Jason Cohen of A Smart Bear has a great post on about why selling customers on ROI and “saving money” are losing propositions. It’s a fantastic article that draws on ASB’s experience selling code review software. Code review software, almost by definition, relies on an ROI sale - “we help you find and fix costly bugs quickly!”. But here’s what Jason has to say about that sales tactic:
But this argument never worked, not once, even though the reasoning is sound and customers requested it. The reason is that the “savings” isn’t commensurate with how budgets actually function.
Bang on. Having been inside a number of large companies, you’d be amazed at how many budgets are done with the “plus-3” technique: Take what you used last year, and add 3% on top.
Notice that by buying a tool that “saves money”, whoever ran that budget would actually have their budget dollars shrink. Not good.
Case Study: Sell a person, not an investment
There’s a golden nugget that that Jason just starts to uncover here: the reason customers purchase your software is rarely the same reason as why you started creating the software in the first place.
As a consultant, the one-line zinger that was thrown around was that we were selling “profits at a discount”. You pay us, we reduce costs or boost revenues to pay for the service ten times over. The jobs was pitched this way even to our own employees; we’d like to think that our analytical rigor and probing, independent viewpoint added value. Our jobs were supporting a raw, logical, business-driven decision.
But the longer I stayed in the field, the more I realized that making money was rarely the reason a case got purchased. There were situations where a short project would’ve had ROI’s in the tens of millions of dollars if implemented, but never got picked up.
The real product we were selling were careers. Buyers would bring in the firm to help themselves hit specific milestones or objectives they had for themselves. Did we benefit the company in achieving those? Greatly. But the reason people were willing to pay hundreds of thousands of dollars a month were because of the coaching, the ‘white-glove service’, and the network a successful case would entail. They were buying a promotion to SVP, the key results which got them their own division, or the track record to shoot for the CEO spot for the next company.
Who do you want to be?
Jason’s tips are pragmatic - over-deliver on value so that your customer never even tries to do the math and price according to how they pay are two great ways to grease the purchasing pathway. But understanding the customer’s pain and guiding them towards their aspirations will have them fighting for your service, budgets be damned.
Finding the guy whose ass is on the line, struggling because his team is quagmired in busywork. Find the new girl who is replacing the guy who got fired for delivering a buggy product, overbudget, and behind schedule, and sell her on code review as a way to leap miles above her predecessor. Find the pain, the aspiration, the dream of your customer, and sell them that. I’m sure they’ll find the extra $500 in the budget.
If you’ve read this far, perhaps you’d be interested in reading a related article: Non-technical founders: learn to code, but don’t code. Sell.
