Sales Tip: Tread Carefully with ROI Calculators
I’m a big proponent of discovering the potential value to your prospect of acquiring and utilizing your products and services. One of our core concepts is: People make emotional decisions for logical reasons.
The potential value to a company of changing how they operate can often be the logic they need in order to help them make a purchase or subscription decision.However, I have some concerns about existing “ROI tools” and how they are used by salespeople in the sales process.
Here are a few things to consider about ROI tools and calculators:
- They typically represent what someone in your company thinks is important to your prospect – not what the prospect organization has told you is important.
- Your prospect has probably equipped its sales team with a similar tool. They are familiar with its intent.
- They know what you are trying to do – convince them to purchase your product or service.
- The potential savings variables contained in the ROI model are typically pre-determined before even knowing what is important to the prospect and what they are trying to accomplish – resulting in you misdiagnosing and being viewed as manipulative.
- Potential revenue improvements that the prospect thinks are possible are often overlooked and can be very compelling.
- They almost always include variables that most prospects and salespeople don’t understand – net present value of money, hurdle rates, etc.
- Salespeople themselves typically don’t understand the potential value of their offering. They leave it up to the prospect to figure it out.
- Salespeople hand the ROI tools to their prospects and ask them to fill it out.
- Salespeople view them as ‘proof’ when in fact they are purely a projection of what might be accomplished.
Instead, we advocate facilitating the development of a relatively a simple cost/benefit analysis – the price of your products and services and the potential benefits the prospect has told you they believe they will receive over some period of time. Why?
- It is easier to understand – you don’t need an MBA!
- You, as the seller, own your costs.
- The prospect owns their potential benefit – what they have told you they believe is possible after implementing and using your offering to address their goals, problems or needs. NOT what you have told them or projected.
- You don’t own or have to defend the prospect’s potential benefit – the prospect does
- They can revise the potential benefits up or risk adjust them down.
- It gives them the information they need to compete with other projects for funding internally.
- It has the ability to differentiate you from your competitors.
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