ROI Selling: Four Opportunities to Advance Your Sale

When customers make a purchase, they typically go through a few different stages. As a seller or marketer, your job is to help shepherd the customer through these stages quickly and efficiently.

Based on our experience, here are the four most common stages of buyer purchasing behavior, plus the tools you can use to advance the sale to the next stage.

1. Customer assesses the problem.

In this stage, the customer is trying to assess the problem and figure out how their performance compares against benchmarks. At this stage, a simple assessment tool can help customers get a feel for how they’re performing in the market.

(To capture more leads from your website, provide visitors with an assessment tool.)

2. Customer quantifies the value of the problem.

At this stage, the customer is saying, “This solution looks interesting … but is it worth it to me to implement it?”

This is when sellers and marketers must quantify the value of the problem for prospective buyers. In other words, if the prospect were to solve this problem, how much money will they either be able to potentially make or save by doing so?

It’s important to note that when customers quantify value, they’re simply trying to figure out how big the problem is. Is this a two million dollar problem, or a 10 million dollar problem? (Note that you’re not yet discussing how much investment it will take to fix the problem — that happens at the “justify the cost of making a purchase” stage, explained further below in this list).

(To capture more leads from your website, provide visitors with a value calculator. )

3. Customer compares alternative solutions.

Frequently (but not always) customers reach a stage where they want to compare offerings. Essentially, at this stage you’re trying to show the customer why this company should buy from you and no one else. Your Company has one offering; XYZ Company has a similar one: which one is best?

At this point, we advise using a TCO (total cost of ownership) tool, which will provide calculations showing the value of one solution over another, over the same time period.

(To close more competitive deals, provide your sales team with a TCO tool. )

4. Customer justifies the investment.

One of the final questions a customer will ask is, “Is there a cost justification for me to make this investment?” In other words, the customer wants to know what the return on the investment will be if he or she buys your solution.

Unlike the stage above in which the customer assesses value of the problem, this stage identifies the cost involved in investing in a solution to that problem. In other words, the problem could cost $5 million, but if the solution requires $10 million to solve, the company should probably address another area or spend resources elsewhere. On the other hand, a problem that costs $2 million and only would cost $150,000 to solve would be worth doing something about. (A good rule of thumb is to ask yourself whether or not you’ve made a case that will cause any Chief Financial Officer to sign off on a major expenditure.)

(To close more deals rather than losing to “no decision” provide your sales team with an ROI calculator.)

Many sellers and marketers won’t have to use all of these tools — very commonly our clients end up using just two or three tools in combination. For instance, a TCO tool is not really of interest unless you’re losing lots of bids to competitors. Similarly, if you’re losing business to “no decision,” or only have a 10% close rate on a large funnel of opportunities, then you need an ROI tool to help you justify the cost of investing in your solution.

Also, not all customers go through each of these stages. Some customers, for example, go straight from “quantify value” to “justify investment.” (In fact, a value calculator plus an ROI calculator is what we most commonly deliver for our clients.)

What’s your biggest selling/marketing challenge, and what tools are you using to overcome it? Share your thoughts in the comments section. 

Discussion with a Sales Leader: The Transformation of the SunGard Sales Force

Last week I spoke with Ken Powell, who’s been leading a sales transformation at SunGard in his role as VP of Global Sales Enablement. (He was also a speaker this week at the Sales 2.0 Conference in Boston.)

He joined SunGard just 15 months ago, but his prior experience leading a sales transformation in his previous role at ADP helped him hit the ground running. Already he’s taken many steps to improve sales effectiveness. These have included:

  • equipping the sales team with mobile devices (specifically, Windows 8 tablets, which have “exceeded” his expectations and are “more business friendly” than the iPad);
  • adopting various Sales 2.0 applications (including Xactly, OneSource, LinkedIn, and SAVO, to name just a few);
  • simplifying messaging.

As a company, SunGard is in an interesting spot right now. Formed originally through acquisitions starting in the 1980’s, its primary revenue driver is currently software licensing, although they also have a large consulting organization. Ken said one of their aims is to make the consulting aspect a competitive differentiator.

To that end, Ken has already done quite a bit of work with his team to refine the message his teams send to the market. Whether his salespeople are face-to-face with customers or interacting online, Ken has made it clear that they must connect the capabilities of SunGard solutions and capabilities to business outcomes. Given this initiative, it didn’t surprise me to learn that one of the next steps for Ken and his team is to incorporate value-based selling tools (and TCO tools in particular) into the selling process. In his words, proof of value is “a natural course of a conversation that professional salespeople need to have today when they’re interacting with customers, because it’s an expectation.”

Since I’m in the business of creating ROI tools, Ken asked what I tell clients about overcoming the fairly typical objection from customers about “fictitious numbers.” As we all know, numbers can be arranged in ways that will support almost any kind of story (as Mark Twain said “There are three types of lies:  lies, damned lies, and statistics.”) As a result, many customers look at numbers supplied by salespeople with a very skeptical eye.

