By now you may be chomping at the bit, wondering when you get to do your PowerPoint or demo. After all, your competitors have already given their presentations, and here you are, still asking questions instead of talking features and benefits. Steady…stay on target…we’re setting the table here, not going straight to dessert.
In Chapter 21, we looked at how to turn soft, hard, or inferred data into a form of impact. The degree of financial analysis required will depend on your industry and the order of magnitude of the problem to be solved. It is important to not get too bogged down in the early stages. Consider the problems of a traditional detailed financial cost analysis:
- Determine the project’s cost savings impact over 3-5 years (a guess)
- Determine the project’s cost over 3-5 years (another guess)
- Subtract #2 from #1 for the project’s total cost savings (guess – guess = guess²)
- Factor in the average weight of capital to the equation (the mother of all guesses)
That is a lot of guessing. And there are obviously many more steps than in this simplistic example; imagine how all of those guesses keep skewing the results! And what happens if you or your clients aren’t happy with the numbers you generated? Be honest…you most likely go back and tweak the numbers until you end up with something closer to what you were expecting. Guessing and manipulation – that’s a recipe for disaster.
The art of getting useful results out of this process will depend heavily on how you take the exercise and turn it into a discussion, not a complete financial analysis. After all, your goal is to help your client understand the problem and its impact, help place you in the role of a trusted advisor, and of course, help you continue to qualify your prospect. Besides, if you are like most salespeople, you are not a spreadsheet genius who delights in the world of credits, debits, and pivot tables. Fortunately, if you can help your 4th grader with math homework, you have all the financial skills necessary for this phase.
In How To Take Data And Turn It Into Impact, we used the example of rekeying the locks at a university to illustrate how to create a very basic understanding of the financial impact of a problem. This type of financial analysis is obviously simple, often referred to as “back of the envelope” math. The exercise reduces the amount of guessing (or makes it obvious to you and your client that you are guessing and agree that you are using round numbers to get a general understanding of the problem). You are now in a position to take your ballpark numbers and talk about them in a way that not only starts to firm up your mutual understanding of the problem, but may also allow you to uncover additional problems that your company can solve.
You both need to work this together
Besides the obvious face time this gives you and the client buy-in it produces, it will give you additional insight into your client’s opinions, allow you to test your assumptions, and enable better, more educated guesses (yes, we’re still guessing at this point, but that’s okay). As you talk about the problem, you will need to put your findings into the language of money. After all, the solution you offer will be based on money. In the end, if your client can’t apply a viable ROI to your solution, even the biggest problem won’t get the funding to solve it.
Keep the math simple, and keep things centered on positive and negative numbers. This is not the place for percentages or ratios, and it certainly is not the place to show off your MBA skills with your trusty HP-12C calculator. If the numbers come up larger than expected, your client may start to distrust the process, even though you both contributed to that process. If this happens, take the conservative route and say something like, “That seems a little high…is this what you were expecting?”
Pay careful attention here…you are about to either get solution buy-in or problem abandonment
If they answer that the number seems about right or might actually be underestimated, keep moving forward. If they answer that the number seems high, work with them until you both reach a conservative number that you not only believe, but can later prove to the client’s senior management who ultimately will write the check for your solution. Then ask one final question: “Is this problem big enough to require a solution?” Because while your solution might solve a problem with an annual ROI of $100,000, that might mean nothing to a $50 billion company with other priorities.
If after all of your work together you get to the point where your client is not seeing numbers that justify moving forward, you need to take a deep breath and evaluate where you are. Should you keep pushing and try to get to a number that works? If you have been lazy with your qualifying over the past few meetings, you may be fooled into pushing forward. If you have been constantly qualifying your prospect throughout your entire engagement, you will probably see that you have reached the point where further time will not pay off. That’s a tough call, but an important one. Don’t keep trying to push that rope uphill. Move on.
But wait, not so fast. There are few absolutes in business. It may make sense to continue on with what appears to be an unqualified prospect. What if there is more to this problem’s ROI than can be easily measured financially? Just as there are soft costs, there is also soft data. We’ll look at soft data and how it impacts your client in Chapter 23.