15 Mar 2017

Sales Tips: Tread Carefully with ROI Calculators

By Gary Walker, EVP of Channel Sales

15 Mar 2017

By Gary Walker, EVP of Channel Sales & Operations, CustomerCentric Selling® – The Sales Training Company

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.

ROI Calculators vs. Cost-Benefit AnalysisThe 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. 

Want to learn more about determining business value and how to use it effectively? Sign-up to attend one of our 2017 public sales training workshops that are available for registration now.

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