ROI for a Web Based Customer Portal
10 January 2011
Anne Huang, Yu Lee Kim, Min Woo Lee,
Chalida Nakornchai, Kana Osugi, Ryan Thompson
Recommendation to Invest in the Web Portal
We recommend investing in the Web-Based Customer Portal. The expected high financial rewards with net present value of $346K and 41% IRR within five years (see Exhibit 1) are the main motivators. Based on our market research, we believe the high revenue would come from an expanded customer base, increased order frequency/size and reduced costs. Going beyond the financial rewards, the strategic impact of the project is not only to increase our penetration rate and customer service quality in the short run, but also to enhance long-term growth potential.
To arrive at the net present value calculation, we assume the project will increase B&K’s penetration rate from 50% to 70% in five years. With our current ordering logistics and sales force, we were unable to reach and serve customers in distant areas, and consequently growth has stayed at the inflation rate. The web portal will enable our sales force to enlarge our customer base.
In addition, the customer portal can provide a complete product list and simplify the ordering process. As a result, customer satisfaction would increase as well as providing customers access to information on products that had not been readily available before. Looking at the industry environment, not many competitors are using a portal, and our simplified process and quick response would be our competitive advantage.
Thirdly, the customer portal is crucial for our long-term growth, especially when the Internet is an inevitable trend. Although few restaurants are using online order systems, they will eventually do so in order to adopt to the end consumers’ behavioral patterns. The customer portal can lead us ahead of the trend. In the long run, we can capture more business opportunities when the adoption of the...