ROI gives Sales the upper-hand in today’s complex B2B Sales journey

2021-02-20
Posted in News
2021-02-20 john@kennedy.marketing

What factors have changed a B2B buyer’s behavior when it comes to a complex B2B sales process?

  • New software solutions, in particular advanced web technology like HTML5 has made it easier to show and visualize the true value a product has for a particular customer scenario
  • For more complex, high ticket B2B products and services those involved in the buying process need to address and meet a wider stakeholder agenda
  • According to a SiriusDecisions survey buyers carried out 67% of self-directed research digitally, taking control of finding information online before contacting vendors
  • Buyers do not want to gamble when making a purchase, so breaking the numbers down into a Return on Investment (ROI) calculation provides a more accurate and defensible decision making process as they’ll have to answer for their buying decision

Doing business today

In the face of dramatic changes in recent B2B buying behavior, vendors must respond to their buyers shifting to digital commerce. Sales has now forever been changed by the digitalization of society and the COVID-19 pandemic.

As a consequence, many of the traditional and heavily relied upon business practices have disappeared. Employees are now predominantly working remotely, and the decision making process has become more far complex with thresholds such as ROI elevated.

With little or no opportunities for face-to-face sales contact, vendors need on the one hand to show the value their product generates (financially and operationally) and find a platform to frame that message digitally.

Those vendors that make the shift digitally with their B2B sales strategy will be equipped to succeed. While those that do not will be left behind.

Listening to your customer’s needs

As business conditions become tougher, filling the sales pipeline with leads means that each prospective sales contact becomes almost a “make or break” moment.

In a business slump, one of the biggest challenges is how to you get your product to stand out and attract leads without resorting to lowering your prices. It’s a “perfect storm” that places the customer in a position of negotiating strength.

It’s a situation that requires a shift in your sales strategy. Rather that “death by PowerPoint” presenting all the wonderful ways your product answers what you feel are the critical challenges – it means listening to your customers.

Digital enablement means shifting your sales focus to value selling, advising buyers on how your product can first and foremost add value. Visualizing an investment value that matches the needs of the customer.

By listening to your customers and understanding their needs you can be far more effective with how you communicate your product’s benefits – no point spending time on what you feel is important, if it is of no value to your customers.

Providing a convincing ROI case creates a logical purchasing position that should appease the various stakeholders. Building an emotional bond with your customers can help retention, but to get them to buy from you needs a more pragmatic approach by showing the value your product creates.

By provoking a robust ROI discussion it can also help to reduce the value of an incumbents emotional ties to your prospective customer.

Why is ROI important, what does it show?

ROI implies you are putting money in (an investment) and you expect something out (a return).

A high ROI means the investment’s gains compare favorably to what it cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to make a comparison across the efficiencies of different investment options.

In terms of sales, and the changes in buyer behavior, the quicker you can show a reasonable ROI, the shorter the sales cycle is likely to be. The longer the length of time a buyer would need to wait until they see a reasonable return, the more likely they will walk away from making a purchase.

By showing buyers the financial benefits through an ROI calculation you’ll help them feel secure and confident as they pass along the buying journey.

As a decision tool ROI is simple to understand and apply. And by presenting an ROI on a digital platform it allows buyers to build their own scenarios to test assumptions.

By making the ROI calculation transparent, buyers can themselves visualize and translate the impact of delaying a sales decision into lost revenue. So they’ll not want to wait to reap the benefits.

How do you calculate ROI?

ROI percentage

ROI is normally presented as a percentage over the period viewed:

Return on investment (in %) = Net income / Investment * 100

Where,

Net income = Gross profit – Expenses, and

Gross profit is either an increase in income generated by the investment or a cost saving made possible by the investment.

Payback period

Another metric is Payback period, that says how long it will take to get your money back:

Payback Period = Invested amount/Estimated Annual Net Cash Flow

Depending on product type and complexity, the work to calculate the key benefits are often some kind of performance that translates into savings or increased revenue. For example, energy savings from installation of a heat pump or electric power produced from solar panels.

How do you use ROI in a value selling process?

The variables that an ROI is based on may be taken from complex calculations. If your target audience don’t understand the calculations or your reasoning, then they won’t be convinced by it.

One of the main objectives of having a sales contact is to motivate the prospect by showing how your product is going to help them achieve their goals.

The ROI methodology helps your customers see that your price has little to do with costs and a lot more to do with the value you deliver.

As a sales person talking about ROI the Alpaxa ValueVizualizer helps the sales team focus on value by visualizing complex industrial processes, financial value calculations and can display the output on an app integrated into your digital sales process.

Today’s digital savvy B2B buyer is looking for the opportunity to be interactive, for ways to transparently compare a multitude of technical solutions and competitor products.

Monetizing product and service benefits

ROI can be an effective tool to link the benefits of choosing your product offering to a buyer’s business objectives or drivers.

A true benefit is something you get as a result of using a product feature. By listening to the buyer, you can target certain features and use ROI as a tool to translate benefits into financial returns. By using the ValueVisualizer® you’ll provide flexibility to a buyer to calculate different scenarios and facilitate direct interaction with your sales team.

ValueVisualizer® 

In the value selling process as well as articulating the outcomes and benefits of the offer, the ValueVisualizer can visualise the return on investment. The ValueVisualizer® is an interactive web-app that visualizes investment value for products and services.

Most B2B purchases are made with ROI in mind. Being able to communicate a solution in financial terms enables a sales team to qualify product values more effectively.

If you want to hear more about ValueVisualizer® or to hear how we can help you re-invent how to work remotely and to enhance your approach to value selling, don’t hesitate to book a Free Consultation: mail@alpaxa.com

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