We’ve all been there. Your buyers say they want to move forward with your solution, but the deal is stalled because of internal resistance and your sales opportunity is on the line.
Organizations often believe that they can solve their problems faster, cheaper, and better internally because nobody knows their business like they know their business. Sometimes the resistance is political, where internal players want to assemble their own problem-solving team and / or engage in empire building to extend their influence. In this situation, you’re competing against the organization for the sale.
You know you offer a great solution. Not only does it make business life easier for your clients, but it delivers measurable financial impact. Customers using it see significant solution benefits. Whether those benefits are increased revenue or cost or time savings, you know your customers find excellent value in your solution. Some have even provided great testimonials, and at least a few have offered to collaborate on a case study.
Even if prospective customers see the value you’ve delivered to others and want to implement your offering, they may not know if they can get budget approval. This is where they begin considering a backup plan, thinking they can build something “good enough” in a spreadsheet. If they’re a technology company with a large in-house IT group, they may also think they can build something “close enough” to sufficiently meet their needs, even though their developers and business focus are in a completely different space.
The Perils of Do-it-Yourself
In our own experience, buyers attempt to build their own value selling tools and come back to us months later after things didn’t work out as well as they had hoped. In many cases, their in-house developers hadn’t started building their tools because projects for their own clients always take priority. Even worse is when they’d actually been working on it for months and just couldn't get it right without the business knowledge, insights or experience to build what their internal buyers need.
Others try to create tools using a spreadsheet and find that it isn’t practical or effective. Even if they get close to what they wanted, the spreadsheet begins to lose its integrity after being shared internally. Associates think they can make it better by putting their own fingerprints on it and when it’s time to make global updates, the organization realizes there are uncontrolled (and often inaccurate) spreadsheets running wild through the virtual halls of the cyber office.
In the end, companies often suffer from taking a do-it-yourself approach. Besides the practical benefits of having a working solution, the cost to delay can reach hundreds of thousands of dollars per month in lost opportunity. End users are frustrated because they don’t have the needed resource to do their jobs more effectively. And those on the internal project team have wasted precious time trying to map and develop the solution.
When our buyers approach us after having these experiences, we pick up where they left off in their own efforts to build value selling tools, wherever practical. It’s important to respect their efforts to map out inputs and benefits and at the same time, apply our expertise to deliver exactly what they desired. This is especially important if they’ve just guessed at their benefits, so we often start here to ensure the tools’ output will be credible.
How do you respond to a prospect that’s considering building their own solution instead of buying yours? What can you do to help buyers make the right purchase decision before they waste time, focus, and money trying to do it themselves? How can you help them avoid ultimately coming back to you months later to complete the effort?
First and foremost, you want to show buyers the costs and benefits of implementing your solution versus attempting to build the solution in-house. Instead of comparing your solution’s value drivers and costs to those of a third-party competitor, in this case, you’re comparing your solution’s attributes to those of a homegrown attempt.
The Virtues of a Total Cost of Ownership (TCO) Comparison
Cost is a core motivator for delaying purchasing decisions and considering DIY options. Presenting a Total Cost of Ownership (TCO) comparison is the best way to clearly articulate the benefits and costs to install, deploy, operate, upgrade, and maintain your solution versus one developed in-house. Politics aside, this comparison helps buyers objectively evaluate these two alternatives and ultimately make the best business decision.
Buyers too often focus on the initial purchase price and overlook evaluating other costs and long-term benefits. Providing buyers with a clear TCO shifts the focus to your solution’s lifetime net value advantage in direct comparison to the financial risk of attempting to build their own.
As discussed earlier, spreadsheets are rarely effective for preparing and presenting complex analyses and comparisons. You need to show buyers the value and benefits of investing in your solution, and create a compelling comparison between your solution and DIY attempts to reinvent the wheel. We know from experience that multiple and erroneous versions of manual spreadsheets floating around the organization won’t get the job done.
A professionally-developed TCO comparison directly addresses the:
- Business needs and problems you solve for your prospect
- Solution(s) you offer to address those needs
- Solution cost (in multiple currencies if selling internationally)
- Savings realized from deploying your solution vs. in house development
- Additional benefits of your solution (revenue, cost savings, profits, etc.)
Leverage Past Success to Save Your Prospect
Populate your TCO calculations with data gleaned from past successes to ensure credible results. Look at the input variables from similar accounts and add industry benchmarking data to calculate realistic estimates of deployment savings and other benefits your solution is likely to deliver.
You will also need educated assumptions of the buyer’s hourly labor costs and the number of hours required for development, as well as other potential resource costs. To improve the accuracy of your TCO calculations, be sure to continue collecting and updating estimated labor costs and business intelligence from your growing customer successes, and other pertinent resources.
Depending on the cost of your solution and the time typically required to achieve ROI, consider calculating TCO over 3-5 years, especially if the benefits of investing in your solution are not likely to be achieved within the first year. At a minimum, your results should include factors like labor savings and improvements to profit and gross margin. It’s especially critical to show the financial benefits of selecting your solution over a DIY approach that will not save money in the long run.
Although buyers may come back to you after scrapping their internal solution, do your best to save them the pain and expense of pursuing a project that is unlikely to achieve their goals, despite their optimism and best intentions. If you can help them avoid the aggravation, you will have happier, more satisfied customers from the onset.
Your ultimate goal is to keep potential buyers from going down the long, winding, and generally unsuccessful road of a DIY option. Use TCO to clearly demonstrate actual cost savings and other benefits of your solution. Influencing the decision away from DIY will yield better results for the buyer and mutual benefits for you both. It’s a win-win for everyone.
Your calculations and analyses must be thorough, documented with benchmark data when available, and professionally delivered to stand up to your prospects’ toughest questions. And by shifting the focus to the lifetime net value advantage of your solution, you can help buyers avoid short-sighted decisions based on perceived short-term savings.
A TCO calculator can help you keep your deals moving by providing an apples-to-apples comparison of your solution versus an internal option. ROI Selling offers guidance around the development of TCO comparisons, and if required can develop a calculator to help you compete successfully against the DIY competitor lurking behind your deal.
You can provide a valuable service by providing buyers with a solid business case and cost justification. Without it, they are likely to take the easiest path forward and surrender development and ownership of the investment to internal forces. Help your buyers make the right investment decision from the start. You know they will be happier and better served with your solution, and you can’t put a price on happiness.