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About This Episode
It can be one of the most terrifying parts of a sales process.
When it’s finally your turn to justify the commercials and show the value.
Ideally, you’ll be able to share that the value you’re bringing to the table is 10x the price that the customer is paying. But that isn’t always easy.
I was excited to be able to interview Mike Genstil, Founder and Chairman at VisualizeROI, about how to make life easier for sales reps and marketing people who want to communicate value in ROI to their customers.
After 20 years at companies that do a great job quantifying and communicating value to their customers, Mike founded VisualizeROI to share the techniques and knowledge he gained. “If you can quantify the size of the customer’s pain points, you’re in a good position later in the sales cycle to come back to that established cost and say you’re going to improve against that cost,” Mike said.
Doing a good job in discovery means identifying pain points in 4 areas where you’re ready to add value and reduce the cost of business as usual.
4 Buckets of value
“Most companies are selling something that helps their customers in one of four areas,” Mike said.
- Hard cost savings (money out of pocket to third parties)
- Productivity gains (saving team members from lower value added activities)
- Revenue acceleration (more sales, lower churn, or both)
- Risk mitigation (reducing the number of bath things that can happen)
“The idea is to try to find early in a sales cycle, one or two data points in any of those categories that can help me quantify that,” Mike said. “The other angle to consider as a sales rep is your own pricing model.”
Example: Thinking about where an organization is missing revenue opportunities and have extra cost… and how that scales with the number of users… and keeping that in mind as you price.
The bucket that’s gold is hard cost savings. If you can come to a customer who spends $1M on hard casts and say you can save them $500K, you’re practically creating a fiduciary responsibility on the customer’s part to explore your solution.
The bucket that’s hardest is risk mitigation. “It’s often hard for a customer to know or admit how many times that bad things happen and how much it cost them,” Mike said.
Use familiar language
Don’t just send an ROI calculator or a spreadsheet. “Most sales and marketing organizations have done a good job creating a set of content with beautiful images and iconography and messages, which has been equipping them over the last one to three years to close sales,” Mike said. Those messages may be working at a certain rate, but the amount of quantitative information that they contain needs to be leveraged.
Example: We’re going to help you in areas A, B, and C. A and B are costing you Y, and C is costing you Z. The next slide needs to say: Here’s how much we’re going to save you against each of these factors.
Mike ties this presentation to the 4 buckets. “We’re marrying those words with a word that they already have in deck,” he said. “Hey, we’re going to improve invoice automation by 20%. That’s costing you so much in hard cost, so much from productivity, et cetera, and we’re going to save so much,” he said.
In other words, use the language they’re familiar with when you’re presenting your case.
Avoiding red flags
The sanity check. Make sure these ROIs work in your customer’s real environment.
“One of the techniques we like to use is to roughly estimate what is your customer’s revenue and cost today,” Mike said.
Info on public companies is easy to find.
Info on private companies translates roughly to $100-300K per employee.
Thus with 200 employees, they’re doing about $40 million in revenue, depending on where the maturity cycle and industry.
“Their costs are 90% of that,” Mike said. “So if I’m selling to a $40 million company whose costs are $36 million a year and I say I’m going to save them $50 million next year, my ROI story is blown out of the water.”
When he coaches sales and marketing people, Mike tells them that saving $3 to $5M per year would be a fantastic solution. “You really want to make sure to avoid these last mile red flags where they throw your ROI out to make sure that it’s relevant and reasonable in the context of what they’re doing,” he said.
P.S. If you’re planning to save them $3M, don’t price your service at $5M. Make sure your price is about 10% of what you’re saving.
Remember, buyers are smarter and doing more research than ever before. “We can either wait for them to ask us and scramble to give them something, or we can proactively collaborate throughout the sales cycle,” Mike said.