Is ROR the new ROI.........?

 

Over the past 100+ years the "West" has moved from economies based mainly on tangible products, from manufacturing and agriculture, to being far more service based, with commodities and products more typically manufactured elsewhere and imported. In turn, our own cultures have become much more reliant on services and knowledge as a tradeable commodity and we are even importing cheap labour to do the jobs we don't want to do and those living comfortably on social welfare can't be bothered to do. Even menial IT-related work and other stuff that doesn't require too much specific knowledge is being "off-shored". You're then left with a strange situation - Whilst a company is making and selling a product, it's pretty straight-forward to measure and compare like for like against its competitors and decide what represents best value and to work out what the return on investment (ROI) is likely to be. However, when you move into a world based more on knowledge and soft-skills, rather than products, there is a greater proportion that is intangible, whether it is writing software code or going to an osteopath. Working out if that's good value for money is much harder, because it's not just a function of cost-per-hour, or whatever and it may be that it's years later you realise the code you had written for 50 pence per hour less is complete garbage (how much did Y2K cost the City of London?) - What's the cost of just suspecting it may not be perfect and having to get it checked? On this basis, trusted relationships become much more important - dealing with people you trust (ideally people you like, trust AND respect). On this basis, it becomes critical that we invest our time in building strong trust-based relationships that help our business to move forwards and surround ourselves with knowledgeable people who can help us to succeed.......... but how do you measure the impact of this investment on your business. Can you calculate Return On Relationships? What are the elements that you must consider in making the calculation - Time? Sure! But how do you calculate the ROR on a referral that leads to $100k+ of business when you only spent a few hours building an understanding with the person who made the introduction and ............. you've never actually met that person, but they still happily "created" a deal worth a lot of money and, because it's all knowledge based, it's basically all profit minus travel and subsistence .........? The vision for CRM (Customer Relationship Management) a few years back was to maximise the value of every customer interaction and the longterm value of the relationships, but that assumes you've already won the customer, or got the "prospect" on your radar. CRM didn't work then and I don't think it's really there yet, because CRM is software and relationships are about people. There are also many individuals and organisations in this area - obviously Ecademy sits at, or near, the forefront of trust-based networking and tens-of-thousands of people have passed through this site in the last year. There are also many others. It's clear that there's nothing new about introductions and trust-based relationships, referrals and recommendations have been the basis of business transactions across the world since before Noah built a boat! But now, as we move into a global economy, fuelled by the Internet, relationships take on a whole new meaning and when we are selling nothing more than knowledge, it is the investment in the relationships that will yield results, not the investment in products that we are used to measuring in terms of calculating returns and profitability. So, is ROR the new ROI and exactly how do you measure it...........? The investment is still there, for sure! But the investment is now in the time not the materials.