I can thank Lotus 1-2-3 (one of the original spreadsheet programs) for helping me launch my professional career (Lotus had me at hello.) Early in my career I worked for Costco in the transportation department. My job was to help the buyers figure out how much money they needed for freight costs for their orders. I developed a really cool spreadsheet that did magic when it came to figuring out the lowest cost. It saved the company over $1 million in the first year. Long story short, I submitted an internal request to buy a new computer to take the program to the next level and my request was denied. I didn’t do a good job of asking for money!
Sales people need to learn the lesson I learned in this story. Someone has to help shake the budget free so the order can get placed. Sales people still seem reluctant to proactively drive ROI as a strategy to get their deals closed. Here are some key reasons sales people struggle in using ROI in their selling strategies
1. Hope is Not a Strategy – Many sales people just want to submit the proposal and let the customer figure out the internal justification. That is a big risk.
2. Lack of Tools – Most sales people don’t have access to good tools to help them do the ROI Analysis. That leaves the task up to them and they don’t have the background to pull the spreadsheet together on their own. In some cases, the tools they have are too complicated so the sales people don’t want to use them.
3. Intimidated by Finance – Many sales people feel like they need to be a CPA in order to run an ROI Analysis. Many of the terms and metrics seem foreign to them.
Telling the story about the financial value of the solution is a critical skill for sales people. Having a compelling financial story is one of the best ways to get your deal accelerated and closed. Once you decide you want to go through the process, here are some keys to making it a successful effort:
1. Have a good discovery process – Getting to what’s important for the decision makers is critical in securing budget. Do your homework and figure out the key priorities of the executive and make sure you connect the dots on how your solution helps meet the needs of those priorities.
2. Focus on Savings and Payback – When it comes to the financial metrics you use, focus on overall savings and payback. How much money will they save and how long before the investment gets paid back by the savings. This will help keep the conversation away from complicated and technical financial terms like Net Present Value, Internal Rate of Return and Hurdle rates. Also Return on Investment is not the greatest financial metric to use. It doesn’t work well across different investment types like technology, real estate or large ticket equipment items.
3. Be conservative and credible – Don’t oversell the value of the financial benefits of your solution. Be conservative in the assumptions you use and if you can, downplay the numbers a bit. Make them good enough for the customer to move forward but not so good that they are skeptical.
4. Make your presentation look great, clear, easy to understand – This is a VERY important point. The clarity and quality of your presentation will make all the difference. Put as much (or more) work into the presentation or document you are using to present the results. Don’t dump a bunch of data that requires the customer to figure out what he analysis means. A nice PowerPoint with 5 or 6, cleanly laid out, slides is your best bet.
Remember, you’re really building the internal budget request for your primary contact. If you do a good job of getting to the important issues, be conservative and credible in the way you do your analysis and build a killer presentation you will greatly increase the odds that your work will lead to securing the budget to move forward.
Check out our new ROI/TCO Sales Tool - if you don't already have a tool this one may be a good starting point for your team.