Help Your Sales Reps Build Credibility with Prospects (Why the ROI Calculator is Not Quite Dead)

When I read this recent blog post, “Death of a Sales Tool: The ROI Calculator,” by Drew Zarges, one of the first things that came to mind was a brief scene from Monty Python and the Holy Grail.

The character Concorde (played by Eric Idle), trusted assistant to Lancelot (played by John Cleese), has just been shot in the chest with an arrow bearing a message that seems to have been written by a damsel in need of rescue. Vowing to respond to this cry of distress, Lancelot declares, “Brave, brave Concorde! You shall not have died in vain!” To which Concorde raises his head and replies, “Uh, I’m-I’m not quite dead, sir.”

I’m in the ROI calculator business, so I obviously disagree with the premise that the ROI calculator is dead as a sales tool. On the other hand, Zarges makes some valid and valuable points. Most ROI tools suffer from a few fundamental flaws and therefore undermine the credibility of the tool (and the provider company), as well as any sales rep that uses it.

I do believe, however, that a properly built and deployed ROI tool can increase not only the sales rep’s credibility, but also improve close ratios and result in bigger deals. Here are my responses to three of Zarges’ observations about ROI tools.

Point 1: “Your reps never learn how to calculate the value themselves.”

First, sales reps need many skills, but I’m not convinced that strong financial-analysis skill is paramount to sales success. The sales process is complicated enough understanding all of the roles and influencers and managing the relationships, without also needing to be a financial expert as well.  Second, when properly built, an ROI tool shows the underlying calculations for each business value benefit articulated in the business case. This allows both the sales rep and the prospect to understand how the value is calculated without necessarily being able to build the calculations on their own.

I wrote a blog post about why spreadsheets fall short as selling tools, and I believe Zarges is referring to those kinds of homegrown spreadsheets. Black-box tools where reps or prospects enter a few numbers and a financial justification magically appears damage the credibility of the tool as well as the providing company.

Point 2: “The calculator only solves for the ideal problem.”

Again, this may be true of many calculators and most homegrown calculators, but a properly developed calculator uses a set of default assumptions only as a starting point. The tool should then allow the rep and/or the customer to modify all of the numbers. Any hidden calculations or hidden assumptions undermine the credibility of the analysis. Ultimately, you want the customer not just to buy into the numbers — you want the customer to own the numbers. They must believe the full results of the analysis and all of the underlying inputs and assumptions, and they must be ready to defend the results if challenged by anyone internally. Any hidden or fixed number undermines their ability to defend the analysis results. Most tools today are filled with hidden and fixed assumptions and don’t allow for modifications based on unique user situations.

Point 3: “The calculator is solution agnostic.”

This can sometimes be true of an ROI tool, but not of a Total Cost of Ownership (TCO) tool. And this is true of an ROI tool only if your offering has no differentiated value for your customer. If your offering has no differentiated value, then you have a bigger set of issues to deal with than the sales tool you’re using. In a competitive situation when trying to show why your offering delivers more value over the competitor’s offering, a TCO tool is sometimes a better choice.

In the end, however, the customer will likely have to build an ROI-based business case to get the funding approval for the project. The funding-approval business case (sometimes called capital authorization or project authorization) is never based on a comparison against a competitive offering — it is always based on how the project will impact the financials currently projected. Thus, even if you need a TCO tool during the sales process to show more value than a competitor, you’ll probably also need an ROI tool to show the customer how deploying your solution will have a beneficial impact for them financially.

Credibility in sales is everything. Customers want to purchase from people they trust and who can deliver solutions to unique problems. If the sales tools you provide your sales reps undermine their credibility, then you’re better off not using the tools. But I’ve seen many cases where a well-designed ROI calculator absolutely helped sales reps move the deal forward and win the sale.

Back to The Holy Grail, in the end, Concorde, who is “just fine,” is being left behind by Lancelot as he goes off to save the supposed damsel in distress, and replies as Lancelot ‘rides’ off, “I’ll-um, I’ll just stay here, shall I, sir?”  In the end, value calculators and ROI tools will still be here to back up the sales team when they need them.

To see an example of an ROI Calculator that can help you build credibility, visit http://www.stratavant.com/roi_calculator.html.

6 thoughts on “Help Your Sales Reps Build Credibility with Prospects (Why the ROI Calculator is Not Quite Dead)

  1. Darrin, this is a good rebuttal to many of my points on this tool. And you’re right that the ROI calculators I refer to are crudely constructed Excel spreadsheets that rely on black box equations. In fact, for one company, I’ve had a rep say “I have to reduce all of our agreed assumptions by 50% or else this thing spits out a ridiculous number”. I still think you’re treading a fine line by saying that the Rep or Internal Resource has to be able to own and believe all of the underlying assumptions, but doesn’t have to be “financial expert”. However, I do agree with the premise that used correctly, an ROI calculator CAN help with funding justification. The best reps demonstrate the value of a solution early and can benefit from such a tool. Unfortunately, most use it late in the sales cycle to try and push the prospect into purchase. Thanks for reading and continuing this dialogue.

    • Drew, thanks for the reply. I was hoping you would. I agree that many tools are built with bad assumptions that are not validated, nor based on reality, so the entire model is ridiculous. On the other hand, very high numbers could mean that the offering is underpriced against the value that it delivers and that the ROI is legitimately very high. Bottom line, the financial model needs to be built based upon a sound methodology and with realistic numbers to be credible. In terms of being a “financial expert,” I still contend that the Rep doesn’t necessarily need to be able to perform a full financial analysis from scratch. It is excellent if they can, and with some applications it may be important. But more often than not understanding the customer’s business and problems and how their own offering solves those problems and then being able to navigate the customer’s buying and approval process are far more important skills. And, in the end it MUST be the customer’s business case that they are taking for approval. The Rep is merely providing a tool and facilitating the evaluation process. In some cases that evaluation process may, and necessarily should, end up with an ROI that isn’t justified and both should walk away. I absolutely agree that demonstrating value early in the sales process is important, but I believe that a Value Calculator (see an example here https://www.estimatebusinessvalue.com/nuance/equitrac_ecopy/web/) is a better tool to demonstrate value early in the process. The ROI Tool is specifically designed to cost-justify your price and unless you are talking price early in the sales process, it isn’t the right tool for the job. Again, thank you for your reply and I appreciate the dialog!

    • Drew, I just found an interesting article (actually a friend sent it to me) that somewhat supports your premise that Reps now need to be at least a business expert if not a full-on financial expert. Here is a link the article http://www.inc.com/geoffrey-james/selling-in-the-post-internet-age.html. His fourth point in the article he states that “Selling often requires the ability to build an ironclad case for ROI.” I still believe that their financial skills can be augmented by a credible tool though.

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