The simplest concepts can be the most powerful, but only when they’re used. I was reminded of this as I kicked-off a three day training session for a group of B2B software sales managers. The question I posed to the group that brought me to that realization was simply: What’s the quick formula for calculating Return on Investment? I raised a crisp $50 bill in the air above my head as I asked the question. I promised to give the bill to the first person that could provide the answer. It should have been an easy question given the audience, with a positive reward, designed to engage the team as we started the first morning’s session. It was also a key question to kick off any sales training session as the concept at the heart of every business endeavor….what value is being created and how is that value being captured in the go-to-market approach? Fifteen blank faces stared back at me. I added another $50 bill to the first and asked the question again. Fifteen faces stared back, this time a bit more nervously.
I have to admit I didn’t fully expect an answer. I also have to admit I borrowed the approach from the first-ever sales training session I attended. In that case, it was my first day as a new sales rep and I was sitting in a conference room packed with nearly a hundred IBM sales reps. IBM’s famed Terry Booten was the instructor and he’d been assigned the responsibility for teaching that group the basics of financial selling. Terry had been a very successful sales executive in his career in IBM while selling into one of the IBM’s toughest segments and geographies: advanced hardware and software systems to coal mining operations in Kentucky. That was a tough territory. He was very successful and was somewhat of a legend in IBM’s sales organization. As Terry opened his first day’s training session he held up a similar bill and a copy of his recently published book “Cracking New Accounts”. He promised the bill and a personally autographed copy of his book to anyone that could provide the ROI formula. I couldn’t believe it. I had just finished my undergrad program in finance and I thought it seemed a simple enough question, but no one in the room was responding. I looked around the room at a hundred of the industry’s most highly-regarded sales professionals in the IBM-standard white, pressed shirts. No one responded. Terry added a second bill to the first, held up the matching bills and the book, and asked the question again. First day on the job or not, I wasn’t about to let the opportunity go by. My hand went up from the back of the room. Terry saw it and seemed a bit surprised that his pocket change and book might be at risk. He grinned from the front of the room and called on me, most likely not expecting the right answer. I gave him the answer, ran to the front of the room to pick up the cash and the book, and went home that night feeling lucky, $100 better off and somewhat wiser.
What I’ve learned since then, despite all the advancements in sales training, systems and processes, is that you can repeat that same scenario in any B2B sales meeting and get nearly identical results. You’ll most likely take your money with you when you leave the meeting. I don’t know about you, but I find that fact dismaying. Dismaying since the heart of business is allocating and investing in resources to build value that ultimately generates positive returns on the investment. That’s certainly the fundamental equation that companies think about when they develop solutions to market problems. It’s also what B2B prospects are trying to figure out when they evaluate vendor’s products or services to address their business issues. I’ve always thought everyone in business would benefit from understanding the ROI and value equation, especially professional sales people. But few do, although ROI should be at the core of nearly every discussion they have. Virtually all B2B software companies can demonstrate an ROI for their solutions that can be measured in the thousands of percents, only to find themselves negotiating sizeable discounts. It seems that it would be difficult to sell on value if you don’t know how to describe it, measure it or calculate it.
As dismaying as it seems, it’s quite encouraging since there’s obviously not a lot of competition for those that can talk and think in terms of value and ROI. How does your direct sales team stack up? It might be interesting or enlightening to take a couple crisp $50 bills with you to your next sales team meeting and try the exercise. I’d love to hear from you if you have anything close to half of your sales reps that can answer the ROI question on the spot. If you do, I’d love to share your story about how you developed a top notch sales organization. Otherwise, stayed tuned. The next post here will describe how you can get there...