FOCUS ON PAYBACK
Sell More with Return-On-Investment (ROI)
What's the payback? That's the question that a return-on- investment (ROI) sales model seeks to quantify and answer, with compelling, credible figures based on specifics provided by the sales prospect.
We deal with ROI every day as individuals: Buying the larger size detergent, for example, means a slightly higher initial cash outlay, but results in a quantifiable savings when compared over time with buying the smaller size more frequently.
Build An ROI Model And See The Benefits Of ROI Selling
Consider the story of a Fortune 1000 high-tech company that saw a revenue increase from $3 million to an excess of $5 billion over a 12-year period. According to the former VP Sales who ran the sales organization during this phase, the key to his team's phenomenal success was ROI selling.
"The foundation of our entire approach was to use consultative selling techniques and to document the prospect's current cost structure. We could then better define the right configuration and quantify the savings in technology costs, downtime cost avoidance, labor, and other elements of their cost structure. We averaged a 60% higher close ratio and 80% more sales success than our direct competitors. Our culture focused on ROI from day one and that culture has served us extraordinarily well."
The addition of a persuasive ROI model to your sales presentation can greatly reduce the time it takes to finalize a sale. Also, using metrics to understand why your clients need your product or service helps to focus your organization on the areas of your product or service that provide your clients with the highest value. Whether you sell mega-sized soap or multi-million-dollar computer storage systems, the language of ROI can help you sell more by quantifying the value you offer. It makes your client's decision to buy tangible, accessible and compelling. It makes your sales approach easy to justify and defend.
How do you calculate ROI? The formula is simple: What's your product cost? Is it a one-time expense, or is there a monthly carrying cost? How much added revenue can you demonstrate will flow from this investment? What costs will be reduced or eliminated by it? With these numbers, you can quantify payback in either a time frame (it pays for itself in four months) or percentage or absolute terms (you'll save 27% or $1,114 each month).
So how do you build an ROI story? Follow this simple outline to create and communicate your ROI model.
Quantify Your Impact