Quantifying the Business Problem

Quantifying the Business Problem

Consultative salespeople are experts at diagnosing customers’ business problems and working with them to develop solutions. Part of the diagnosis process is quantifying the financial impact of the customer’s inefficiencies and performance gaps. When the “cost” of the related issues are determined, the seller puts a price tag on the business problem. Experienced consultative sellers know to only use numbers that the customer has provided, confirmed and agreed to when qualifying financial impact. Otherwise, they may not buy into the results.

Once the inefficiencies and performance gaps of the business problem have been quantified, the customer has two choices: 1) continue to incur the cost or 2) invest in a solution. When the cost is high, consultative sellers should help customers make time the enemy. For example, based on improved performance, what is the customer’s opportunity cost of not increasing revenue right now? Or, for every day a decision is not made to address an inefficiency, what will the actual cost be? The higher the cost or opportunity cost, the faster a decision should be made to address it.

If not having the right project management solution is causing a company to incur $5K per month in missed deadlines, there is a $5K per month business problem. Every day the inefficiency is not addressed, the company is “bleeding” $167 ($5K/30 days). If buying the seller’s project management solution for $6K annually would address the issue, the customer’s payback period would be 1.2 months ($6K/$5K) and they would see savings of $54K over the subsequent 10.8 months. Help customer’s use their gain as a decision driver and the cost of their pain as an decision accelerator.

All contents copyright © 2015, Josh Lowry. All rights reserved.

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One Response to Quantifying the Business Problem

  1. Daniel Schutzberg says:

    Qualifying the business problem (and client readiness to deploy) are key considerations for a PPM (project/portfolio management product). Unless the vendor can groom the client for ‘readiness and rollout,’ the sales relationship will be at risk.

    Like

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