I said that, in my mind, a major benefit of using a value calculator (or other tools) as part of the sales process is transparency. Whenever we train salespeople on how to leverage ROI tools, we advocate what we call a “peel-the-onion” approach. Salespeople should rely on the default calculations of an ROI tool to generate an initial report. But the next step shouldn’t be to simply throw the report over the fence and let the customer evaluate it alone. A much more effective route is to say, “We have this tool to evaluate your business case and decide whether or not this solution makes sense for you. Let’s sit down to discuss the numbers together.” After that, you answer questions and adjust numbers accordingly as you go.

With a peel-the-onion strategy, the customer sees the numbers evolve and thus becomes invested in the final calculation. For example, you might change the default analysis from three years to five years on the spot. Or, if the customer pushes back on a point, you have options. If the customer says, “Ok, I’ve seen your case study and how you’ve done this with other customers, but I personally don’t think you’ll ever get a two percent reduction in labor for us.” At that point you can ask the customer what he or she feels is realistic. If it’s one percent, you plug in the numbers for a one percent reduction in labor and show them what that scenario looks like.

The point is to start the conversation with numbers. Numbers will get the customer engaged. Only then can you talk about features and functions and how you’ll be able to support those numbers with your capabilities.

Great sales leaders must make hundreds of choices that will influence whether or not their sales teams succeed. This is particularly true for sales leaders that undertake a sales transformation, which by definition involves countless changes that all tie back to a unifying business strategy. It’s an interesting journey for any sales leader and I look forward to seeing what evolves at SunGard.

Do you have a sales process that supports a business case? What do you say when customers show skepticism about numbers? Share your thoughts in the comments.

3 Tools to Communicate Value at Different Stages of the Sales Cycle

Depending on where the prospect is in the buying process (or your sales cycle), there are different tools (or calculators) to help you with your value-based selling approach.

business people with chartsIn the earliest stages of the sales cycle, you want to establish the prospect’s pain and how much that problem is costing them. This will help set you up for a conversation about how much your offering can help. A value calculator helps you show how much money the prospect is leaving on the table each month, or how much they’re spending that’s unnecessary. This helps you establish the “value” of solving the problem. (Here’s a good example of a value calculator.)

The main reason you want to use the value calculator early in the process is that it helps you avoid a price discussion until you’ve clearly defined what the prospect’s problem is and how your offering can add value. This is why a value calculator can be a great lead-generation tool for marketing. If you add it to your website or make it a landing page in an email campaign, prospects can use it in a self-serve way to estimate how much the problem is actually costing them and how much they might be able to reduce costs or increase sales. Again, this tool doesn’t address pricing or how much you might be charging them.

As you get later into the sales process, there are two types of tools you can use to communicate value. One tool is great for when you’re in a competitive situation and you’re trying to differentiate: a TCO (Total Cost of Ownership) calculator. This tool can help you make a case for why you’ll be better able than the competition to create value for the prospect.

The other type of tool to use later in the sales process is an ROI tool, which helps you make a case that the prospect should invest in your offering (as opposed to why you provide better value than the competition as in a TCO calculator). An ROI tool provides the prospect with the financial justification for your solution. In other words, it will show how much they’ll save, the payback period (aka, the break-even point from investing in your offering), and cost-to-delay-per-month (how much they’re losing each month by not investing in your offering). These metrics really help when the CEO or CFO gets involved and wants to see a cost justification for investing in your offering.

The type of tool you use depends on what information you want to reveal, and when. Unless your pricing is publicly available, you would rarely make an ROI tool available until the sales cycle is well underway. Here’s why. You could scare the prospect off early by indicating how much your offering might cost them, let’s say one million dollars for discussion purposes, because they won’t stick around long enough to hear about how your offering can save them ten million dollars.

It’s important to note that the ROI calculator is not used to set your price but to justify your price. (There are tools to help you with price-setting, like PROS, LeveragePoint, Vendavo, or Zilliant.) Most selling processes will tell you to resist talking about price until you’ve gotten the prospect to realize, “Yes, this is a big problem and it’s costing us X amount of money.” This is where a value calculator is a great tool to help establish the cost of the problem.  Be careful trying to use an ROI tool to establish your pricing because if a prospect believes you’re going through an assessment simply to set the maximum price possible, then they might give you artificially low numbers in an effort to minimize the amount they might spend on your offering. This can create distrust on both sides, which is never a good way to start a business relationship.

When used at the right place in the sales cycle, all three of these tools, the value calculator, TCO calculator and ROI calculator, can establish a strong business relationship with your prospect.

At what stages of the sales cycle do you discuss value? Share your thoughts in the comments section.