Are ROI Calculators Dead? Not so Fast.

A recent article by Drew Zarges from Sales Benchmark Index opines, "Are ROI Calculators Dead?". With B2B sales teams generating hundreds of millions in incremental deals each year directly attributable to Alinean ROI Sales Tools, we clearly think not. 

However we do believe that ROI Sales Tools need to be developed and delivered appropriately in order to gain these incremental sales benefits.

First, the demand for financial justification has never been higher. According to IDC’s annual 2012 Buyer Experience Study published in November it was not Product Information, Peer/Customer References, Industry Trends, Competitive Comparisons and Case Studies, but by a large margin, Financial Justification / ROI.

Why has Financial Justification / ROI now become the most valued content?

In our recent ValueStory™ roadshows, this has been a great discussion topic, and the reasons discussed seem to be focused on:

  The Rise of the Economic Buyer – CFOs and financial executives are “large and in charge” of more groups and more purchase decisions, putting in place more financial scrutiny and hurdles to any purchase decision. With economic diligence front and center, even non-financial executives now are more focused on the business metrics and bottom-line impact of purchase decisions.
  More Stakeholders – the average number of stakeholders involved in purchase decisions has risen a hefty 40% over just the past 3 years according to IDC.  And each stakeholder sees value differently – value is truly in the eye of the beholder. With more stakeholders, demand has been boosted for Financial Justification / ROI, in particular aligned to individual stakeholder’s perspectives.
  The Value Gap – Sales and marketing often falls way short in providing the key financial justification content buyers need to make timely and favorable purchase decisions. In sales, this is such a big issue that SiriusDecisions indicates the “Inability to Communicate Value” is the #1 issue why sales has failed to meet quota, this for the second year running.

The evidence is clear that your buyers value and need ROI / Financial Justification to help facilitate their purchase decisions, with more than 90% of purchases requiring formal ROI justification according to IDC.

As well, we know from IDC that two-thirds of buyers indicate that they do not have the time, knowledge or tools needed to do business value assessments and calculations and that 81% of buyers expect vendors to quantify business value of proposed solutions.

Failure to provide ROI / Financial justification content has a real cost, with IDC reporting:

  • More stalled deals as buyers fail to properly prioritize the “cost of do nothing” and value of your proposal amongst all the other potential investments
  • Significant delays in decision cycles as buyers struggle to put together their own internal business cases
  • More competitive losses, as buyers fail to see the differentiating value unique to your solutions.
For companies not providing ROI sales tools, we have seen sales professionals waste many hours building their own business cases, or developing custom ROI tools to meet this pressing content need. With only 2 out of every 5 days spent on customer engagement according to CSO Insights, this additional business case overhead produces even less real selling time.

But just because ROI / Financial Justification is required, are ROI Calculators the answer? Here is where we agree with Zarges in that many ROI Calculators fall short.

The Black-Box
Many ROI Calculators are too simple, collecting some basic profile data from the customer, and with a press of a button magically generating positive ROI results.

Although easy to use, this black-box design of these simplified ROI Calculators:
a.   Do not provide customization of the results to match the unique challenges and “point of value” important to the specific customer and their role in the decision process
b.   Don’t let sales teams and the customers review and edit key assumptions
c.    Don’t deliver needed calculation details, so important to help sales understand how the value is being calculated, and so needed to gain skeptical customer buy-in

Solution: Good ROI Sales Tools provide the ability for Sales teams and customers to collaborate on the analysis, providing customization of the case to match the specific customer profile, buyer roles and challenges. These ROI Sales Tools the ability to review and edit all assumptions and review details of all calculations to gain buy-in. As well, 3rd party development and delivery can help provide the credibility, so that it’s not your numbers and calculations, but those of a trusted 3rd party.

Solution Agnostic?
These ROI Calculators are often simplified so much that the unique differentiators of the Solution are not reflected, making the ROI solution agnostic.

Solution: Good ROI Sales Tools are developed using a methodology to identify the unique differentiators and tie them to value realization. The tools should be delivered with unique value calculations and documented impacts, providing 3rd party research and success stories to prove that the savings are achievable.

Pain vs. Gain?
Many ROI Calculators jump too quickly to “justify the gain”, when the tools should focus first on helping the sales professional “quantify the pain” and get alignment and agreement on the cost and priority of the challenges before demonstrating that the solution can deliver savings and ROI.

Solution: Good ROI Sales Tools provide diagnostic assessments to help Sales teams and customers uncover issues and quantify the current costs of “do nothing” BEFORE discussing potential solutions or quantifying potential benefits.

All About the Benjamins?
Many ROI Calculators focus too much on the numbers and too little on the value storytelling.

Solution: A good ROI Sales Tool uses the numbers to cement the value messaging, combining emotional storytelling with rational justification. We believe that this is the best approach earlier in the engagement process, and our new ValueStory tool is specifically designed to leverage Tablets to help accomplish this.

The Bottom-Line
The need for ROI / Financial Justification remains very high, and will continue as Frugalnomics remains in full effect. And leaving the business case in the hands of the buyer or sales person has proven to be less than efficient of effective.

As a result, developing and delivering good ROI Sales Tools remains important providing tools like:
  • ValueStory
  • for use earlier in the sales process to help address the #1 sales issue – improving the ability to communicate value messaging, providing both value storytelling and justification to deliver more provocative, data driven engagements
  • ROI Analysis Tools
  • used later in the sales process to collaboratively and credibly create a CFO ready business case for proposal justification and approval.
Are ROI Calculators Dead? I think this question needs to go into the nearest bucket along with “Is Solution Selling Dead?” and “Are Personas Dead?”. As Jim Ninivaggi, Sales Enablement Services Director for Sirius Decisions so aptly said in our last webinar, “I think what is dead is calling something dead.”

And, here's the best ... this same company, SBI, that claims ROI Calculators are dead, just published their own on Sales ROI ...gotta love it.


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