ATTRACT WITH ROI
In the saturated SaaS sector, it is incredibly difficult to stand out from the competition and therefore every good argument can count.
Our clients often ask us to build the best value proposition when prospecting a new segment or a new market.
During the onboarding phase, we spend a lot of time with our new customers to understand the solution and brainstorm on the best approach.
One of the key topic: how the potential prospect is ROI sensitive?
Of course, all prospects are eager to understand not only which pain the solution tackles but also if this can positively go through the Capex/Opex decision and board sentence.
There is different methods we can apply and suggest.
Method #1 – Gross revenue
ROI in terms of Gross Revenue. If the software is something that primarily increases revenue, you compare the revenue generated by each group.
For example, if you’re selling CRM, suppose the control group sells $1.1 million in the quarter following installation, while the subject group books $1.2 million. In that case, the net benefit for the quarter for the pilot is $100,000.
If the subject sales group consists of 10 employees, then the net average revenue benefit per sales rep is $10,000. Therefore, if the entire sales force consists of 100 employees, then the additional yearly revenue for a full installation is $4 million.
So, if the software license cost for the entire company is, say, $1 million a year and the customer intends to keep the software up and running for five years, you achieve ROI in five fiscal quarters..
Method #2. ROI in terms of Cost Savings.
If the software is something that primarily decreases costs, you compare the expense in the control group versus the expense in the subject group. For example, if you’re selling Product Lifecycle Management (PLM) software, ad the control group manufactures a million widgets at $1 a widget while the subject group manufactures a million widgets at $.90 a widget, the cost savings for the pilot is $.10 per widget.
If the entire company normally manufactures 10 million widgets a quarter, then the cost savings is $1 million per quarter or $4 million per year. As above, if the software license cost for the entire company is $1 million a year and the customer expects to keep the software for five years, then ROI for your software is five fiscal quarters.
ROI definition and presentation is only one piece of the successful equation, but if you can bring a competitive advantage by nicely storytelling the cost savings attached to the value proposition, you will see a significant raise in the interest rate, leading to more leads and ultimately more sales.
Ask one of sales expert to discover how we can help.