By definition, justification is a reason, fact, circumstance, or explanation that justifies or defends the action being taken. Justification answers the question, Does the end justify the means? Unless you’re dealing with a single individual who has the power, money, and authority to buy without answering to
anyone
else, justification must be done. Too often salespeople leave this important step up to the prospect or customer to do. They don’t have a model to work from, or they’re afraid to get involved because they don’t know how. I recommend that salespeople initiate the activity and participate with the customer in the value justification activities. If you don’t know how, you must learn.
A COMPELLING REASON TO ACT
Value justification gives customers a compelling reason to take action. People will
spend
money if they can see that doing so will enable them to make more money or save money they’re currently spending.
Salespeople have been participating in ROI (return on investment) analysis and cost justifications for
years
. Many times I’ve
observed
salespeople frustrated because, though their proposal was completely justified with a fantastic ROI and a short time frame for payback, the customer still didn’t take action. Why? One reason is that the return and the payback are in the mind of the salesperson and not the buyer. The only way prospective buyers can get the same vision and understand the real value of the solution is if they understand and own both the problem and the solution. As long as salespeople are telling
buyers
, “We can solve your problems,” they’re not enabling
prospective
buyers to take ownership.
Historically, salespeople and customers have used terms such as cost justification and ROI analysis instead of value justification or value analysis. I stress the
term
value justification because I want salespeople to focus their customers and prospects on value. It’s very important for salespeople to know that the higher the price, the more important it is to sell value. Remember, in Solution Selling we define value as Total Benefits minus Total Cost or Total Investment.
Why Participate in Value Justifications?
There are several reasons for participating in value justifications. They include sale cycle initiation, closing a sale, discounting, proof, and avoiding no decisions.
Initiate Sale Cycles
Once you know the value you bring to situations, you can leverage this to help initiate new opportunities and create
curiosity
in your prospect or customer more easily and quickly.
Close Sales
Value justification creates compelling reasons to take action. With a compelling value justification, buyers often ask to get started early. In other words, the cost or impact of delay is so overwhelming that they can’t afford to wait any longer.
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Minimize Discounting
When the buyer and the salesperson know the real (measured and
quantified
) value, this onerous pressure can be greatly reduced. The buyer is less likely to ask for (or at least expect) a discount, and the salesperson is less likely to feel he or she has to give one.
Provide Proof
Visionaries see how the implementation of your offerings will give them an advantage in the
marketplace
. However, these visionaries only make up 20 percent of buyers in the market. The other 80 percent are more pragmatic and conservative. They need proof and the demonstration of high value to mitigate the risk that buyers naturally feel at the close of sell cycles. Value justification and value analysis are very important to this segment of the market.
Avoid No Decision
For one reason or another, some opportunities never conclude. The customer makes a no decision (we call this No Decision, Inc., or NDI). One of the main reasons buyers end up making a no decision is that they see no compelling reason to act; they don’t see enough value in the solution.
I contend that we actually do lose these opportunities because buyers do make a decision—they choose an alternative project. They don’t go with you or your competition, but they choose instead to invest that budgeted money with someone else. We all need to stop kidding
ourselves
about this situation; we lost.
Think of your buyers as people who hold the money like bankers. They don’t sit on the money; they invest it to get a return. You may well be competing against an accounting system, a new
fleet
of
trucks
, furniture, and so on, not just your usual
competitors
. Expect your buyers to go with the projects that provide the greatest value and the greatest return.