If you’re selling online services, you’ll need one!
Did you know that in 2019 Carmax sold 748,961 used and 447,491 wholesale vehicles? Or that they raked in net earnings of $842.4 billion? Talk about an impressive showing for a company that only came on the scene in 1993!
Add to this the fact they entered a highly competitive industry with a reputation for slick salesmanship and “bad deals,” and their growth is incredible. What’s their secret sauce? They sell value, not commodities.
Sure, cars exchange hands in the process, but the Carmax approach lets customers circumvent used car salespeople altogether. It also ensures that clients understand the value of the vehicles that they purchase with the assistance of ROI calculators such as car payment calculators.
If you want to drive successful sales in today’s digital world, you must understand the importance of value-based sales along with demonstrating your customer’s potential ROI. With that in mind, let’s explore how to use calculations of ROI for better sales results. Also, in case you’re curious, I encourage you to check out Ion Interactive, a SaaS platform for interactive calculators to help you better enable your sales team and your customers. We CAN help you build your own ROI calculator! If you’re curious, I encourage your to take a platform demo!
What Are ROI Calculators?
Once upon a time, web-based calculators were used primarily by financial and real estate websites to give customers a sneak peek at mortgage or interest rates. Now, though, just about every industry can benefit from tools calculating return on investment.
Return on investment (ROI) tools demonstrate the value of your products to customers. They rely on the calculating ROI formula:
- ROI = (profit gained from investment/cost of investment)*100
In the equation above, the profit gained from the investment does not equate to the revenue earned from it. Instead, this profit is equal to the extra revenue attained from the investment minus the expense of the investment:
- profit gained from investment = extra revenue earned = expense of investment
These equations illustrate the value of your products to customers. That said, your sales team doesn’t want to sit around all day crunching numbers. Neither do your customers.
That’s where an ROI calculator comes into play.
An ROI calculator simplifies these mathematical equations. They provide your sales team and customers with a foundation of understanding of the financial and operational value of your company’s value proposition (a.k.a. the solution to your customers’ problem).
How and When Calculating ROI Should Enter the Sales Picture
You should build these calculators into every step of your customer’s buyer journey. For example, you can use pain calculators and maturity assessment tools early in the game to foster lead generation and nurture customers.
ROI tools also have vital applications in the initial sales cycle, emphasizing the inherent value of your products. They can also nudge prospects to keep engaging with your content and other sales material until they’re ready to make a purchase.
You can use these tools late in the sales process, too. Later in the game, they facilitate pricing calculations and automate proposal generation. What’s more, these online tools continue to provide value by ensuring customer satisfaction post-sale.
How? By providing customers with resources such as quarterly business review generators that further demonstrate the value of your products. When it comes to fostering loyalty and repeat business, customer support remains critical.
Of course, providing the right set of tools at the right stage of the buyer journey requires finesse and expertise.
That’s why you should work with an SaaS company that understands your company’s needs. One that can provide you with the best suite of tools to capture the sale at a pricing model that works for your organization.
Your company should also take a closer look at your current sales model. If you’re following a traditional model, you’re likely turn customers away. Instead, cultivate a value-based selling model.
Emphasize the Value-Based Selling Model to Drive Sales Success
What is a value-based selling model? This model demonstrates and reinforces why your offer is valuable to a purchaser. It focuses on what your customers need to solve a problem rather than the products you want to sell to them.
By articulating the value of your proposition rather than focusing on commodities, you increase the likelihood of a sale. You also give your company room to price products based on value rather than cost margins.
Unlike pushy sales tactics, value-based selling requires listening to customers and identifying their problems. Armed with this information, you’re then in a position to demonstrate the value of your product to meet their wants and needs.
For example, let’s say you provide a service that costs your company $100 per year. Yet, your customer earns $100,000 a year as a result of said service. In turn, they pay you $15,000.
Does it matter that your investment is just $100? No.
Why? Because no matter what your overhead costs, if you’re bringing $85,000 of profit to a company, there’s a noticeable return on investment. One they won’t want to give up.
Will it matter to your customer that other services charge much less? Not after you establish your product’s value. Show them that your company offers more value than other services, and they’ll happily make the investment.
Determining the Key Components of Your Value Proposition
For most customers, your company’s worth is about more than numbers. For them to consider your offer, you must present them with a concise, simple value proposition.
Whether you call this your elevator speech or unique selling proposition (USP), it needs to explain what your company will deliver.
Once you’ve earned the interest of your prospect, use testimonials, case studies, and analyst reports to support this value proposition. You’ll also want to utilize measurable operational outcomes and activities, including ROI.
Once you’ve developed a strong value proposition, quantify it with value drivers that speak to your customers. To do this, explore factors such as:
- Productivity gains
- Hard cost savings
- Risk mitigation
- Revenue acceleration
Next, develop calculations based on an existing ROI spreadsheet. This spreadsheet will help you craft a model for your prospect’s given industry. Find out more about how to calculate ROI in Excel.
With your value proposition firmly in place, you can focus on crafting a surefire value-based sales model.
