Knowing the right time and context to use value selling tools is crucial for B2B sales success. Two popular tools are Return on Investment (ROI) and Total Cost of Ownership (TCO). While both can prove cost effectiveness, they have different purposes and are most effective in specific sales situations.
I recently reflected on what might cause sellers to reassess their value pricing and value selling strategies in a changing economy. While both are rooted in value, value pricing and value selling use different tools with different purposes and reference sets. Let’s take a moment to review the basics.
Building value selling content into your solution messaging and sales process requires a deep understanding of the difference between ROI and TCO analyses and the right use case for each. If used inappropriately, or not at all, you can lose credibility with customers and hurt your chances of closing deals.
With value selling tools, sellers can develop a more persuasive business case with insights into customer problems. And buyers can justify investing in a solution whose value is expressed in dollars and cents. In our experience, successful value selling tools adhere to ten core principles.
During initial conversations, prospective customers often tell me they’re looking for a TCO (Total Cost of Ownership) calculator or tool. My typical response is to ask what they’re trying to accomplish so we can explore which tool (or tools) will best serve their needs. More often than not, a TCO tool can be helpful, but it may not the best solution.
A solid business case is essential for conveying the value of your solution through its obvious and more subtle advantages. When properly prepared, a business case informs and challenges customers to consider new perspectives, and gives you an opportunity to seal the deal with speed and confidence.
What does it mean to be a successful salesperson, whether inside sales or otherwise? Certainly, the ability to persuade is as important as is the knowledge of the solution for sale. However, the most successful salespeople approach each sale as though it were a battle, in the most positive sense.
Buyers tend to take the same journey every time they make a high-commitment purchase. They realize there is a problem and begin researching potential solutions. Unfortunately, they are not always methodical in their search.
Just when you think you have clinched the sale, the buyer springs a competitor on you, or someone inside the buyer’s company is suddenly suggesting an alternative method.
Total Cost of Ownership (TCO) and Return On Investment (ROI) seem to be similar methods of proving cost effectiveness, but they perform best in totally different situations.
In fact, if you use a TCO tool at the wrong time in the sales process, you are taking a couple of big risks. Let's take a closer look at ROI vs. TCO and which tool is better for your business.
