On the other hand, in a recessionary economy, where budgets are fixed, hiring is frozen, and/or layoffs are happening, companies expect their employees to achieve more with less. Although it’s a bit counterintuitive, companies are less apt to invest in solutions that primarily impact productivity. They’re more interested in acquiring solutions that save actual hard costs. The best example of that is replacing a spend in a certain category with a similar product or service, or a substitute product or service that is less expensive and has functional parity. Another way of labeling this category of benefit is consolidation. “Total cost of ownership,” or TCO, is a metric that CFOs care about. It is defined as how much a solution will cost over a period of time, including both cash and people’s time.
This is not to say that companies will not continue to invest in solutions that help make their marketing and sales functions more effective. All companies must continue to attempt to grow revenue in this environment. What’s likely happening is that discretionary marketing funds are being reduced, and discretionary sales funds and activities are being reduced. For example, many companies are reducing travel budgets. So in this environment, it’s more important than ever, if you’re selling a solution that has an impact on marketing or sales, that you’re able to credibly back up the results.
For now, let’s focus on cost savings.
The best practice in this environment is to construct a way to quickly and elegantly assess what your customer is doing today, and where they’re spending cash on other solutions. The way this can best be accomplished is to utilize a dynamic form, with CRM integration, which lists categories of expenses that your customer typically is incurring. Pre-fill the form with the typical costs that companies do incur in that category. Your competitive intelligence team should be able to help you with some initial data. If needed, ValueCore’s team can help you with this process (learn how).
The next step is to train your reps on how to ask these questions and assist the customer if they don’t have all of the data at their fingertips. If you do this successfully, your reps should be able to approximate the total cost of their existing environment! You now have a framework that allows you to credibly present potential reductions at the aggregate level (e.g. “2.5% reduction in COGS”), as well as at the individual component level (e.g. “15% savings in fuel”). You can then discuss how your solution or service addresses each of these components.
The final step is to back up your claims of how you’re going to reduce their cost with information from existing customers (case studies, surveys), analyst reports, or both.
