How to Document Value for Buyers
Sales Training Article: How to Document Value for Buyers
By John Holland, Chief Content Officer, CustomerCentric Selling® – The Sales Training Company
New sellers are taught how to beat competitors. A Sales Benchmark Index survey found sellers win 24% of proposals issued and lose 24% to other vendors. Surprisingly, they also found 30% of opportunities are lost when buyers decide not to spend the money, and 22% of companies choose to develop in-house solutions.
Four common reasons for “no decision” outcomes are that sellers fail to:
- Uncover business goals
- Create visions
- Gain access to power
- Negotiate evaluation plans
I wanted to focus on a fifth reason: Failure to agree and document value for buying committees.
Most sellers are unaware of the internal competition for funding initiatives within prospect organizations. If a CFO has 5 requests each for $100K but can only approve 3 of them, most likely the offerings providing the highest paybacks will be funded. A student selling accounting software to heating oil distributors realized during a workshop he lost a recent sale because the business owner decided to buy a delivery truck instead. Without documented value it can be difficult for a seller’s internal champion to secure funding.
While better than nothing, many vendor value propositions are forced upon prospects. Given prior experience with seller/vendor hype, assume a buyer discounts potential savings they’re told they’ll realize by half. If the offering requires implementation effort, assume the buyer doubles the cost. If this happens the buyer (assuming twice the cost and half the savings) and seller are off by 400% in their perspectives of value.
How to Document Value
I have no intention of making salespeople accountants that present ROI’s to senior financial executives. That said, competent sellers can help buyers create simple cost vs. benefit analyses for proposed expenditures. This can be done by calling on committee members and uncovering the business outcomes (goals) they want to achieve. Wherever possible, sellers should have each buyer provide baselines reflecting where they are today without the offering and have the buyer quantify how much improvement he or she believes can be realized. Sellers can and should share industry statistics and results other clients have achieved, but it’s critical that each buyer decides what improvements are possible.
After getting the perspectives of committee members, sellers can summarize total costs and projected benefits in a few pages. If there are significant upfront costs, I would focus on the cost vs. benefit in year 2 after those costs are defrayed. Divide the total potential benefit by 12 to allow buyers to see the monthly cost of delaying decisions.
Taking these steps allows sellers to address the two reasons for “no decision” outcomes:
1. It’s harder for committees to decide not to buy if the potential value has been agreed upon and documented.
2. The savings per month highlight the cost of delay. Buyers may realize lost savings while creating in-house solutions that should be considered as being part of the development costs.
Making committees aware of value won’t ensure wins. That said it should enable salespeople to reduce the painful 52% frequency of going the distance only to lose to no decision.