Sometimes in sales you run into a curious dilemma: the business solution you’re offering is perceived by your customer as “too good to be true.” It happens to the best of us!
The return on investment you’ve calculated seems improbably high, which in a customer’s mind calls your credibility into question. This is a tricky issue because the ROI you present is based on the best information you have at that time. It’s also based on a number of assumptions; including financial figures provided by the customer you assume are accurate.
The Right and Wrong Answer
Don’t avoid presenting an ROI. You’ll gain a major advantage over competitors simply by trying to quantify your solution’s impact, because so few sales professionals do this consistently – yet it’s essential when selling at the executive level. The right answer: Assess the reasonableness of your ROI. If it seems too high, re-evaluate your assumptions and present it to executive decision-makers.
Determining What Is – Or Isn’t – a Reasonable ROI
The best way to assess if your percentage is out of whack is to evaluate how this return compares to what you had initially projected during the preliminary discussions.. If materially different, the first place to check is the assumption set you’re using.
You may find that you need to add additional assumptions. Moreover, in very few scenarios will you have 100% control over the solution once it becomes imbedded in the customer’s infrastructure.
When validating your ROI:
- Ensure you’ve recognized all costs, including their internal costs such as people, implementation, potential downtime and training.
- Evaluate whether the timeframe you’re using to forecast returns is longer than the period when your solution will truly be delivering incremental value. Shortening the return period will lower the ROI.
- Multiply the ROI by your customer’s 3-year average Return on Sales (ROS) to get more of a “bottom line” perspective of your solution’s value.
- Verify that the figures and assumptions you’re using are credible to your customer sponsor, then agree on an acceptable ROI range (best, worst and most likely scenarios).
- Bundle your solution with an additional service or solution that solves an enterprise need but doesn’t generate a significant ROI. In doing so, you’ll add strategic value, lower the ROI and leverage a sales opportunity.
If you’ve taken all of the above steps and your ROI is still huge, pat yourself on the back! You’ve achieved strong alignment between your solution and improving your customer’s business performance.
However, you’ll have to prepare for potential push-back from executives who may be somewhat incredulous. You may also get a negative reaction from customer executives who believe your sponsor should have presented the solution much sooner given the excellent projected returns.
Delivering the Good News
Attend the meeting where your sponsor will be presenting your solution to his or her executive management. Let your sponsor’s superiors know that the sizable ROI isn’t out of line with the results your other customers have seen.
Perhaps point to the sizable investment your company has made developing your solution to produce these substantial returns for customers.
In this way, you can deflect potential objections and make your sponsor look good while reinforcing the outstanding ROI your solution will deliver.
Have you ever presented an ROI that seemed too good in your customer’s mind? Comment below with your experience!
{ 4 comments… read them below or add one }
ROI selling has been a somewhat loosley applied term often associated with excessive claims of either lowering customer Opex or increasing their top-line revenues. A common feature of this approach is a spreadsheet containing improbable numbers which the sponsor may or may not agree with but will most definitely not be able to support in the face of the intensive examination that procurement departments use. A far better approach is a full “business case” selling process which has engaged not just the sponsor but several other customer employees to provide the hard data and figures proving the business case of the solution to the customer’s organisation. Such an approach is very time intensive and demands a deep understanding of the customer’s business but will deliver substantially larger orders and in parallel raise the level of competitive lockout to other would be vendors. A true measure of business case selling is that the resulting proposal is “CFO level” strength.
Hello from Russia!
Can I quote a post in your blog with the link to you?
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Can you provide more details on what this is going to tell you… “Multiply the ROI by your customer’s 3-year average Return on Sales (ROS) to get more of a “bottom line” perspective of your solution’s value.