Think Twice Before Selling ROI

When we're selling to business people, our value proposition has to show a good return. Solid, credible Return On Investment (ROI) calculations are supposed to prove this for us. But if we don't think twice, calculating ROI can sabotage our sale.

Lots has been written about various ROI methods -- return on assets, net present value, months to break even -- and I'm not knocking any of them here. Use the one that serves your customer and your purposes best. Create the financial model that shows your offering is indeed a good investment, far exceeding your prospect's hurdle rate. But don't stop there.

If your prospect decides your figures are believable and accepts your argument as valid, that may or may not be good news for you. Here's the rub; the effort and energy you have expanded to extract relevant figures, analyze them, put them into a presentation, and then "sell" them to your prospect may have helped your competitor more than you!

Once your prospect accepts your ROI arguments, their conclusion is not what you might think. You may be assuming they will now feel justified in buying your offering. In reality, their conclusion is that several solutions like yours probably all make financial sense. They are now ready to buy - as soon as they know they are getting a fair price. Now that you've done all the hard work and convinced them to buy something, it's time for them to compare your offer to the competition's. You better think twice before you induce them to do that!

Here is how you can "think twice" and resolve the vulnerability you have created for yourself.

Think first about preparing an ROI presentation based on common, generic aspects associated with your category of solution. Get the prospect to understand the financial benefits of investing in a solution like yours. As before, use convincing, relevant, proven data so they can fully accept the financial benefits as real and attainable.

Now it's time to "think twice." Consider each of your competitive advantages and build separate ROI models to quantify the advantages of each. This is your chance to attach a figure to your differential advantage.

A software company used this approach to justify the perceived expense of their system to business executives. Their presentation on common benefits demonstrated a solid ROI that would get the executives' attention. Next, the salesperson would present additional ROI calculations that quantified the value of their seven unique system attributes. This second ROI layer improved financial returns by almost 30 percent. Their software package was far from the cheapest, but nowhere near 30% more than any of their competitors. As a result, buyers rarely found reason to shop around.

Thinking twice can earn you higher margins and a shorter sales cycle. You will avoid pushing prospects into the arms of your competitors. Plus, you will finally be able to quantify and capture the value in your differential advantage.

Give your ROI presentation a second effort, and you'll jump from sabotaging your sale to securing it.

© 2005 Paul Johnson. All rights reserved.

Note: This article is available for reprint at no charge. We only ask that you include our copyright notice in your reprint, along with the About the Author (byline) information we provide at the end of the article.

Paul Johnson of Panache and Systems LLC consults and speaks on business strategy for systematically boosting sales performance using Shortcuts to Yes?. Check out more salesforce development tips at http://panache-yes.com/tips.html. Call Paul direct in Atlanta, Georgia, USA at (770) 271-7719.

---

ISO 9001, What Next?

The overriding goal of ISO-14000. (History 1995)As ISO-9000 becomes a... Read More

Employers - Protect Yourself from Custody Battles that Hold Your Company Hostage

Child custody? How'd that get to be an employer's concern?When... Read More

One Simple Idea to Grow Your Business

Perhaps the most common theme I've heard in working with... Read More

Leadership Styles - the Ten Top Qualities the Best Leaders Show

Top leaders...Are Visionary Top leaders have a very clear understanding... Read More

Top 7 Methods to Empower Employees

How many times have you asked someone to do something... Read More

Check Your Communication Skills

Use this check list to assess your communication skills.Focus* Do... Read More

Effective Multi Cultural International Business Meetings

Of the many areas in international business where cultural differences... Read More

The Top Six Reasons to Buy Rather Than Build an Inventory Management Solution

Is building your own inventory management solution really your best... Read More

Christmas Carol Coaching - Help to Get Ahead at Holiday Time!

I've always been fascinated by situations where art imitates real... Read More

3 Ingredients of Highly Profitable Organizational Change

As waves of organizational change sweep across the business landscape,... Read More

The Seven Cs: Partnership Danger Signs - Conflict Becoming the Norm ? Part 2

A series of articles exploring the seven critical areas that... Read More

Problem Solving - Think Cleopatras Ass

Picture the scene. Anthony pops down to the guardhouse, partly... Read More

Proven Secrets to Keeping Your People and Increasing Your Profits

Why are people changing jobs so quickly these days?Here are... Read More

Directed Introspection

One of the greatest obstacles to progress can often be... Read More

Toxic Bosses

What's everyone's favorite topic around the water cooler? Bad bosses!... Read More

The Seven Cs: Partnership Danger Signs - Communication Breakdown

An ongoing series of articles exploring the seven critical areas... Read More

Book Summary: Mind Your Own Business

A maverick is an independent person who will not go... Read More

The Seven Essentials of Business Communication

There are seven essential elements to successful business communication:StructureClarityConsistencyMediumRelevancyPrimacy/RecencyPsychological Rule... Read More

Working with Hearing Impaired Employees - Giving Them a Fair Go

Hearing impaired people often encounter difficulty at work because their... Read More

HRM: Contributing to Well-being or Ill-being at Work?

If you were to take the people out of an... Read More

How to Manage Your Most Valuable Assets - People?

People management and leadership has become a major topic of... Read More

Innovation Management ? Rigorous data analysis

Creativity can be defined as problem identification and idea generation... Read More

Innovation Management ? idea selection, development and commercialisation, what are the differences?

Creativity can be defined as problem identification and idea generation... Read More

Unravelling the Data Mining Mystery - The Key to Dramatically Higher Profits

Data mining is the art of extracting nuggets of gold... Read More

Its a Training Issue!

There's a common phrase used by Organizational Development and Human... Read More

Déjà Vu MCI to Qwest International Inc: Can this Corporate Marriage Survive?

Current Situation:As of this writing, the MCI Board of Governors... Read More

Creativity and Innovation Management - Core Competencies and Competitive Advantage

Following is a brief definition of core competencies and competitive... Read More

Know Your Client - The First Rule of Business Coaching

Whilst the very best coaches have undertaken independently accredited training... Read More

Business Innovation ? Core Competency and Competitive Advantage

Creativity can be defined as problem identification and idea generation... Read More

CEOs Are Great, Top CEOs Are Greater

People in leading positions are often in a dilemma: on... Read More

Whatever it Takes!

I have a sign on my office door. It pretty... Read More

Managers? Biggest Blunders

Nobody's perfect, including the boss. Managers, we polled recently, acknowledged... Read More

Top Ten Things About Creating a Business Vision

To visualise where you are going, is deeper and more... Read More