The Four Steps of the Value-Based Sales Model
The value-based sales model includes four critical steps:
- Having a clear grasp of the situation
- Defining the customer’s problem
- Outlining the short- and long-term implications of the problem
- Quantifying the emotional and financial pay-offs a customer will experience through the resolution of their problem
Emphasizing the return on investment that your customer will receive is critical to the value-based sales model. Not only will it increase your prospect’s confidence about your ability to deliver a satisfactory solution, but it will demonstrate your product’s ultimate value to them.
When you shift your marketing tactics from selling products to selling what your product will do to make a customer’s life easier, you gain marketing traction. When you demonstrate that you understand and can solve your customer’s problem, they’ll turn to you every time.
When your sales reps make a pricing proposal to a customer, they ask that customer to take a leap of faith. Whether or not they take the “leap” depends on the return on investment your solution can deliver.
That’s why you must equip your sales team with the resources to demonstrate the ROI of your products. If you don’t explicitly state the ROI offered by your products, then you leave it to your customers to fill in the blanks.
In all likelihood, they’ll vastly underestimate that value.
Why? Because they don’t yet associate your product with the relief they’ll feel after finding a solution to their problem. It’s your job to create that association.
Equip Your Sales Team to Be Internal Champions to Drive Success
How do you get members of your sales team on board when it comes to championing your ROI? Think of your sales team as your primary customers. If you can’t excite them about your products, then how do you expect them to go out and captivate prospects?
How do you get your sales team on board and convince them that your products are well worth the price tag? By making sure that your value model is easy to understand, meaningful, usable, supportable, and flexible enough to deploy in the field.
Where to start? By showing your sales team the “money.”
In other words, they need to understand and believe in the value of your product. They should also see the offer as compelling for customers. These two pieces of the puzzle will enable them to close future sales successfully.
What are some of the biggest challenges that sales reps face when beginning an ROI discussion? Let’s explore some of the inherent difficulties.
Challenges Your Team Must Surmount During an ROI Conversation
While pointing out how much a customer stands to make by using your products seems like a simple enough approach, conversations about ROI can lead to roadblocks.
What are some of the biggest pitfalls that may surface during a conversation about ROI? They include:
- Buyers who care about more than the bottom line
- Assumptions held by a customer that are not based in reality
- ROI messaging that customers and prospects don’t find relevant or compelling
- A lack of available data on the part of the buyer to populate an ROI model
Your team will need an understanding of the quantitative benefits of your product to overcome these obstacles. ROI proves essential to demonstrating these quantitative benefits. They’ll also need to listen well and know how to address the customer’s specific needs in a relevant way.
For example, when it comes to customers who care about more than ROI, you’ll need to demonstrate how your products solve their most pressing concerns. Not sure where to start?
Survey the happy customers you already have to hone in on your company’s value drivers. Then, use these value drivers to present prospects with relevant content.
A survey also allows you to delve into your customer’s language and how they speak about your products. Understanding and being able to speak the language of your customers is marketing gold.
You should also show, rather than tell, customers about your product. Potential ROI remains an essential way to do this.
Since calculating ROI often involves ascertaining data points from the customer, your team must feel confident about getting the right data. What if your customer can’t furnish all of the data needed? Then, it’s time to get creative.
Does your sales team know how to leverage publicly sourced data for your industry and customers? If not, now’s the time to learn. The internet has placed endless volumes of information at our fingertips, and your company’s sales team needs to know how to use it to captivate customers and drive sales.
You can further support their ability to interact meaningfully with customers by investing in customer relationship management (CRM) software. This software stores and manages your customers’ transaction history and data. A CRM can increase sales and improve customer relationships.
Best Practices for Applying an ROI Calculator
Now, you’ve got a better understanding of what ROI calculators are and how they can enhance your customer’s buyer journey in a value-based sales model. Of course, this begs the question: what’s the best way to start applying this knowledge to your current sales setup?
Start small to avoid overwhelming your sales team. For example, we recommend beginning with one product, one sales team, or one customer segment.
The “baby steps approach” will help your team adjust while gaining the experience and skills for success. Since you’re asking your sales reps to shift their thought process, expect a learning curve and adjustment period. Don’t feel surprised if you encounter initial resistance, particularly among team members who think they’re doing an above-average job.
Once your sales reps start to see the ROI on your new marketing approach, they’ll invest more time, energy, and faith in the process. They’ll come to believe wholeheartedly in your products and marketing strategy, and your sales will skyrocket.
Value-Based Sales and Calculating ROI
Gaining new customers in today’s competitive business environment starts with a value-based sales approach. Of course, central to this approach is a clear understanding of the inherent value your products have to a potential client.
The best way to quantify this value? Through the artful use of ROI calculators. When you equip your sales reps with these tools, they’ll be in a much better position to support customers at every step of the buyer journey.
Interested in more ways to improve your company’s sales results? We’d be happy to hop on a call with you to show how Ion Interactive can help you build amazing ROI calculators and increase your conversion rates. Let’s chat!