I was recently introduced to Michael Nick. I was impressed with his commitment to salespeople and how he helps them learn to justify ROI to clients. In this month’s guest blog, Michael breaks the ROI process into simple, easy-to-follow steps. Listen and learn. I did.
“What is the ROI on ROI anyway? If I had a dollar for every time someone asked me that question, I would be rich.
Much has been written lately about how ROI is dead, how no one believes ROI results, and blah blah blah. This rubbish comes from people looking for headlines or who really don’t understand the concept of client relationships and how sales tools can help identify issues and monetize value. The whole process, if done correctly, should be as natural as asking prospects about their budgets.
Here are a few steps—in most sales processes—that require some sort of Economic-Impact Analysis (formerly called ROI):
1. In your current sales process, what do you do first? Qualify a prospect? When you qualify, what do you ask? How many, how much, and when? There are typically questions you can monetize against a minimum number of something to determine if the prospect is worth pursuing. For example, we may ask how many sales professionals a prospect currently has? Or we may ask about their annual revenue or average size sale? Each of these must meet a minimum quantitative figure to qualify for our pipeline. You probably have similar questions.
Economic-impact tools help sales professionals gather qualifying data. Most of the questions in an Economic-Impact analysis questionnaire are quantitative. This makes you look more professional and organized, and it differentiates you from your competition.
2. Next, you dive deeper into your pain-discovery questions, right? In this phase of the sales process, you are identifying issues your products or services can resolve. You need to understand the magnitude of the issues (i.e. the level of pain). A wise person once said, “People make decisions to change when they feel enough pain to compel them to change.” Pain is the key word here. The level of pain must be measured until you can identify a tipping point.
When you identify an issue (pain) and can measure the current cost of that issue, it changes the dynamic of the sale. When a prospect acknowledges he has an issue and can clearly see the cost of that issue, he is more likely to pursue a solution. The key, however, is the tipping-point question. In other words, if the issue is not “painful” enough to inspire change, your client won’t, and you will lose to status-quo. Economic-impact tools are designed to identify pain, capture and calculate the current cost of that pain, and extrapolate that cost over a period of years. This allows you to discuss the ongoing cost of status quo and decision delay.
3. Next you must prove you are capable of delivering the solution. In other words, what is the economic impact your solution will have on the prospect’s issues, pains, and goals?
You have to prove your value. The problem is most prospects don’t believe you can deliver what you say you can deliver. Look at CRM or SFA systems over the years. Do you really think those delivered ROI as planned? How about ERP or Project Management Software?
I suggest proving you have impact and then leaving it to the buyer to establish a goal for your solution. The key to this process is to have a starting point, which is the current cost of status quo (see #2 above). Once you know the current cost, prove you’re capable of lowering that cost and then ask your prospect to establish a goal for bringing it down. This will shift the onus to the prospect. It isn’t about customers believing your numbers any longer; it is about setting realistic expectations for your solution.
ROI is not dead; it just changed its name and reinvented itself. You need sales tools that include detailed, consistent pain-discovery questions, TCOs for cost comparisons, 360-ROI tools to measure success and retain your customer base, and a high-quality business case to bring it all together—not because it sounds good, but because your customers are demanding it.”
How (and where) does ROI play a role in your sales process? Which economic-impact tools have you used, and what results did you get?
Michael Nick is one of the leading experts in sales tool development, and training and sales enablement. Founder of the ROI Selling program, Michael has worked with companies like Rockwell Automation, Fiserv, Autodesk, Hewlett Packard, Emerson, Compuware, Ingersoll Rand, Bomgar, and Microsoft Great Plains.
He is the author of three bestselling business books, including: ROI Selling (©2004 Dearborn), Why Johnny Can’t Sell (©2007 Kaplan), and the Amazon top-10 business book, The Key to the C-Suite (©2011 AMACOM). To learn more, visit Michael’s website or follow him on Twitter.