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The ROI Dilemma - Part 1 - Look at how bad you Look!

Written By: Bob Riefstahl
Published On: January 17 2003

The Situation

I sent the CFO a letter two months ago explaining why she should consider looking at new software. I told her I would contact her at precisely 8:00AM 12 December. At that time, her Administrative Assistant told me "I'm sorry, she's in a meeting. Can I take a message?" Being the persistent salesperson that I am, I've called five times since. I was never able to contact her.

It's now half past six on 12 February and I figure "Hey, maybe she's working late". With my feet propped up on the desk in my home/office, I dial the telephone. After five rings you await the dreaded voice mail greeting. "Hello, this is Karen". STOP! She's not only there, she answered the telephone herself! This is my big chance. "Oh, hiKarenI didn't expect to get you. Say, this is Bob Riefstahl with Future ERP Software and, um, I sent you a letter two months ago. Anyway, in the letter I outlined why I think we should get together. For example, did you know that your Revenue Growth has slowed substantially? And your Revenue to Fixed Asset ratio has plummeted. And your inventory levels have ballooned. Anyway, at Future ERP Software we can fix all of that. Would you entertain an appointment to discuss how we might help you with those metrics?" Karen, now quite irritated replies "No, in fact, please take me off of your telemarketing list" and hangs up the telephone.

Analysis of What Happened

Welcome to the crime, Randal Dick, a friend of mine from J.D. Edwards calls "Look at how bad you look!" Think about it. Isn't that what an ROI model is really trying to say? They all seek to justify why, by simply implementing a software solution, someone could save millions of dollars. It's all about how bad the end user is performing. It's a real trap for salespeople and pointing out how bad a CFO's company looks is a common crime.

Allow me to introduce you to Jared. If you recognize the name it's because the Subway Sandwich chain has made him famous. You see, if you eat Subway's low fat sandwiches, you can be just like Jared and reduce your weight from 180 kilos to 80 kilos. What great ROI! Subway has become the fastest growing restaurant chain in the world. They've surpassed McDonalds in revenue growth! Now, does Subway spend their advertising budget each year focusing on how FAT Jared was when he ate other fast foods? Do they explain that, in addition to eating Subway sandwiches, he happened to be on an exercise program that helped him lose the 100 kilos? The answer is No and NO!

It's a subtle difference but, an important one. Subway focuses on what Jared looks like today. He's thin, in condition, has a beautiful wife and is happy. They also focus on just one thingwhy low-fat Subway sandwiches helped him lose weight. They don't "data dump" you with all the other reasons Jared lost weight.

Now it's your turn. Don't insult the intelligence of a CFO by telling her how bad she looks. For example, this prospect knows that her company's revenue growth has slowed. She's the CFO! She clearly remembers when their major customer canceled their orders. Her revenue immediately fell along with her revenue to fixed asset ratio. That same major customer caused her inventory to balloon. She doesn't need some slick software salesperson to point out to her how bad her company looks!

Here's something else to consider. Every other software sales representative today is promoting ROI. This CFO has received similar calls, letters and emails. She knows that the current wave in software is to convince someone that there is real value in buying their software. This is all the more reason why your approach needs to be focused, relevant and thought provoking. She's going to pick the sales person who sells ROI the best!

The "best" doesn't mean the "biggest". For example, I've heard some sales trainers say that you need to start out an executive call or conversation with a "big, bold statement". If I followed their advice, I might start out my call with Karen like this. "Karen, this is Bob Riefstahl with Future RFP Software. The reason for my call is that I believe our firm can help you reduce your inventory by 20%." Karen hangs up. Why? Because she's been trying (unsuccessfully) for 3 years to reduce inventory by 5% relative to sales! Welcome to the second Crime in our story. I call it "Talking to the Wall". When you use big bold statements that are seen as unrealistic, you might as well be standing in a corner and talking to the wall.

I'm not saying there isn't value in using big, bold statements. However, you need to make sure your statements are viewed as realistic. And, if you're going to make big, bold statements, you need to make sure the person has a personality type that accepts them. In the end, unless you know a lot about this CFO, using big, bold statements is very risky.

Using the same example, I exchange 20% for 5% and follow it with a "value" statement. It sounds something like this. "I believe our firm can help you reduce your inventory by 5% and the savings realized by your reduction in inventory will flow right to your bottom line." There's only one problem with this statement. I'm talking about a Balance Sheet line item not a Profit and Loss line item. The reduction in inventory doesn't "flow straight to the bottom line, it releases cash and improves the Balance Sheet. Welcome to crime number three. I call it "Talk the Talk". If your going to engage in a conversation about ROI with a CFO, make sure you are talking their talk!

Try This Solution

Let's say I tried something different. I went deeper with research, found an inside "coach" in the organization that was willing to validate (or dispel) my assumptions. During my discussions with the coach, I learned that the CFO has been on a twelve month campaign to remove operational costs and personnel while improving business processes. I learned that she's positioning the company long term by anticipating an economic recovery. She's betting that when the economy recovers, sales will once again increase. With her cost reductions and process improvements in place, as sales grow so will her profitability. With that type of information, I can reposition my emails, letters and telephone calls around her mindset. The call might now sound something like this. "Karen, this is Bob Riefstahl with Future RFP Software and I've been spending time researching your organization. I noticed that you've been working hard at reducing costs in order to position your organization for future growth and profitability. The reason for my call is that I believe our firm can help you grow revenue now, while at the same time increase the contribution to sales from more customers. As you know, this would accelerate your profitability plans, reduce your vulnerability to one large customer and positively impact your shareholder value sooner rather than later. Can I share my ideas with you next Tuesday at 8AM?"

In this call, Karen's impressed. I've established credibility by providing her with information that proves I've really done my research. I've aligned with her objectives and offered her value by accelerating her profit plans. I focused on one element of her business plans rather than confusing the situation by Data Dumping (another crime) the eight ways my software can provide her ROI. I even finished my example with a benefit! In the end, I've differentiated myself from the competition through executive alignment.

If you're going to use ROI in order to find new business or, justify your solution, be careful. ROI is a loaded gun and you might just shoot yourself. Quit talking about how bad someone looks and start talking about the "opportunities that exist". Use realistic examples. Talk their talk. Do research beyond their Profit and Loss statement or Balance Sheet. When you do find an opportunity to save them money, focus on the one element that will help you align with their objectives and don't confuse them with other "noise".

About the Author

Bob Riefstahl has spent over 20 years selling and demonstrating software to all sizes of companies and audiences. His firm Demonstrating To Win! LLC, provides tactical sales and demonstration skills training for software companies through workshops, consulting and professional speaking worldwide. His book "Demonstrating To WIN!" has been sold in over 30 countries and is available at www.demo2win.com.

 
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