Calculating & Communicating ROI
by Karen Buch, RDN, LDN
There may not be a hotter topic for retail dietitians (RDNs) than return on investment (ROI). If you are wondering what ROI is, please refer to my previously published article entitled Measuring Positive Return on Investment (ROI) for a definition and explanation on why it is important for retail dietitians to understand and measure ROI regularly. Being able to calculate a positive ROI and presenting the findings to senior retail leadership are essential to show the value of RD services, gain approval for new programs, and support additional RD head count.
In general, ROI is a performance measure used to evaluate the efficiency of an investment. Hiring a registered dietitian requires significant financial investment in human capital by the retailer. Ten to 15 years ago, progressive retailers were willing to invest in retail dietitians as a unique point of differentiation in the marketplace and as a service to its customers. Today, one could argue that having a retail dietitian on staff has become a mainstream requirement for grocers just to remain competitive. But, gaining approval to add more corporate dietitians or to expand regional or in-store dietitian teams remains quite challenging and requires building a compelling ROI business case to justify the additional head count and cost of new initiatives.
Here are some tips for developing and communication ROI:
1. Align. Align ROI metrics with the goals, objectives and outcomes valued by your retailer. Some common outcomes include improving customer loyalty through meaningful engagement, increasing sales through direct and indirect customer interactions, enhancing retailer’s brand image through public relations and communications and adding to the bottom line by creating revenue streams and through cost avoidance.
2. Define Your Measures. Define how to measure the success of each program during the planning process. Seek industry standards or develop predictive modeling when proposing new, groundbreaking initiatives. Examples of common ROI calculations include:
- Customer Loyalty & Basket Data. Loyalty cards allow retailers to collect data via customer transactions. By issuing coupons to customers in association with health and wellness initiatives, retail dietitians can measure redemption rates, identify significant shifts toward increased shopper loyalty and shifts in basket size and contents. Partner internally with the marketing department to set up custom coupon PLUs and activation dates. Then track and report redemption rate and calculated basket impact.
- Incremental Sales Lift. When featuring a better-for-you product, compare sales results during the featured time period to base sales during a previous comparable sales period and similar price point. Dollar sales and unit sales in excess of the base equate to incremental sales lift. Sales lifts can be calculated by store, for a select ‘pilot’ group of stores (using ‘rest of chain’ for comparison) or chain-wide.
- Sponsorship Revenue. Retail dietitians can establish vendor partnerships to help offset the retailer’s raw cost to execute retail health and wellness programs. Quantify and report this revenue stream internally along with other measurable impacts of the sponsored program.
- Media Impressions. Retail dietitians can enhance retailer brand image through public relations media campaigns. Media placements may be earned or sponsored and can be delivered in print, radio or television appearances and via the company’s social networks. Note whenever media is reaching coveted consumer groups such as young families, Baby Boomers and Millennials. Compare campaign costs to the cost of advertising needed to generate similar media impressions. Work with your advertising or marketing department to estimate accurately.
3. Communicate. When communicating ROI, present your findings to senior retail leadership as if they were media sound bites. Develop key bullet points that are powerful and succinct. Use visual charts, graphs or event images only if they enhance rather than detract from the message. Establish a reporting schedule by period, quarterly and annually. Then, use the reports during performance review time as part of your self-evaluation to show measurable contributions to both the company mission and your individual goals.
Predicting, measuring and reporting positive ROI can help support the rollout of new programs, expansion of dietitian teams and your own career development.
Karen Buch, RDN, LDN, is a registered dietitian/nutritionist who specializes in retail dietetics and food & nutrition communications. As one of the first supermarket dietitians, she is a recognized trailblazer and expert at translating nutrition science into practical solutions for consumers. Karen is owner and principal consultant at Nutrition Connections LLC, chair of the Food & Culinary Professionals Supermarket/Retail subgroup and contributing author to RDBA Weekly. You can connect with her on twitter @karenbuch and visit NutritionConnectionsLLC.com.
This article was originally published for RDBA on April 22, 2015.