All sellers and marketers keep a close watch on their competitors. But many teams overlook a competitor that’s invisible to them: the other investment choices available to the prospect’s finance team.
The Role of the Finance Team
Traditional tactics to insulate yourself from the competition (like differentiating yourself in the market) won’t help you if you’re facing off against the decision-making process of the prospect’s finance team. Why? Because the role of financial officers is to arbitrate purchases and consider how to allocate company funds. The idea of purchasing your solution is just one of many strategic decisions they’re considering.
This means that your competitor might be the option to open up a new sales office in China. Or to invest in a new human-resources management system. It will have nothing to do with making a purchase from a company that makes a product similar to yours.
Just how important is the financial team? The results of a survey of 570 executives found that 75 percent of finance teams play an active role in spending decisions, particularly for purchases that affect the way the company does business and/or for large expenditures. The report also showed that members of the finance team collaborate with business management on the following key issues regarding vendor selection:
- 98% collaborate on “developing/reviewing business and functional requirements.”
- 95% collaborate on “preparing/reviewing financial justification and ROI analyses.”
- 85% collaborate on “speaking with and evaluating prospective vendors.”
This research supports what we’ve witnessed working with many B2B companies over the years to help them improve their win rates. Financial decision makers are increasingly putting sales and marketing teams through their paces by a cost justification (aka a business case). This is particularly true for high-ticket items and any solution that will significantly disrupt a customer’s business.
Many salespeople instinctively know that more deals are lost to lack of funding approval than a traditional competitor. For some reason, however, they rarely build this awareness into their sales process. Instead, they continue to focus solely on beating “the competition.”
Winning Against the Invisible Competitor
In fact, these actions are not likely to make an impact if you’re facing your invisible competitor. The one thing that will help is a solid business case (depending on your offering, you’ll need either a simple, standard, or in-depth business case to win budget approval and close more deals).
An ROI tool is an effective and efficient way to build a standard business case that your champion can show to the CFO (or other member of the prospect’s finance team). The business case should include financial metrics such as net present value (NPV) and ROI; CFOs use these metrics routinely to compare potential investment opportunities against each other.
Conclusion: Yes, You Can Stop Losing Deals
The next time you’re trying to close a deal, don’t go to your manager pleading for price discounts, and don’t worry so much about what competing companies are doing. Instead, think from the perspective of the prospect’s finance team. What do they need to understand about your value to sign off on this purchase? Why would it make sense over any other option they’re considering? If you can’t answer those questions, you still have work to do before you win the deal.
