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BitcoinAddict

AE

Opinionated
Valued Contributor
Member
+6

Sales rockstars here that have done ROIs successfully, can you help me out?

What does a successful ROI look like? Do you all have any resources?


For most business, if you can effectively show them that you will save them at least $50k a year with your solution, would they be willing to buy your solution if it costs say $250k?


I need some help here.

☁️ Software Tech
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Sunbunny31
Politicker
2
Sr Sales Executive 🐰
Why would your customer spend $250K to solve a $50K problem?

Maybe you can immediately show a $50K uplift (in sales, for example) but you have to find the rest of the $200K somewhere - and more than that to make your solution look even more valuable.

So, classics:
what's the cost of doing what you're doing? (literal cost of existing solution or solutions, including datacenter, upgrades, support, firmware, anything relevant)
what are you losing by doing it the way you're doing it? (lost efficiency, time to market, etc.)
what are you missing out on by not changing how you're doing it? (is someone else getting your market share? Are you unable to expand, increase your business?)

If your solution is one that is required for compliance or some other intangible process, then the ability to remain compliant and avoid expensive fines and be more agile with audits are part of your ROI.

I'm sure there are other points you can make, but you'll have to apply what's relevant based on the problems your solution resolves and the value that represents to the customer.
BitcoinAddict
Opinionated
1
AE
Sorry, the problem was 50k more than the price itself, so over 300k really. I worded this post weird. How much would the problem have to be worth to justify paying 250k for it?
Sunbunny31
Politicker
0
Sr Sales Executive 🐰
That's the problem with ROI. If you're solving a problem of avoiding monetary penalties because your solution resolves an audit or compliance problem, it's hard to put a number on that, but the solution is essential.

If you really are increasing sales or enabling the company to grow by a certain %, then it becomes much easier to put a number on the results.

I sell a solution that is just about required, so what's needed in my role is to be able to point to the differentiators my solution has and the delta in value provided from those differentiators. That will vary some depending on who the competition is and what we're replacing (rarely, nothing, most often something on premise and/or old and/or expensive). It's an exercise in understanding what's important to your customer and leaning into metrics that support your value with regard to those business goals and problems.
Pachacuti
Politicker
1
They call me Daddy, Sales Daddy
There are a lot of variables to configuring a proper ROI analysis. And you aren’t presenting enough of those variables in order to provide that analysis here.

For example some industries can justify an expenditure over 10 years. However in others you need to show a return on investment in one year.

And an ROI analysis can also factor in other non-monetary aspects, or hard to qualify monetary aspects. For example a reduction in headcount could be the result of new technology, but the longer term effect could be hard to quantify.

So if you were looking for help to justify a $250,000 one time expenditure which saves someone $50,000 a year, I would need to know many more details. And personally I would not spend that much money in order to achieve such a long-term ROI.
BitcoinAddict
Opinionated
0
AE
How much would it have to save you a year in order for you to even consider it?
Pachacuti
Politicker
1
They call me Daddy, Sales Daddy
Most businesses seek an ROI of less than 1 year and rarely more than 2.
CRAG112
Valued Contributor
1
Account Executive
Have you tried using Excel and a bar chart? Just keep it simple.

Year 1 cost.
End year 1 savings.
Year 2 costs.
End year 2 savings.

Define what savings means in terms of hours saved, money saved, or whatever tangibles exist.

Visualize your data and explain it at the same time.
Diablo
Politicker
0
Sr. AE
What are you doing right now and what’s the outcome? Sometimes it’s not just $ but combo of money along with time, mental piece, learning curve, more flexibility and so much more.
Maximas
Tycoon
0
Senior Sales Executive
Main thing here is that saving has to be way more than spending to get an appealing product to be sold.
BitcoinAddict
Opinionated
0
AE
How much more than spending exactly? A range is great.
poweredbycaffeine
WR Lieutenant
0
☕️
How long is the contract for? It would have to be at least 5 years to break even on their investment if they're saving $50k/year.

Is that $50K in the first year? Is that every year? Do the savings increase if they hire someone new, take on 10 new customers, etc? Do they decrease based on the same variables?

A true ROI breakdown takes into account the TCV of the deal over X years, and you back out all savings rendered by your service. You also have to build back in all costs related to implementation such as the cost of the implementation service, if they need to hire someone to admin the platform, etc.

There's a reason why most companies don't have a good ROI process beyond a shitty calculator on their site: it's highly labor intensive and is usually only requested by companies that will destroy the deal in procurement.
CRAG112
Valued Contributor
0
Account Executive
This took me less than 5 minutes.
Notice how you can easily explain that costs would increase next year, but their savings will also increase.

Break it down by percentage to lessen the blow further. a 50% increase compared to a 100% increase in savings as time progresses. Wowness!!!!
CRAG112
Valued Contributor
0
Account Executive
How can you relate those savings to real world scenarios? In other words, how do those numbers survive a stress test?
ASalesCoach
0
National Director of Sales
this is a very loaded question. does your solution drive revenue, improve operations, or reduce risk? if the answer is yes to any of the above, than ROI means more. a $50k ROI could be very good but could also not really drive the value someone needs due to org change management, disruption, timing, internal skill sets, etc.
part of a great ROI should include the mentioned areas above. Pure financial cost or savings is only a part of the real impact that business incurs when making any change or adding any new service / solution.
I know that i get hit all the time with tools to help me sales team prospect better. Everyone wants their team to be better at prospecting but I also know my team and our company culture. bringing a new tool in will get the adoption needed to drive the right value, and therefore we would miss that potential ROI.
Know your customers and their real needs. work the ROI at that point. people buy for financial, personal, emotional, and team reasons.

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