Is ROI selling dead? Why would you argue yes/no?

As buyers we make emotional decisions that are justified by logic. We have to have both. It's America's buying ritual.

ROI selling will always support this decision asking process. ROI selling allows us to give logical reasons to move forward. The better the case for a return investment the easier it is for the prospect to make their "emotional" decision.

Tom Black
Tom Black Center for Excellence
www.tomblack.com
www.tomblackwine.com

I believe real “ROI selling” is not dead because it’s never had a chance to really live! It’s important to note that I’m using a more generic definition of ROI selling that is probably better described as value based selling. Done properly that means two things are happening: 1. Aligning my value to what matters to the prospect. 2. Quantifying that value. Importantly 1 happens before 2. Again, a ROI is really just one way of several to calculate value. Others include TCO, Payback, and IRR.

Let me expand on Aligning value. Unfortunately ROI selling has baggage, as folks have rightly pointed out here. That’s because it’s been misused, “Hey Mr. Prospect, you’ll never guess what? I ran a few numbers here in my trusty excel spreadsheet and I’m going to save you millions!” No learning. No diagnosis. No aligning. No Benchmarks. No KPIs. I would respectfully suggest that skipping to a focus on just C-Suite financial metrics isn’t enough. In the end these are just different ways of describing the “R” in ROI. We need an understanding of Key Initiatives, Pain Points, Goals, Problems, and KPIs for key departments beyond finance. Of course everything eventually can be quantified in terms of metrics like ROA or ROE – and being able to tell a story about how you’ve positively impacted these elsewhere is no doubt powerful. But effective complex selling requires learning more. And aligning your unique value to what’s important to your prospect. An ROI or similar model should be the foundation for a learning and value based selling process.

Another key challenge is many sales reps don’t apply value based selling approaches using things like ROIs because they’re hard to use and explain. They’re intimidating. So guess what? They don’t use them. These tools need to be simple and easy – built into processes reps are already using today, but still effective. Insisting that your whole sales team learn “a new religion” is difficult at best, impossible at worst.

We think there’s a better way . . .

ROI selling is partially alive! it is not the case that no one sells in terms of ROI, nor everyone sells in that pattern, but over a period of time buyers are not just interested in listening so the same style of selling.

ROI selling is not dead, it's just there are more and more different measuring tools people can use. The challenge with ROI selling is if if the salesperson hasn't been able to validate the benefits the customer expects to receive how can they put a dollar figure on them? My opinion is ROI selling is not used as much due to people trying to use ROI selling as a short-cut selling process.

It depends on the prospect's buying motives as to whether or not ROI is relevant as a selling tool.

When a prospect "wants" something it becomes an emotional decision and ROI is less relevant as emotion trumps logic.

When the prospect "needs" something, logic trumps emotion as there is very little emotion in this type of transaction, and ROI becomes a more active consideration.

ROI selling is dead when it is intended to be used to create awareness for a problem at the beginning of a buyers journey. I agree with Mark that tryinh to use ROI as selling as a short cut-selling process does not work. Today's customers are not only very suspicious about seller defined standard ROI in this phase of the buyer's journey ROI is also not yet relevant for the prospect. Indicators as suggested by Michael are much more effective at the beginning of the buyer's journey.

In more advanced stages of the buying cycle, ROI selling might be still alive. I find Bryan's suggestions about the relevance of ROI very helpful.

Should ROI be relevant to help the customer to advance in the buyer's journey, then it must be calculated on the basis of assumptions agreed with the propspect. ROI calculated by the prospects themselves is though most effective when ROI is a determining element in the decision process;

We are working on a new concept called a, "Value Hypothesis". This is basically a preemptive document sent (to the economic buyer) at the very start of an opportunity that lays out to a prospect: The issues your products and services resolve, the expected value you will deliver and an economic impact analysis that includes things like water fall charts for capex,opex, intangibles, and financial statement impacts - i.e. Balance sheet & Income Statement, three to five year cost of status quo and impact analysis.

We believe ROI Selling (the concept of selling based solely on ROI) is not used so much because of the lack of organizations that actually return to measure impact.

You all make a great point in that, "it depends on...". In large B2B sales opportunities someone is measuring potential impact of a major purchase prior to buying, and certainly measuring impact after implementation. This is why it is so imporatant to know your value and how it relates to c-Suite metrics like ROA, ROE, Net Profit, Operating costs, DSO, etc.