Business as usual won’t work; businesses need to focus on intangible value to ensure business continuity
Businesses and individuals throughout Eagle County were suddenly and unexpectedly financially vulnerable due to the impacts of COVID-19. Economic uncertainty related to business vitality and continuity caused by COVID remains paramount to our business community. This requires a shift in the traditional approach to business decisions.
These challenges and others have combined to cause increased economic stress and uncertainty among our businesses and our community at large in the valley. The length and depth of the impacts of COVID remain uncertain at this time. We have good news that our mountains will operate, yet significant questions remain regarding expected demand.
Everyone in business is familiar with return on investment (ROI). ROI is used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.
ROI is a popular metric because of its versatility and simplicity. Businesses are going to need to shift from a traditional ROI approach to a Value on Investment (VOI) approach as we approach the winter season with uncertainty caused by COVID.
The Value on Investment concept is defined as “intangible assets that contribute heavily to an organization’s performance. Where ROI is the measure of the tangible benefits of a project or activity, VOI is the measure of the intangible benefits of a project or an activity. VOI includes ROI.” These intangible assets include knowledge, processes, service, and ability to collaborate.
The key word there is intangible. VOI is the measure of the intangible benefits of a project or an activity. By the very nature of things, VOI will include some aspects of ROI –but that’s not where you want to end up.
Businesses will need to consider, and to talk about, value to their customers and stakeholders. Focus on the guest experience and providing the best possible service levels to increase your net promoter score and guest satisfaction. This will develop loyal, repeat visitors – always important, but now essential.
Businesses will need to have access to the latest data and information on customer demand, demographics, lodging occupancies, air service details, workforce availability, and more. Those with the knowledge of local economic trends will be better prepared to manage their staffing levels and inventory to meet guest needs.
Businesses will need to collaborate with others within their industry and within the county to understand the latest public health requirements, and to collaborate with industry association partners to ensure our elected officials understand their needs. Those who collaborate will have a voice at a local, regional, state, and federal level.
Shifting to a VOI approach instead of a traditional ROI approach helps with business planning. It provides the necessary forward -thinking framework for scoping, prioritizing, and initiating business continuity projects. A focus on business continuity is a front of mind concern for many businesses.
VOI helps measure the total value of “soft” intangible benefits derived from continuity initiatives, in addition to those “hard” benefits measured by ROI. VOI is, of course, subjective and would be difficult to measure with the same precision as ROI. Yet a VOI approach is critical to allow for continuity planning efforts that provide the competitive differentiation necessary for the success of your efforts.
Heading into the fall and planning for the winter season, businesses need to focus on the concept of VOI (knowledge, process, service, and collaboration) in order to ensure company resilience during the sure-to-be turbulent times ahead.
Chris Romer is president & CEO of Vail Valley Partnership, the regional chamber of commerce. Learn more at VailValleyPartnership.com