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Commentary
January 2002

 

Put Your Money Where Your Mouth Is

BY JOE JACKSON

We certainly live in interesting times! Despite recent events and a sluggish economy, businesses around the world continue to work hard and do their part to get us back on track again. Now, more than ever, cash is king! Surviving the times and carefully managing cash flow is on every business principal�s mind.

Gone are the days where businesses would buy your product because it was cool and leading edge. It�s true that not many people bought based upon those principles alone, but certainly the past few years of prosperity showed that the return on the customer�s investment was less important.

Today, return on investment, or ROI is �back in style� again. Just go take a look at the Web sites of many of the application companies in this magazine, and in the converged space in general. Many have begun to move their ROI story to the front of their messages.

Today, if you want a prospect to give you an appointment, you have to lead with a solutions message, not a technology message!

  • What will your product do for them to help drive new revenues and to reduce key customer attrition?
  • How fast?
  • Will you guarantee your proposed ROI?
  • How can they leverage the investments in their current infrastructure further?

The ROI Is The Message
Let�s face it, many business owners today are faced with how they are going to make payroll. They are simply trying to hang on to what they have and hope they can keep their businesses afloat until better times. It is all but impossible to sell in today�s market without being able to show a substantial ROI to the customer.

Here are some ideas that might help you with your ROI message:

1. Your value proposition should lead with a solution, not technology. That is to say, don�t try and justify your product with features / bells-and-whistles. Instead, create a message that will help the prospect visualize the financial impact associated with your product.

a. How can it help save them money?

b. How can it help them to drive new revenue into their business?

c. How can it increase customer satisfaction?

d. How can it improve quality?

e. How can it improve employee satisfaction?

2. Back in the mid 1980�s, the economy was soft, but many voice mail / automated attendant companies did very well by developing an ROI message that helped prospects visualize how they could pay for the product by displacing clerical staff and redeploying this staff to other positions such as customer service. The ROI message was simple and effective.

3. Am I willing to put my money where my mouth is? Well, a great way to illustrate your commitment to the proposed ROI is to back it up with a money back guarantee.

a. Write down in a statement of work how your ROI will be measured.

b. Have the prospect agree to the measurement criteria, and ultimately, if you can prove that the product is delivering on your ROI commitment over a set period of time, they will pay for the product.

c. I believe that the more aggressive you are in this formula, the shorter the sales cycle will be. An aggressive pitch; �you don�t pay anything until we prove our ROI to you� will yield a shorter sales cycle because you are telling the prospect they have nothing to lose � essentially try before you buy. You absorb the risk. This strategy yields a shorter sales cycle, but the downside is high risk to your company. You�d better do a great job as it relates to the ROI criteria ad measurement methodology to be used. Example ROI template:

i. ROI Statement � Increase the number of sales calls by�., Lower your operating costs by� Increase customer satisfaction by�

ii. ROI Key measure � We will measure weekly the number of sales calls generated, our product will help you to ramp up your call production a minimum of �y� percent week to week for the first 90 days�

iii. Reporting � If your product does not have performance reporting to support your ROI key measures, add it! Even basic reporting will be essential in proving your point.

d. Less aggressive would be a strategy that involves recovering basic costs only if you fail the ROI test. Things like professional services, capital equipment, etc., may not be items that you want to expose to such risk. In this case, the prospect absorbs these costs regardless of the outcome, which is a fractional portion of the overall price tag. Sharing the risk with the prospect is a sensible approach, but the balance between their risk and your risk controls the sales cycle!

Steve Seavecki, VP of Product Management for Captaris (formerly AVT) and I were exchanging e-mails on this subject a couple of weeks back, and he made a point that I thought was spot on: �I see the biggest problem with a technology vendor succeeding in today�s market is the ability to develop a killer application. What type of application is hot right now in the stock market? Nothing! Why, you may ask? Well, it has to do with the fact that nobody has produced a product that goes beyond being �cool.� Not only does a product need to be cool, it needs a �hard-ROI� so that the corporate sponsor can justify the initial cost of the technology and project a specific timeframe for a return on the corporate investment. In these economic times, a hard-ROI is much more important than it was in the go-go days of the dot-com era.�

Good luck and good selling! 

Joe Jackson is managing partner of Incite Global Services; a consulting firm that specializes in assisting communications software companies with their strategic planning and execution. Joe has been in the communications industry for 20 years. In marketing, and business development. You can reach Joe at jjackson@incitegloblal.com. Please visit Incite at www.inciteglobal.com.

[ Return To The January 2002 Table Of Contents ]



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