How to work out what a customer portal is worth

A customer portal is one of the easier custom projects to justify, because nearly all of its value shows up in numbers you already collect. You just haven't added them up in one place yet.

By a portal we mean a website where your customers log in to check on orders, find invoices, see their pricing and place orders themselves. Here's how to build the case for one before you spend anything.

Count the calls that shouldn't need a person

For one week, have whoever answers the phone keep a tally of incoming calls by type. Four kinds matter most: where's my order, can you resend an invoice, what's my price on this item, and can I place an order.

Each of those is something customers could do for themselves, handled instead by someone on your staff. Multiply the number of calls by the time each one takes, then by the full hourly cost of the people taking them, including benefits and overhead. That's your first number. For most distributors and service businesses it comes out bigger than expected, mostly because nobody has ever counted.

Count the retyping

If orders come in by phone, email or fax, someone types them into your system afterward. That's doing the same work twice, and a certain number of those orders will get typed in wrong.

Pull the last six months of credits, returns and corrections, and work out how many trace back to a mistake when the order was entered. Each one costs you the correction, the shipping and a bit of goodwill. A portal where customers enter their own orders removes almost all of that, because the person typing the order is the one who knows what they want.

The number people miss: order size

The savings above are real, but they're about cutting costs. The more interesting number is on the sales side.

When customers order by phone, they order what they remember. When they can see your full catalog, their order history and their own pricing, they tend to order more. They come across products they didn't know you carried, and they reorder things they'd forgotten about. This happens consistently enough that it's usually the biggest single line in the business case.

Keep the estimate conservative. Take your average order value for orders placed through your staff, then apply a modest increase to the share of orders you expect to move to the portal. Even a few percent on a decent share of your orders usually outweighs the labor savings by a wide margin.

An example from our own experience

Our team built and launched the B2B eCommerce platform at a manufacturer, running both the development and the program management. It now handles more than 90% of that company's orders and returned 125% on the investment, through a combination of lower costs, automated processes and a better experience for customers.

Your business is different, and your numbers will be too. But the pattern tends to hold. Most of the return came from work that no longer had to be done by hand, and from customers buying more once they could see everything.

What to measure before you build

Write these down now, so that later you can show the result instead of arguing about it:

• Incoming calls per week, by type
• Average order value, split by how the order came in
• Order entry corrections per month
• How long it takes from receiving an order to having it in your system
• The share of orders that arrive outside business hours

That last one is easy to overlook. An order placed at 9pm is one you couldn't have taken before unless someone was there to take it.

When a portal isn't worth it

If you have only a few customers and their orders are large and custom every time, a portal solves a problem you don't have. For some businesses, selling over the phone through a personal relationship is the right way to work, and putting a login between you and your six biggest accounts won't help anyone.

The case gets stronger the more customers you have, the more their orders repeat, and the more of your catalog they've never seen. If that sounds like your business, start with the week of call tallies. It costs nothing, and it'll tell you quickly whether the rest of the math is worth doing.