article | January 3, 2013
Death of a Sales Tool: The ROI Calculator
Anybody who has placed an ROI calculator in front of a customer knows differently. The book, Conversations That Win the Complex Sale, captures why: “If a prospect still needs convincing about the impact of your solution, an ROI calculator won’t get them there”.
In fact, your sales reps would be better off without it.
Why kill the ROI Calculator? Here are the top three reasons:
1) Your Reps Never Learn How to Calculate The Value Themselves
Here’s a quick test. Give your reps the current ROI Calculator and pull out all of the calculations. Now ask your reps to repopulate the tool with the correct equations. If they can’t articulate and calculate how your product provides value, they’re toast. Nothing is more disconcerting than a rep who has to refer to a cryptic excel file for answers.
My car has a GPS unit installed. My wife’s doesn’t. I’ve lived in Atlanta for 18 months and have to punch in every destination. My wife knows the roads like a local cabbie. For me, the helpful tool became a crutch.
2) The Calculator Only Solves for the Ideal Problem
Your client doesn’t always care about the metric your calculator solves for. Consider this disaster: I accompanied a new rep on a Sales Call for a financial software solution. The software would save a significant amount of labor required for fiscal year reporting. The sales rep got the labor costs for accounting from the owner. Once she entered the numbers in her ROI calculator, she glowed. “From this report, we can save you over 25% on total accounting labor costs”. “Great,” the owner smirked, “now tell me which of the 5 employees that I’ve had for over 20 years I should fire”. The sales rep realized too late the labor savings weren’t realistic.
The ROI Calculator makes simple assumptions in an ideal world. Your reps should dig to uncover the prospect’s true needs and show value. Never assume the client’s problem is the metric your calculator solves for.
3) The Calculator Is Solution Agnostic
Many of your opportunities have multiple competitors. Many of these competitors have a similar looking ROI calculator. Your calculator solves for Cost of Goods Sold Reduction? So does theirs. Your calculator looks at labor costs? You get the point.
ROI calculators don’t work in competitive situations because they all solve for the same things. Prospects use on ROI calculator to justify advancement in their buying process. They do not use it to select a specific vendor. In a competitive deal, purchase depends on factors like trust, ease of implementation, and company/industry fit. Are these quantifiable? ROI calculators can even sink your chances if they haven’t been modified for the industry standard calculations.
So how do you communicate value to the client? With a story. If you know how your product helped a similar client with a similar problem, you’ve got a story.
One of the “A” players of a company I worked with dismissed his ROI calculator. Instead, he told me, “I’ve always got two examples of customers in their industry with the same problems”. During a demo, every question was answered with an explanation AND an example. During the example, the rep walked right through the value the solution provided. It was the same set of calculations on the ROI tool, but in story with vivid details. I looked around, every customer was on the edge of their seat.
A solid customer story provides two things: 1) Feasibility of the solution. 2) Proof of actual results. ROI calculators do neither. Equip your Sales Force with the Story by Numbers sales tool. Put every customer success story in the archives for future sales reps. After a year, your reps will have a wealth of customized stories for every prospect.
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