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Do You Need a TCO Tool or a Value Calculator?

Posted by David Svigel on Jul 5, 2016 9:00:00 AM
David Svigel
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Value and total cost of ownership comparisons are important to any B2B sales process. Between them, they attract and justify the selection of your product while building a business case for prospective customers to use when presenting your offering to buying committees and financial approvers.

However, they operate in different ways and at different points in the sales cycle. Each tool has a different goal and addresses different pain points, and each is used by a different primary user to different benefit.

Value Calculator

The goal of the value calculator is to generate demand. Not only that, it is designed to increase both lead conversion and the quality of the leads you attract.

A value calculator helps buyers discover the value of your solution and gets your company’s proverbial foot in the door. When set up properly, it shows a prospective customer the value your offering provides compared to their status quo. 

Value calculators are deployed on your website and then promoted on social media, email campaigns, and press releases. Built for potential buyers to calculate the value of your solution themselves, it is a self-service tool that qualifies leads before they are handed off to sales. That allows your sales representatives to spend their time more profitably.

Additionally, your sales team can engage with those who have already shown a willingness to enter the sales funnel rather than cold-call prospects who are just window-shopping and have no pressing reason to pursue your solution at this time. 

As you can see, this tool is best used at the beginning of the sales cycle. A value calculator builds awareness of your solution and encourages buyers to enter the sales funnel, thereby increasing the conversion rate through not just your website, but other marketing channels as well.

Talking about value early in the sales cycle steers the conversation away from price. 

Total Cost of Ownership Tool

Total Cost of Ownership (TCO) tools work at the opposite end of the sales cycle from a value calculator. This is a tool that has the goal of winning the deal in a head-to-head competition. It does this well enough that the sales cycle is shortened, making the entire cycle more profitable and generating higher revenue annually through an increased number of sales.

Primarily for internal use by inside or outside sales and your channel partners, the TCO tool shows buyers the benefits and costs of your solution in direct comparison to a competitor or alternative solution.

If you’ve had problems in the past with properly comparing your offerings favorably to the competition’s, TCO provides the framework to show the net lifetime value you bring.

Showing total cost of ownership is especially useful if you are in close competition with another vendor or a competing technology or material. You can present the cost and value dimensions of both solutions for a head-to-head and point-by-point comparison, illustrating which is the better financial option. 

Since TCO includes talking about costs, the end of the sales cycle is the best place to bring it up. You have already shown the value of your offering and had the chance to help the buyer build a business case to convince the buying committee and financial team.

TCO provides further justification for choosing your solution over another by highlighting the distinguishing points of the solution, comparing them to the competition, and building a convincing picture for the benefit of the buyer.

A TCO tool shows the buyer your intent to continue to add value after the sale closes. Price is only part of the conversation; total cost of ownership includes the rest of the story.

Value Calculator + TCO Tool = More Closed Sales 

Value calculators begin the engagement with the customer by showing how your solution will solve a buyer’s problem, neatly delaying the price conversation until later. Prospects unready to change the status quo will not engage, thus filtering out window shoppers and delivering more highly qualified leads.

The total cost of ownership tool picks up where the value comparison leaves off, enabling you to show exactly how your solution stacks up to the competition.

Value calculators and TCO tools, used together, shorten the sales cycle, attract the right leads easier, and give you everything you need to close the sale.

Selling Tools Comparison by ROI Selling www.roi-selling.com

Topics: TCO Tools, Value Calculators