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Guest Column: Moving from ROI to ROE – Investing in empathy

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Guest Column: Moving from ROI to ROE – Investing in empathy

Businesses have long concentrated on Return on Investment (ROI) metrics to calculate marketing success. However, innovations in neuroscience and developments in social media have revealed that profitability can no longer simply be relegated to sales figures and profit margins.

Increasingly, to create sustainable customer relationships that enhance customer lifetime value, businesses must invest in the emotional needs of their customers. By making this shift, brands will gain a significant ROE – Return on Empathy.

A business that invests in empathy devotes itself to understanding the deep-set emotional needs and motivations of customers, and aligns itself to meet those needs. Companies have increasingly embraced the value of emotion in selling products and services, but often these companies merely pay lip service to the importance of emotion, without actually understanding how to harness it.

We know that human motivation is extremely complex, and typically people don’t say what they think, or even think what they say. As a result, an enormous amount of business resources are wasted when companies over-rely on market research that poses only rational questions without probing customers’ emotional reactions that lie hidden within their answers.

Consumers treat brands like relationships, rewarding friends with their loyalty and lashing out when wronged. When companies cultivate positive customer relationships they are rewarded with loyalty. When businesses look beyond the surface of rational data and into the meaning behind customers’ feelings, and behaviours, they will recognise the human needs that drive most customers’ decisions.

Businesses that work to build lasting partnerships with customers see a tangible Return on Empathy. Their efforts are rewarded through sustained relationships that endure beyond shifting trends to deliver greatly enhanced lifetime customer value.

The author is Founder and Managing Partner of Insight Consulting Group.



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