Have you ever worked with a client to determine if your products and services were the best alternative for the prospect only to find at the end of the sales cycle that the client says, "Thank you for spending the time with me, but, we can't cost justify buying from you!"?

My clients tell me that in many cases the reason this has occurred is that the prospect can't determine the value or cost justification of a proposed product or service. To make it worse, after the prospect has spent all of that time "looking" they may default to the lowest priced vendor or go to a "NO DECISION" and do nothing.

Below are just a few excerpts from industry organizations that point to the importance of cost justification:

• "A project is 60% more likely to be approved with a cost justification and business case." - Gartner Group


• "More than 82% of IT decisions now require a Cost versus Benefit analysis." - Information Week


• "Return on investment is king, and projects with a quick and clear Cost versus Benefit are much more likely to get funding in today's uncertain business climate." - The Industry Standard

Value or cost justification is not a broad-brush statement we as sales people make to a prospect or existing client. An example of a statement we make could be, "Our 'Sales Force Automation' system will help you improve forecasting accuracy, saving you thousands of dollars in un-productive manpower" That may be our opinion, but the only person(s) that can conclude that an SFA product will save any money is the prospect or client.

1. Understand the prospect(s) goal(s) by asking questions to determine in their words how large (currency - dollars, Euros, Pounds) that goal is today with their current operations. An example of a business goal could be, "I would like to improve forecast accuracy of our sales divison by 15% in 2008.


2. Help the prospect understand how much it is costing them to do things the way they do it today.


3. During this conversation help determine if there are multiple reasons that prevent them from achieving their goal(s). Each of those things or 'reasons' may contribute to a portion of the amount that is preventing them from achieving their goal(s). An example of a reason in this discussion could be, "An opportunity's size and when it will close is the opinion of each of our sales personnel. Because it is their opinion, I cannot place any confidence that the opportunity will close, when it will close, and how large it will be."


4. Once you help the prospect arrive at the cost of that reason's contribution to the goal, then they are in a position to determine that if they performed those operations in a different manner (with the use of your capability(s), would that cost go down or stay the same.
5. If you and the prospect determine that if they had certain capabilities there would be a reduction in the variability of the forecast they receive from sales personnel. An example could be, "Would it help if when a sales person completes a prospect call they could update that opportunity with a standardized milestone indicating where in the sell cycle that prospect is, and when the prospect will make a decision?" If the prospect indicates that it would help, then the next question could be, "If you had that capability, how much of the variability in forecasting do you think could be reduced?"

Good Selling,

Dan Lemke
A Licensed Affiliate of
CustomerCentric Systems®

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