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Guest post by: Tibor Shanto Become an Author

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Many sales reps today rely to heavily on ROI based selling. The concept being that if one can show a company or individual a return on their invested dollars within a reasonable time frame, there should be no reason why an average sane buyer would not buy what they are selling.

However, all too often these ROI calculation is too vendor centric, and fail to engage the prospect. The result is a mathematically sound calculation, but as is the case with marketing crafted "value propositions", they speak to the vendors' view of the market, and their need to derive revenue from the market. They do not speak to the clients' agenda, or move it forward, nor do they deliver value to the prospect. This type of self-serving mathematical validation ends up turning prospects off and either lengthens the sales cycle, or worse kills the sale. Again, although the typical ROI sale is rational, intellectually sound, it usually lacks the teeth to grab the customer and create either real interest or action on the part of the prospect.

This can easily be demonstrated with a specific real life example. A company I worked with had a fairly robust offering around content, content delivery and content management. Using their systems, indexing, and approach to content management they were able to deliver "relevant" content to the desktops of users "faster" and more "efficiently". For the longest time they have sold based on an ROI with single premise originating from a claim found in an industry commissioned white paper (paraphrasing):

"The typical corporate employee spends over two hours a day searching for information"

Once they got a prospect to accept the above as "fact" , the ROI was that if they could cut down the "search time", save each employee say 2 hours of "searching" a week, times the number of employees, time the cost per hour, times the days worked in a year, well, you'd pay for the system in no time. In fact the more you bought, the more you'd save, the quicker and the bigger the ROI. Now this company is not the only one that goes down this path, a bunch of "solution" providers do. The math works,

$35 dollars per hour ROI

(assuming an annual (in the form of annual income of around $45,000) savings or clawed back revenue)

2 hours a week $70

52 week $3,640

300 employees $1,092,000

We and it seems many prospects, see this as flawed, and therefore not only reject the ROI proposition, but often the company and the reps presenting it; and in sales rejection is not the goal.

A solution with a price tag of $350,000, four month pay back, an ROI of 212%! Wow where do I get one?

It was amusing to watch the face of a senior executive when she was asked by a CIO her team was prospecting, how she and her company can assure him that the "reclaimed time" potentially realized by their "corporate employees" would actually be put back into productive use for the company. How could he be assured that they would not go for a cigarette or surf the web.

The problem was that the ROI only related to the seller's reality and needs. A real ROI starts and ends with the prospects view of what makes sense.

A real ROI, one with teeth, calculates a return on the clients' objectives, measures pay back based on specific impact of changes in the clients' interactions with their customers, speed of fulfillment, customer service response time, and increased production. All of these are real measures. All presumably identified through a process of discovery and identified by the client as not only their objective but important enough for them to want to make an investment, or just a change.

This is not to say that as sales people we can not get prospects to focus on, and buy things they did not have in mind before we engaged. By helping them discover that our product or service could in fact help them attain their goals, avoid risk, improve margins, expand markets, improve their image, and a number of other things that were not top of mind for the prospect to that point. We then have to help them understand and buy in to the impact of our offering by utilizing an ROI validating their decision and creating urgency on their part to act.

As an example, when I meet with a client and we begin to discuss the quality of their sales team's forecast, (It is worth noting that I read a study that stated the average accuracy of sales forecasts in North America is 53%), it becomes clear that the team's inability to forecast accurately is creating havoc on the production side of the company and his margins. With better forecasting he could better predict production cycles, timing of his purchase of raw materials, ship the finished product, he could negotiate better deals with various supplier thought the whole chain. With that on the table we can begin to quantify his current costs, his potential savings and the impact for each percentage of improved forecast accuracy. Now we can have a real discussion about the real returns he could realize for every dollar he invests in Renbor's Funnel Management Program. As an added bonus, his reps also sell better while they learn to forecast more accurately.

No BS, no Magic, just a real return based on the clients' realities, not ours. Sure it takes a bit of effort, but it makes for a more solid sales and a more real calculation. The reality of the other type of calculation, the ones that tries to rationalize the investment based on outside or general factors, is that it really is a thinly veiled product dump. Fresh, cute, but still a dump, one that hopes that the prospects get so caught up in the numbers that they end up buying. The fact is that sometimes they do, that's why people use it. But prospects catch on, and see that type of ROI has no teeth.

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