Small talk, chit-chat, mindless chatter. Whether you’re stuck talking with someone at a party or a nosy neighbor, our daily lives are filled with moments spent asking ourselves:
Is this conversation worth my time?
Business owners have things a little different. For them, every conversation is an opportunity to make a sale, delight a customer, or improve their community.
The question, then, is no longer “is this conversation worth it?” It’s:
What is this conversation worth?
It’s easy to recognize surface-level exchanges in our personal lives. But putting a price tag on small business conversations is a much more complicated science. Fortunately, we put our math skills to the test and came up with a proven formula to help you accurately measure the ROI of all those little talks that fill up the workday.
Here’s what we found:
Take the value of word-of-mouth conversations…
Some of the most valuable conversations around your business don’t even involve you. They’re the ones your customers are having about you.
A recent study by Engagement Labs found that peer-to-peer conversations are directly responsible for 19% of consumer purchases in the US. And worldwide, these same conversations are estimated to drive $7-10 trillion in annual spending (more than the GDPs of Japan and Germany combined!).
Those eye-popping numbers underline just how essential positive word-of-mouth is for your business. If you’re not sure how to break the ice, here are a few tips to keep your business the topic of conversation—both online and off:
- Craft your story: To quote the great Bonnie Raitt, “Give them something to talk about.” Getting people to talk about your business starts with leaving a strong impression. Building a pitch-perfect brand identity is your ticket to making this happen.
- And know where your story is being told: Whether it’s at the local coffee shop or a specific social media platform, keeping tabs on where you’re seeing the most buzz lets you know where to invest additional ad spend and provides insights into what you’re doing right (or wrong.)
- Prioritize social proof: There are plenty of steps you can take to cultivate positive sentiment around your business. A testimonial or two can go a long way. Also consider encouraging your customers or clients to leave reviews, and take the time to respond to them (thoughtfully). When used strategically in your marketing efforts, these and other forms of social proof can be deciding factors for potential buyers who are on the fence.
- Encourage sharing: If people want to share their experiences with your business, let them! Adding social share buttons to your website and emails makes it easy for customers to spread the good word about your business to others in their network.
Our math so far: Taking the annual value of word of mouth conversations and dividing it by the total number of businesses worldwide puts us at $33,000 per year for each organization. Assuming that people talk about your business 10 times a day, this comes out to $9 per conversation.
Multiply it by the cost of poor communication…
Business leaders spend a whopping 80% of their day communicating—whether that’s over the phone, catching up on emails, or collaborating in meetings.
That’s a whole lot of hours spent on jabber. But the issue isn’t how much time these conversations eat up; it’s how much is lost following up on them.
Employees dedicate an average of 17 hours each week repeating or clearing up their previous communication. Even for smaller businesses, that adds up to $424,000 per year lost to misunderstandings.
Effective communication is all about quality, not quantity. Here are some pointers on how you and your team can harness the gift of gab:
- Leveling up your tools: As more workplaces go remote, it’s important to give your people the tools they need to collaborate across time zones and in real-time. Apps like Slack, Asana, and Yammer work to keep everyone on the same page while adding additional transparency to employee communication.
- Setting expectations: One of the biggest obstacles to workplace communication is unclear expectations surrounding collaboration. Keep everyone on track by setting clear and consistent guidelines around meetings, workflows, and milestones.
- Schedule check-ins: Whether they’re in-person or through a screen, make sure to schedule regular 1-on-1s with each member of your team. This offers them a platform to raise concerns and clarify points they made in previous communication with you or other employees.
Formula update: If a person has 20 workplace conversations a day, and the average annual cost of miscommunication is $424,000 per year, this comes out to around $58 per conversation.
Carry the price of customer happiness…
Businesses are often measured by their level of customer service. This goes double for smaller businesses that rely on strong professional relationships for long-term success.
And when it comes to customer happiness, the stakes couldn’t be higher. According to a recent study, 96% of customers are willing to leave over poor service—costing your business an average of $289 per lost relationship.
Every interaction with your customers is an opportunity to win or lose their trust. Because of this, it’s critical that your team is set up to deliver exceptional experiences across the board. Fortunately, we’re experts at helping businesses do just that. Here are a few of our favorite tips to help you get started:
- Practice active listening: No one likes getting lip service—especially not your customers. Actively listening to your customers’ problems not only builds trust but also helps you identify areas of your business that could use improvement.
- Learn new skills: If a customer comes to you with a problem, then you’d better have the right tools to fix it. Whether it’s learning more about the needs of the people you serve or how to turn a tough conversation around, it’s essential to have as many skills in your toolkit as possible when it comes to solving customer issues.
- Optimize their experience: There’s no better way to solve customers’ problems than by preventing them in the first place. Optimizing each and every touchpoint your customers have with your business (e.g., your website, over the phone) lets you get out ahead of problems before they ever occur.
The final variable: Because even one bad conversation can result in a lost customer, and the average lost relationship is worth $289, we’ll go ahead and attribute this value to every customer-service interaction.
And voila! Here’s the true value of every conversation.
So, how much is a conversation worth? Let’s see how our math works out:
The value of peer-to-peer conversation ($9) + the cost of internal communications ($58) + the price of customer happiness ($289) =
The value of peer-to-peer conversation ($9) + the cost of internal communications ($58) + the price of customer happiness ($289) = $356
There you have it, the peer-reviewed and mathematically sound valuation of every conversation. Three hundred and fifty-six dollars.
We’ll take our Nobel Prize now.
Okay, okay, there might be a slim margin of error here. So let’s go ahead and round it up to what we all already know the real value of each conversation is: priceless.
Cheesy? Sure. Expected? Maybe. But it’s also absolutely true.
The fact is that
every conversation you have throughout the day impacts people’s perceptions of your business. Even the smallest exchange can end up having Butterfly Effect-esque consequences that ripple outward.
The bottom line: don’t think of conversations in terms of dollars and cents but as intangible investments in your future success.
Now go out there and get to gabbing!
Visit Ruby’s Small Business Hub for more tips on customer communication and business growth.