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Your goal is to put the value your product or service creates in context for your prospect.
Sales professionals create this context by breaking down the costs associated with the product or service and illustrating how the purchase or investment provides a positive rate of return for the company.
When the prospect sees your analysis, they should conclude "It's a no-brainer when you think about it like that."
Above all, remember – the wiifm principle (what's in it for them?) always applies.
Objective
Provide quantitative information to demonstrate the hard value your prospect will receive by making an investment in your product or service.
Method
Begin with the initial sales call. Use open-ended questions to learn about the prospect's business, challenges, goals and plans. To perform a meaningful analysis, you may need some of the following data points from the interview stage:
- indirect investment (additional costs incurred by your prospect to buy your service – e.g. new training costs, management time, set up time, etc.)
- planned usage of the product or service
- time frame for use
- number of people who'll use the product or service
- average margin on sales revenue
Positive Return on Investment
Return on investment (ROI) is defined as the amount of monetary value one can expect to receive as the result of making an investment. An investment is anything that is purchased for the purpose of generating income (or decreasing expenses) or an item that is expected to increase in value over time. While an ROI analysis can be very sophisticated and include such details as time value of money, tax rates and cash flows, a simple ROI analysis will generally work. Just be sure to match your audience appropriately and never work at a level you feel they may not understand (it's always best to bet on the conservative side during your preparation).
A. Calculate the total investment amount required to purchase your offering
- direct cost of product/service
- direct cost to implement
- indirect costs to implement
B. Determine the monthly dollar benefit your prospect or customer will receive as a result of purchasing and implementing your offering
- expense savings per month
- increased revenue per month and the resulting average gross margin generated
- combination of both
C. Determine the annual benefit of the new product or service by multiplying B by 12 months
D. Subtract the original investment amount in A from C
E. Divide D by A and multiply by 100 to determine the ROI percentage
Example
The annual return on your investment is ##%. Based on the monthly sales revenue it will generate, your annual benefit is $##,### and your investment is only $##,###.
Keep in mind your goal is to illustrate the investment you're asking your prospect or customer to make, in terms that help him or her see a positive return. Be sure to:
- keep your analysis brief and direct
- clearly state your assumptions
- include all costs (direct and indirect) the prospect will incur to make the investment
Things to Avoid
Your prospect may disagree with your assumptions and approach. If so, you'll have an additional opportunity to engage with your prospect and you'll likely learn even more about how your prospect will make the buying decision. To ensure credibility of your analysis, you'll want to avoid the following:
- unrealistic assumptions on usage, response rates, etc.
- assumptions that the prospect cannot control
- excessive time frames which exaggerate positive returns
- over estimating the value of intangibles
Source: Just Sell
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