Cost or value?

A friend of mine is a Project Manager for a national insurance company.  He recently submitted an updated investment justification for a technology purchase that was originally approved three years ago.  Turns out, the annual maintenance costs exceeded the initial projections.  The company's executives wanted to re-visit (and re-justify) the cost. 

I found this remarkable because in my sales career, my clients rarely went back and re-justified their purchases.  Let me ask you… post sale, how often did your clients go back to re-confirm the original cost justification?  

Products or services, I believe they all work the same.  George Eckes, a subject matter expert in Six Sigma manufacturing processes, chimed in…  (According to Wikipedia, “A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects”): 

About 30 percent of my clients have had a true Six Sigma cultural transformation; about 50 percent of my clients have obtained tactical results that justified their investment in paying my outrageous fees.  And about 20 percent of clients have totally wasted their money.           

Not every technology purchase has to be “justified”.  Here’s an excerpt from an interview published in the March 2012 issue of CFO Magazine: 

CFOs need to understand that you have to keep the core running, says NetSuite CFO Ron Gill.  Sometimes the CIO will say the phone system needs upgrading.  The CFO will ask, ‘What will we get from the upgrade?’ The CIO says, ‘Phones.' 

Way back in 1979 during my very first, B2B sales training class, we worked on feature-benefit drills.  Anytime we came across a feature we couldn’t immediately connect a benefit to, we were taught to use that famous, catch-all, cost justification phrase:  “Save Time; Save Money!” 

Over four decades later, I’m amazed at how often I still hear this phrase.  Maybe you say it yourself.  Oh and there’s the popular derivation that goes like this:  “With our automated, online, interruption, peddle, your people currently performing this task can do more important things for the company…”  More important things?  Such as? 

Much has been said and more has been written on how sales professionals can “cost justify” the sale of technology products and services.  “Value Proposition”; “Return On Investment”; “Total Cost of Ownership”, “Time to Value”; “Automating manual tasks”; what is your favorite justification technique?  (“Save Time; Save Money” you say?  Just shoot me!) 

When the client values the technology we're selling and wants the technology we're selling; they don’t always need a formal justification.  Don’t take my word for it.  ROI and the fact that it is often unneeded has been part of the technology industry for as long as there has been a technology industry: 

What's my return on investment in e-commerce?  Are you crazy? This is Columbus in the New World.  What was his ROI?

                        Andrew Grove 

In my experience, when I understood how the client valued my proposal a closed sale was at hand.  Of course, the term "value" is vague and varies by client.  We know it exists because it connects to the client’s “discretionary funds”.  Discretionary funds includes their original “budget” plus whatever it costs to get what they want.  They may not need it but if they value it and want it, who am I to say no? 

We might all consider seeking to understand what the client wants and then selling to the value.  After all, this approach could Save Time; Save Money! 

GAP 

When life gets tough we could get a helmet… or… we could leverage the peace and share the power of a positive perspective.