ROI Selling

Only two decades ago, sales managers told their salespeople, “Features justify the price, but benefits justify the purchase.”

After the Reagan years customers wanted more from salespeople than a long list of benefits before they signed on the dotted line. Soon sales managers embraced value-added selling as the ultimate activator of the decision-making neurons in the customer’s brain. The new idea was to sell value, not price. The idea worked until products and services became so complex that companies had to pay outside consultants to translate a salesperson’s proposal back into plain English.

During the past economic downturn, drawbridges to corporate fortresses were lowered only for salespeople who carried white-papers with the magic word ROI (return on investment) in the title. ROI selling appeals to the hearts of the CFO in need of black ink and the decision maker in need of evidence that the solution will actually work.

Here are some of the steps of ROI selling.

1. Understand your prospect’s business model. Find out how your prospect is making money now.

2. Help your client collect data within the company to build a business case for the purchase. For example, a fleet-leasing sales executive may help a CFO calculate the cost per mile of a fleet of company cars. To build the business case, help the customer articulate the “value mission” necessary to sell the idea to management. For example: “Reduce the cost per mile while increasing safety.”

3. Develop clear financial reasons for buying. For example, IT salespeople know that technology-based metrics will be rejected by a CFO, while a clear focus on financial metrics moves the IT project forward.

4. Use your financial acumen to show your clients how to calculate the ROI. Many buyers do not have the time or the knowledge to perform accurate and objective ROI calculations. Savvy salespeople calculate the cost of not purchasing and compare it to the projected gains resulting from the purchase.

5. Link the features of your product or service to specific outcomes and provide objective, cost-justified benefits of your solution. The ROI-focused sales proposal often contains a value map that documents the dollar value of every part of the solution.

6. Determine the future value of your prospect’s business. Help the customer visualize the changes in the current business model and how it can evolve and grow into a much larger and more successful entity with your solution.

7. Match the sophistication of your ROI analysis to the interest level of your audience. Use the one-page executive summary when you speak to the CEO; show the detailed ROI analysis to the CFO; share the application benefits with the end-user.

The new ROI approach requires more work up front but often leads to shorter sales cycles. Best of all, it leads to higher margins. What’s not to like about that?