Proposing Credible Return on Investment

Proposing credible return on investment is not something a sales person selling enterprise software should do early in the sales process. Why? Because any calculation of return on investment a prospect will find believable depends upon accurately portraying costs unique to the prospect and the prospect’s organization. If these costs aren’t yet known it is not possible to make this presentation.

There are hundreds if not thousands of publications on the topic of return on investment available on the internet. “The Most Common Mistake People Make In Calculating ROI“, written by Joe Knight and published back in April, 2005 on the Harvard Business School Review website is merely one example.¬†Why? Because saving money is one of, if not the biggest motivator powering big purchases like enterprise software.

Just yesterday I met with a prospect from a global manufacturing business. The business employs in excess of 10K people across the world. This meeting was our first. We met online using webcams. The product I sell can be used to lower the cost of supporting personnel using a very popular web platform of so-called “productivity” tools – Microsoft 365. The “can be used” in the last sentence is important. There is a big gap between organizations successfully using our tool and the also rans. This gap isn’t unique to my client’s software. Over 80% of enterprise software can be judged to exhibit the same gap. The gap even pops up for Microsoft 365 as a web platform.

My prospect wasn’t familiar with our product. He asked about how other organizations have successfully used it. I responded with an example built from the experience of one of my client’s top customers, an enormous global management consulting business. This customer used my client’s software to shorten the amount of “on-boarding” time required to bring personnel up to speed on an important task. Before my client’s tool was used the on-boarding process took 1.5 hours per person. After? A mere 15 minutes. How many people are we talking about? 80K. So, on paper, the savings amount to $24.99 per person. Multiplied by 80K people, we seem to be talking about reducing cost to the tune of $1.999 million.

But my prospect wasn’t impressed with this calculation. His response? “Our organization doesn’t think like that. I learned this early on over here. My management’s response to a claim like yours about return on investment goes like this:

Those people (the 80K) will use the time anyways, so shifting use of time from ‘on-boarding’ to something else (maybe a trip to the water cooler) doesn’t amount to much. When we talk about return on investment in our organization, we are talking about taking actual dollars out of somebody’s budget as the result of buying your product.

Perhaps Jeff Thule did the best job depicting what is really required to provide a glimpse of credible ROI to a customer. In his book “Exceptional Selling: How the Best Connect and Win in High Stake Sales” he devotes more than a chapter on a presentation of how powerful a driver a truly credible calculation of ROI can be for a customer. A sales person achieving this lofty height will not only become the leader to get the business but, even better, will have crafted a unique solution (with the customer’s help) completely free of competition.

Like this story? Here is a link to another you may find helpful:

Finding Leads for Complex Sales on a Limited Budget Part I

 

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