Why the COI (Cost of Inaction) always needs to come before the ROI (Return on Investment)

If you’re selling high-value B2B products or services, you’ve probably been involved in coming up with ROI (return on investment) calculations to justify your proposal. You may even have been tempted to market your offerings on the basis of the superior ROI you believe they can generate.

But even if you present your prospects with what looks like a compelling ROI-based argument, chances are that on many occasions, you still won’t win the deal - and it’s not just because (even though it’s undoubtedly true) most buyers don’t trust the ROI calculations that vendors come up with.

Overcoming the risk of change

It’s because until your prospect has concluded for themselves that the costs, risks and consequences of staying as they are will be far higher than the costs and risks of change, they will probably be tempted to simply stick with the status quo - and ROI won’t even come into their thinking.

It’s a case of “better the devil they know”. You see, your prospects know, from bitter experience, that change always carries risks - many of them unpredictable and seemingly unmanageable. So unless they feel they have to change, and unless there is a consensus for change across the organisation, they probably won’t change.

It’s no wonder that prospects are increasingly (and frustratingly) deciding to “do nothing” after involving you in a lengthy and apparently sales process. In fact, overcoming the status quo is often a more powerful competitor than the vendors you regard as your traditional competition.

Selling against the status quo

Sooner or later, if your proposal involves significant investment, and even if it has the support of your sponsor and the apparent decision making group, before the project is finally approved someone in authority is going to say something along the lines of “tell me again why we’re planning to spend money on this?”

And if at that point the case for change is not absolutely compelling, chances are that the project will be dead in the water - even if you’ve polished up an apparently compelling ROI calculation with the primary project sponsor.

Because at that point, you’re not just fighting the competition. You’re fighting against everything else the prospect could do with that money, including keeping it in the bank. Your much-vaunted enterprise software project could be competing for attention with buying new office furniture, or the banks’ current rate of deposit interest.

Making the case for change

That’s why, when you first uncover an apparently compelling need, and before you succumb to the temptation to pitch your solution, you have to help your prospect recognise the costs, risks and consequences of inaction. If you can’t help them develop a compelling case for change, you need to be very cautious about throwing lots of sales resources against the project. And you most certainly shouldn’t be forecasting it.

So - when you uncover that apparent need, use the opportunity to learn more about the problem from their perspective. Help them think though the ramifications. Here are some of the questions that you need to have answers to before you qualify the opportunity:

• How long have you recognised the problem? What’s prevented you from dealing with it in the past? Why is now the right time to deal with it?
• Who else is affected by the problem? What’s the impact on them, and on their organisation?
• What would happen if the problem wasn’t dealt with? What impact would a delay in dealing with it have on your department - or the company as a whole?
• Who would have to approve the project? What has been their attitude to similar change programmes in the recent past?
• Does the company have an appetite for this sort of change? How would this project fit into the company’s key initiatives for the current year?

Chances are, your potential champion may not have all the answers. In fact, you may cause them to think about the problem from an entirely different perspective. You’ll never have a better chance to secure their agreement to help you make connections with other key parts of the organisation. Don’t waste it by jumping straight into your product pitch - it’s way too early for that.

It’s not just about money

The costs of sticking with the status quo clearly need to be part of the calculation. If those costs increase month-by-month you can develop a strong case for taking action sooner, rather than later. But it’s not just about the money.

What about the impact on employees, on morale, or on customer satisfaction? What about the risk that one of their competitors may steal an advantage if your prospect decides to do nothing, or to delay?

Your case for change needs to combine cost, risk and consequences in a compelling way. You’ll build a much better case for your solution if you take the initiative. And when that time comes for someone in authority to ask the dreaded question “tell me again why we’re planning to spend money on this?” the justification will be irrefutable - and your solution irresistible.

About the Author

Bob Apollo is a Founding Fellow of the Institute of Professional Sales, a founding contributor to the International Journal of Sales Transformation, a recognised Sales Futurist, and the driving force behind Inflexion-Point Strategy Partners, the leading proponents of outcome-centric selling.

Following a successful corporate career spanning start-ups, scale-ups and market leaders, Bob now works as a strategic advisor, mentor, trainer and coach to ambitious B2B sales organisations - teaching them how to differentiate themselves through their provably superior approach to achieving their customer's desired outcomes.

Cartoon reproduced under Creative Commons Attribution 3.0 Unported Licence from Geek and Poke