  • Customer lifetime value (CLV): This metric measures the total amount of revenue that a customer is expected to generate over their lifetime.
  • Customer acquisition cost (CAC): This metric measures the cost of acquiring a new customer.
  • Customer churn rate: This metric measures the percentage of customers who stop doing business with a company over a period of time.
  • Net promoter score (NPS): This metric measures the likelihood of a customer recommending a company to others.
  • *Always keep in mind that ROR > ROI. Why? Because ROI will match a fixed period of time, or perhaps be income related, whereas ROR will have “halo” effect (e.g., two projects can have same ROI, but if one was completed with better relationship management, it has the added benefit of a satisfied customer and/or long-term relationship).

By tracking these metrics over time, businesses can get a better understanding of the value of their relationships with customers and other stakeholders.


How to improve ROR

There are a number of things that businesses can do to improve their ROR, including:

  • Focus on customer service: Providing excellent customer service is essential for building strong relationships with customers. This means being responsive to customer inquiries, resolving problems quickly and efficiently, and going the extra mile to make sure customers are satisfied.
  • Personalize the customer experience: Customers appreciate feeling like they are more than just a number. Businesses can personalize the customer experience by using data to understand customer preferences and needs, and then tailoring marketing messages and offers accordingly.
  • Create a community: Businesses can build strong relationships with customers by creating a community around their brand. This can be done through social media, online forums, or even in-person events.
  • Be authentic and transparent: Customers appreciate businesses that are honest and transparent about who they are and what they stand for. This means being upfront about pricing, policies, and other important information.

By following these tips, businesses can improve their ROR and build stronger relationships with customers, partners, and other stakeholders.

Relationships are like muscle tissue, the more you engage them, the stronger and more valuable they become. 

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