Investing in the sales function with ROI tools and financial insight allows today’s sales professional to properly quantify your product’s ‘features and benefits’ in a way that the potential customer can appreciate. ROI is important because potential customers make purchase decisions that are heavily impacted by budgets, risk, and opportunities that are financially measured and ranked within their company.
As a result, most successful salespeople are financially astute and can show the short and long-term financial benefits of their products. They also have the ability to individually tune the financials to meet the specific needs of each potential customer. Do your salespeople know how to quantify the value based benefits of your product or service and do they feel comfortable answering basic business questions? For instance can your salespeople:
• Understand and explain ROI, NPV and other financial metrics (e.g., TCO, Payback, IRR)?
• Investigate customer’s business requirements and properly use the results?
• Conduct an ROI analysis and run “what-if” scenarios to gain customer buy-in?
• Effectively incorporate ROI analyses and findings into presentations, proposals, and assessments?
• Easily handle customer skepticism and objections (e.g., “Your competition has a lower price.”)?
• Leverage effective financial closing techniques to reduce long sales cycles?
WHY ROI?
Return on Investment is universally accepted because it is used by decision makers, executive management, shareholders, analysts, and investors.
ROI is the benefit of an investment divided by the cost, expressed in percentage terms, over some period of time. If you only use ROI as an end result number you cheat yourself and your company because the true benefit of an ROI analysis goes well beyond the numerical result, and includes:
• Reducing Long Sales Cycles • Creating a Receptive Customer Environment • Establishing a Fair Product or Service Selection Process • Providing Insight into the Customer’s Business Situation Reducing Long Sales Cycles An ROI analysis can dramatically reduce the time and effort associated in closing the deal with a potential customer. Demonstrating the business impact of your product or service for the potential customer helps them appreciate the true value of your solution.
Proof: International Data Corporation (IDC) found that the average sales cycle for a million dollar Lotus Notes deal is 18 months. For those companies completing an ROI analysis, 65% reported their purchase process to be 6 months or less.
Creating a Receptive Customer Environment Purchase decisions by a prospective customer can be made without a full consensus. However, the success of a decision is often based on consensus within their organization. Quantifying the benefits of your product or service can make it easier for potential customers to select you and keep everyone in their organization supporting the decision.
Establishing a Fair Product or Service Selection Process When you try to get a new customer you often have to compete with an incumbent. An ROI analysis helps to eliminate entrenched vendor bias. ROI heavily penalizes products that require a lot of resources to implement and/or require significant upfront investment with time delayed benefits. An ROI analysis provides financial insight and allows the potential customer to eliminate the emotional elements often found in decision-making.
Providing Insight into the Customer’s Business Situation Discussions with customers when you only focus on your features and functions are risky at best. Completing an ROI analysis insures that your discussions with the potential customer will focus on their organization's business problem. It also guarantees that you get an appropriate understanding of their business needs and motivations. Your insight will result in them having more confidence in your product or service making their business better.
EQUIP YOUR SALES PROFESSIONALS WITH ROI TOOLS & TRAINING
Properly equip your sales force and watch your sales generated revenue increase. It is critical to select and implement ROI tools that are designed to highlight the business value of your product in order to be deemed meaningful by prospective customers. Prospective customers want to work with salespeople who have tools can be used to quickly simulate a range of important product influencing variables that have a business impact, such as:
- Number of records processed. This is a practical measure of productivity.
- Number of sales made, a practical measure for increased sales effectiveness.
- Length of customer support calls, a practical measure for more efficient customer service.
There are many other variables that are unique for each product and service and 95% can be quantified and used in an ROI analysis!
A well designed ROI sales tool can be effectively used at any point in the sales cycle. Consider putting a flash based version on your website, but at least make sure that your salespeople have the tools they need to be successful. Just as important as the tools is making sure that your sales people are properly trained and ready to go. The future of your company is worth doing everything necessary to insure your sales professionals will be successful.
Make Your Sales Force “ROI Smart” - To learn more about this author, visit Glenn Clowney's Website.
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