“What Type Of ROI Are You Looking For?”

I’m reading a post  that provides “7 Phrases That Make You Sound Like An [Sales] Authority Figure.”  My first quibble with the article is that I’d actually like to be an authority figure or, in the least, a credible sales person, not just sound like one.

One of the things the author suggests is posing the question, “What type of ROI are you looking for?”  The reasoning is:  “With this question, you’re tossing the ball to your prospect and giving them an opportunity to show off what they know. It’s also an easy way to ingratiate yourself with results-minded individuals. Instead of asking a vague question about goals, find out exactly what they expect to get back from the money they’d put toward buying your product.”

I get it–kind of–but it’s really a terrible question, particularly early on in the discussion.

We absolutely have to understand how the customer will justify the investments they make in a solution and their expectations of return, but we don’t get this by asking for the expected ROI.  ROI may be an element of the justification, but it’s never the only element.

And a great ROI or an ROI that exceeds the customer hurdle rate doesn’t necessarily cause you to win.  I can’t count the number of times I’ve seen solutions with lower ROI’s selected.

In evaluating change initiatives and the investment required, it is never reduced to s single number.  There are differences in risk, time to results, other hard/soft benefits, strategic fit with the organization’s priorities, and any number of other things.  I’ve been involved in a number of deals in which the ROI was not great.  But if the customer didn’t do the project, the viability of their business was seriously at risk.

Our customers are always evaluating how to best invest their money and resources.  There are always more requests to use funds than there are funds available.  How do they choose?  If it was ROI only, they might choose a new employee cafeteria and parking lot over that great enterprise software system you are selling.  Even if your solution were “mission critical.”

Asking the ROI question without understanding all these other issues doesn’t build credibility, but limits the discussion to a small part of the financial decision, and a smaller part of the overall decision.

If a sales person was crazy enough to pose this question, in isolation, then there are a whole number of rat holes the customer can take the sales person down.

Is it the ROI of the vendor solution, is it the ROI of the total project?  The vendor portion may have a great ROI, but if the overall project ROI is insufficient, guess what—no decision made.

Then there is the whole way in which the ROI is calculated, what do they include, what do they exclude, and on and on.

If the sales person asks the ROI question, they have to be prepared to drill down and understand all the details of the ROI discussion.

I suspect, most customers, when asked that question, would either shrug their shoulders and reply, “A good one,” or “I have no clue.”  They really don’t know the answer because the business decision is never just a case of the best ROI.

If we ask the ROI question without understanding how business decisions are evaluated and made, we are displaying our ignorance, not building our credibility.

Our job is not to sound credible or authoritative.  We have to be credible and authoritative.  We have to understand our customers’ businesses and how they make business decisions.  We have to understand business and financial cases, we have to have the knowledge and confidence to challenge the customer on their business evaluations/assessments.  We have to have the ability to lead them in developing strong business justified proposals, understanding the investments, risks, tradeoffs, alternatives.

If you aren’t prepared to have business discussions at these levels you will be disadvantaged both in the value you can create with your customers and in your ability to win business.