From The Stimson Group

What is your value proposition? Why should the customer hire your services instead of someone else's? More and more I am finding that customers in all walks of life need an extra boost to choose one product or service provider over another. And what I think will do it is ROI. Every business transaction has an underlying return on investment. In theory, only the customer can determine what their ROI really is. In practice, we can demonstrate why our product or service has a HIGHER ROI than someone else's. As a Consultant, I can prove to my AV industry clients that dollar for dollar one hour of my time is worth more because I already understand their business. That demonstrates good value. To prove ROI, I have to show a cost savings or increase in revenue as a direct result of my engagement.

As an Integrator, you may struggle with steering customers to the better solution instead of the lowest cost. Instinctively you know that certain products and designs will serve the customer better, longer, and at a lower operating cost. You might demonstrate this in terms of cost of ownership per year. This is also a great way to sell service agreements as you can show that overall cost of ownership will go up over time without one.

Manufacturers - especially those with premium products - face a big challenge in a tough economy. You have to train your resellers how to sell the ROI of your product.

Stagers have it the toughest. How do you convince a customer that their money will yield a better return? Can you prove that attendees will be more attentive if it's your job than someone else's? Read on.

To sell a return on investment (ROI) to your customer, you must look at your proposal from the customer's perspective. What is valuable to them? I find that the three most common priroities are initial cost, time, and risk in terms of variable cost. Most of us sell the inital cost thing fairly well. However, if you will calculate how much time you can save your customer because of 1. Your Experience, 2. Your depth, 3. Your capacity, 4. Your processes, etc... then you can present an ROI using the cost savings in the customer's time. Variable costs are those things that you bury in your Terms and Conditions - changes, add-ons, caveats. By eliminating these and adding a small cost back into the proposal to cover your exposure - you will save the customer more time and limit their potential costs. Packages, systems, and programs can all serve to minimize variables and thereby give the customer additional peace of mind.

The underused technique for presenting ROI is to do the actual calculations. This means you need to know something about your customer's business (which they will appreciate). It also means that you need to know who the economic buyer and decision makers are. If you are presenting a video projector with an auto-advancing cartridge air filter to an integrator, connect the ROI to their service department:

ROI for ten stage projector air filter:
Standard filter: replace every three months
Auto-advance filter: change every two years
Over two years, reduce scheduled service calls from 6 to 1.
Integrator cost per service call $150.00 times five trips equals $750.00 over two years.
Increase service provider capcacity by ten hours at $125 per service hour equals $1250 over two years.
Cost of projector is $5000 with an expected five year life.
Potential savings on service over five years is $1875 (2.5 times $750) or alternatively recapture $3125 (2.5 times $750) worth of sellable service time.

Not only would this show the integrator what the benefit to your product is, you have also shown them how to sell to their customer.

Stagers can also use the time ROI calculation. For instance, if using an integrated switching package will save time on setup and even reduce the need for an additional stagehand - prove it with numbers. Even saving one hour of an engineer's time and cutting one stagehand can add up to enough savings to justify a professional solution versus selling a lot of unconnected components. Can you show that the added cost fo the package is offset by a similar savings in labor? Can you additionally show that the package will expand the capabilities of the system thereby reducing exposure to time delays for reconfiguring? You probably figured all this out when you built the integrated switching package in the first place. Use that experience to convince your customer to upgrade.

An added benefit from calculating ROI for your customer is that it can lead to a reevaluation of your proposal. An interesting and profitable analysis is sure to draw attention. It might demonstrate that you are more engaged than your competitors. In the end, every time the customer sees themselves in your proposal increases the likelihood that you will at least make the first cut if not take job then and there.

Share your stories, thoughts, or comments: email me.