What’s your company’s Return on Know-how?


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Our team spends a lot of time discussing business cases – real business cases, not “feel good” benefit-based stuff, but the ones with numbers on them. We’re keen to work out, for each of the customers or prospects we speak to, where revenue can be generated and/or savings can be made by putting knowledge-sharing campaign platforms in place.

At the center of it all is a concept we call “Return on Know-how” (ROK). OMG, you may be thinking, another word dreamed up by marketers. And that’s what it is, for sure. But there’s a real point to it, too – and it’s a goodie: What potential gains or savings are hidden in the know-how of your subject matter experts? What can be done to unlock this potential?

Knowledge-intensive companies are full of them: highly knowledgeable, intelligent experts who can wrap their minds around a problem in their field and deliver fantastic solutions. At times, their ideas and energy can open sales opportunities the company never knew existed at its customers or prospects. But these same experts are often described as introverted, and task-focused – not the kind of qualities that systematically uncover opportunities and close deals in a way that truly implements the company’s overall business strategy. Yet they can be the key to achieving greater Share of Wallet (SoW) at your existing clients.

How to assess your ROK business case

To uncover this potential, begin by asking questions. Find out how many subject matter experts (SMEs) there are in the company. And map the customer contacts each SME has, figuring out the span of contacts as well as the level of engagement the SME has with each customer contact.

The level of engagement is key to Return on Know-how calculations because we’re interested in the likely effect of moving customer contacts from a low to a higher level of engagement. An Engaged Customer is highly valuable to the company, typically delivering greater revenue and exhibiting a range of positive characteristics such as:

  • Long-term relationship
  • Emotional connection
  • High participation level
  • Shares internal agenda
  • Shares budget
  • Co-creates
  • Recommends to others
  • Greater Share of Wallet

So the secret to unlocking the potential is to find out what it means in terms of business results to move, for example, 10 percent of your customers to a higher level of engagement by leveraging SME know-how to a greater degree.

Of course, not all customers can be engaged at a higher level – some simply don’t have more needs that can be covered or more budget to spend with your company. So the important parameter is to make sure that the engagement has revenue potential attached to it rather than just being an added burden on already stretched resources.

Next, you should try to uncover the average value of that increased engagement. Start by breaking down a sample of your existing customers, analyzing how many of them buy just one service, how many buy two, and so on. This will give you an idea of the potential sales that remain to be realized. You’ll need to make assumptions, of course, as there are many factors to bring into such analysis, and not all of them can be properly investigated.

At a simple level, the calculation might be:

ROK = (No. of customers with unlockable potential) x (Average value of that potential)

More revenues from engaged customers

Take the (simplified) example of a professional services firm with 5000 customer contacts. Of those contacts, on average, 20 percent or 1000 individual contacts could potentially spend an additional USD 40,000 with the firm on an annual basis by tapping into other auditing services or expanding the use of already contracted services. And this potential could be reached within a two-year period from the launch of the ROK campaign platform. That’s a total of USD 400,000 being “left on the table” every year. But that’s just a start!

What other benefits might there be of obtaining higher ROK? Reducing the cost of sales leads is one area: Could turning your SMEs into subtle salespeople be a cheaper way of identifying new opportunities than your current sales force? Could this enable the sales force to be reduced by two people? Or what about reducing customer churn? Studies confirm that having a greater proportion of customers that are highly engaged – using more of your services – reduces churn. What if your annual churn could be reduced by 10 percent? What would that mean for revenue? Assuming annual revenues of USD 100 million, and churn of 5 percent, that’s a saving in the region of USD 500,000 per annum. Then there’s the capacity to motivate and retain your best talent – in fact, ROK platforms have been proven to motivate SMEs in new and rewarding ways. Is there potential to retain 10 of the most valuable SMEs that might otherwise have left your company per annum? Potential saving on recruiting/training/retention of 10 new staffers: USD 300,000.

Realizing the potential ROK

Now let’s assume that the firm above has 75 customer-facing SMEs working with an average of 40 customer contacts each. In the case of an audit firm, these SMEs are typically senior managers of audit teams.

How could each of these SMEs deepen their customer engagement to capture an average additional USD 5-6000 for 20 percent of these customers? We’ve already discussed the fact that SMEs aren’t necessarily born salespeople. And it doesn’t take a genius to work out that telling them to sell more just won’t have the desired effect.

To get there, you need to think in terms of:

  • Right approach
  • Right platform
  • Right skills
  • Right budget
  • Right processes
  • Right culture

For the professional services example above, the gains are considerable – and easily justify a sizeable budget to begin seizing the opportunity. Learnings from this initial platform can then be applied to achieve the full potential gains uncovered in the business case.

What do you think? Is it worth it to take a closer look at your own company’s Return on Know-how? And to examine solutions that could deliver some or all of this hidden value?

Republished with author's permission from original post.

Jonathan Winch
With over 20 years of experience in international marketing and business management for companies like Nycomed, Cisco, DuPont, LEGO, A2SEA, Johnson & Johnson and many more I help knowledge-intensive companies become thought leaders in their industries. I am co-founder and partner at the strategic agency Eye For Image. We are a team of senior consultants focused on developing and implementing the Three Voices™ framework for B2B companies as described in the 2012 book "The Death of Propaganda".


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