Seven Reasons your ROI Spreadsheet Fails to Sell

Your sales team created an ROI spreadsheet, a spreadsheet that attempts to quantify the return on investment (ROI) of your business’s offerings, for your prospective customers. You share this with your customers to persuade them to purchase your offerings, but your customers are not convinced. They don’t believe the assumptions and they find your spreadsheet confusing. They take no action. Or they purchase from a competitor. 

Your ROI spreadsheet fails. It does not achieve your goals: it fails as an analytic tool in quantifying the value that your offerings bring, and it fails as a persuasion tool in convincing your prospective customers of the value. 

Why does your ROI spreadsheet fail? It does not reflect how value is actually created by your customers’ business. Modeling your customer’s business requires time and skill, particularly skill at business modeling. And your customers are not all the same; they differ in the way value is created.

1. It ignores revenue

Rather than tackling the hard problem of modeling your customers’ business, your sales team has created a superficial model—an ROI spreadsheet—that considers only obvious hard costs rather than the whole picture of customer value. It entirely ignores the additional revenue that your offering makes possible. 

2. It ignores soft costs

Even for costs, your ROI spreadsheet considers only the hard costs that are easy to quantify, ignoring soft costs like employee morale, customer confidence, and the loss of customers due to environmental concerns. 

3. It is defensive

Your ROI spreadsheet is focused on making defensible value claims. Your sales professionals are accustomed to making claims and then defending those claims against customer objections. Your ROI spreadsheet serves that tactic, capturing only the value that can be defended rather than all the ways that value is affected by your offering. 

Instead of making defensible value claims, your sales professionals could be exploring value hypotheses with your customers. A value hypothesis is a hypothesis, something that may or may not be true. A value hypothesis can be tested with your customer, to determine whether it is true, and adjusted once you learn more. And a value hypothesis is not limited to those few areas where your sales professionals can defend against objections. Instead it is broad, looking at all the ways your service offering affects customer value.

If your sales professionals were exploring value hypotheses with your customers rather than making—and defending—value claims, you could present a more complete model of value, and a model describing far more value than your ROI spreadsheet.

4. It is opaque

Your ROI spreadsheet is opaque. That 10.53 in cell G32: where does this number come from? That’s a reasonable question. Your customer wants to check the integrity of the model, to ensure that it is honest. Or he wants to check the fidelity of the model, to ensure that the model reflects the actual complications of his business. Or perhaps he just wants to better understand the model, because he is curious. 

The where-does-it-come-from question should be answered in the model. The sales professional should be able to show the customer how the 10.53 was estimated. We call a model transparent if it supports answering the where-does-it-come-from questions for all model variables. Your ROI spreadsheet is not transparent; it is opaque.

5. It is dishonest

Your ROI spreadsheet is dishonest, shading the truth by exaggerating the value of your offerings. Or even if it is scrupulously honest, your customer believes it to be dishonest because of his experience with past ROI models. 

6. It is overly certain

Your ROI spreadsheet does not reflect the natural uncertainty of your customer’s business. Your customer does not know for sure whether next year will bring the 10% growth in revenue he is hoping for, or a 10% decline he fears. Your ROI spreadsheet does not reflect that uncertainty. It instead offers a false fantasy of a certain future.

7. It has mistakes

Finally, your ROI spreadsheet is buggy. Most large spreadsheets have bugs, and your ROI spreadsheet is no exception. 

Since your ROI spreadsheet is superficial, focused on defensible value claims rather than the totality of value, opaque, dishonest—or at least believed to be so, unrealistically certain, and full of bugs, is it any wonder than it fails to accomplish your goals? 

An ROI spreadsheet is a value model, a model of how value is created at your customer’s business. A successful value model is one that persuades customers. It must:

  1. Quantify revenue opportunities, not just cost savings
  2. Quantify soft costs like employee morale and customer confidence 
  3. Approach value as a hypothesis, to be explored with your customer, not as a claim, to be defended against customer objections
  4. Be transparent, so your customer can understand it
  5. Be honest, without exaggeration or hidden biases
  6. Address uncertainty
  7. Be bug-free

Thanks to Michael Bean, Jay Ma, Steven Bridgeland, and Ashley Deans for reading drafts of this.

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