UGLY ECONOMIC NUMBERS It's official: The U.S. is mired in what will turn out to be the longest downturn since the Great Depression.
Hartland, WI (PRWEB) December 24, 2008
These are BAD RECORD BREAKING FINANCIAL TIMES. How bad? "UGLY ECONOMIC NUMBERS It's official: The U.S. is mired in what will turn out to be the longest downturn since the Great Depression.", wrote Business Week in their December 15, 2008 issue.
Koser offers true sales innovation to help your business through these record breaking times.
Competition for the sale of your solution is going to come from places you never even imagined. Not only will you face the normal myriad of competitors, you'll face more. There will be competition you never even heard of coming out to try and close business--any business. Your biggest competitor will be apathy--doing nothing! And your solution is going to compete with every other way your prospect might choose to spend that same dollar. Even seemingly unrelated projects will be competition because there will be less discretionary available dollars.
How do you sell anything in an environment where a capital project to automate a warehouse is in competition with a new computer software application, or a punch press, or "doing nothing" because your prospect is worried more about survival than growth or improvement?
There is a way to sell that can help overcome this record breaking financial crisis, Economic Value Added--"EVA" is the way! But you're going to have to learn some new financial terms to be successful at this. Are you game? Will you work for it? Are you, or do you desire to become a sales person that can sell even now?
EVA is the value over and above all of the costs of implementing your solution, including the cost of the capital (money) used to purchase your solution. Peter Drucker once said: "Until a business covers the cost of capital, it doesn't create value, it destroys it." Money has a cost. Recognizing this can help you sell even when times are as tough as they are now.
Selling value is not new, but selling the EVA that your solution can generate--is new! Here is how it works. Ask your prospect how they measure the financial success of projects. They will essentially explain how they evaluate capital projects. This evaluation might include return on investment (ROI), payback period, net present value (NPV), internal rate of return (IRR) or economic value added (EVA). If these are foreign terms for you, go to our website at http://www.sellingtozebras.com, sign up for a free subscription to Zebra U, and download our "Definitions of Financial Calculations Document" and study it! (You said you were game. You said you would work for it - this is what I meant!) Once you know how your prospect evaluates capital projects, ask "what is your top capital project projected to return"? You'll get an answer like, "we are expecting this new punch press to deliver an 18% annual return on investment and pay for itself in six months." NOW you know the rate of return you'll have to BEAT in order to compete for the available funds. But you'll first have to do more homework. You have to know the specific value your solution creates.
To uncover the specific value your solution creates start with the business problems you solve. When you solve these business problems, what verifiable, repeatable value have you created for your existing customers? How long did it take to achieve this level of value--net of all costs? Make sure your customers are ready to back your claim!
To verify the value you create send a survey to your existing customers. Document the business problems you solve and the value created. It's best to categorize your survey results based on industry type, size of business, and even region of the country or world.
The previous questions are classic value based questions, but to get at real net value, or real EVA you have to go farther. What was the implementation time, "ramp-up" period, and internal people costs associated with putting in your solution and continuing to operate it? Did your solution work in conjunction with other components your customer had previously implemented that were creating value before they implemented your soluton?
We have tools that can help kick-start this process. We have built a "free" value model template that can be downloaded at our website. If you have already signed up for your free subscription to Zebra U at http://www.sellingtozebras.com go back to our Zebra U page, under the column titled "Steps to the Zebra Process", download the "Economic Value Model" spreadsheet template.
Our Economic Value Model template will prompt you to enter all of the cost components of your solution which are needed to create value. It will allow you to enter the implementation time (and won't calculate value benefits during that time). Next it will help you identify all the ways your solution creates value. The template will also automatically REDUCE your value claim by the amount of time you say it takes to "ramp-up" your solution - a prospect, for example, might only achieve 30% of the value in the first year, 50% in year two, and 80% in year three. It'll also apportion some of the value away from your claim by allowing you to distribute some of the benefit to other ways or solutions the prospect has put in place which are designed to solve some of the same business issues you solve. In other words our template model will reduce your value claims and make them ultra conservative - even CFO worthy. Further we will do the heavy lifting for you by calculating the ROI, payback period, NPV, IRR and the "all important" EVA your solution creates. We will even estimate the cost of their people's time to put in, maintain and run your solution.
Remember we asked the prospect "what is your top capital project projected to return"? And we learned the answer was, "we are expecting this new punch press to deliver an 18% annual return on investment…" Now comes the real innovative part of this process because we are going enter a cost of capital of 18% into our value model. By entering the cost of money as 18% into our value model, the model will reduce our value claim by 18%. When we reduce the model benefit by the cost of our solution; their internal people cost to put it in and run it; reduce it by the implementation time; ramp-up time; further only claim the value we create over and above all other ways they have tried to attack these same business issues, and finally we further reduce our value claim by the amount of return on investment that is expected for the BEST PROJECT they plan to approve, WHAT we have left is the EVA of your project! Can you feel the power in this?
Now you have to identify Power for the projects and solutions that you sell before you try to present this information. This presentation is not for your normal contact. This is the language of Power. Your normal contact will not understand ROI, NPV, IRR, payback period or EVA any more than you did before you started to study, learn and change your selling habits. In fact if you go to your normal level of contact they will be frightened by the new you and you will fail. This language of Power is not understood by everyone.
To answer the question of who is Power, ask your existing customer base; "who owns the promises that got our projects approved? Who reports the end results to the CEO, and/or to the board of directors?" When you accurately answer these questions you'll have your answer to the level of Power you'll need to approach to present your EVA based value message.
Now you're ready. What this new language allows you to do is communicate with Power and say "if you have these business issues, and care enough to solve them now, the EVA my solution generates is the value over and above any other way your business might choose to spend these same dollars. Would you like me to prove it? Is it worth twenty minutes to find out more?"
Now that is a meeting Power will agree to!
EVA is the way to combat the worst economic downturn most of us have ever seen! Can you learn something truly different and innovative and apply EVA to a new level of sales success? Your business might depend on the answer to this question!
"Jeff and Chad Koser wrote a book [Selling to Zebras] that I consider one of the best sales books I have read in the last decade." - Marc Kramer, Wharton School of Management
For a short review of the entire Selling to Zebras sales process please go to http://firstthingmonday.net/2008/11/18/zebras/ to review Jeff's interview with Bruce Richardson, Chief Research Officer, AMR Research, http://www.AMRResearch.com.
Jeffrey A. Koser former Chief Operating Officer of Baan Supply Chain Solutions, is the founder of Selling to Zebras, LLC, and the USA Book News Award Winning co-author of Selling to Zebras, HOW to CLOSE 90% of the BUSINESS YOU PURSUE FASTER, MORE EASILY, and MORE PROFITABLY. You can contact Jeff directly at 414-659-1494 and via the website at http://www.sellingtozebras.com and via the sales blog http://www.sellingtozebras.blogspot.com .