The Cost of Doing Nothing

In my business, probably like many of you, one of the critical steps in a sales/buying process is establishing the business case for acquisition.  Assuming that the technical and economic buyers are on board and established that your company and solution are VOC (vendor of choice), there is typically a gauntlet of approvals necessary before a sale takes place.  How onerous this process is will be dependent upon transaction size…the larger the transaction, the greater the oversight and scrutiny and more levels of approval.

Most technical buyers are not experts in developing a business case, particularly one with a financial bent.  They are generally quite good at describing the operational benefits, but establishing the financial impact in terms that a CFO understands is more challenging.  Additionally, it often requires getting data that isn’t right at hand, then expressing value in a number of ways…IRR, MRR, NPV, ROI.  From a sales process perspective I have always advocated delivering a framework to capture and express financial impact, and helping translate the operational benefits financially.

Most companies that go through this exercise focus on ROI.  While this is an important metric, stopping there is stopping short.

No business case analysis is complete unless you also establish the cost of doing nothing.

Two things work against you when selling.  First, the general law of inertia.  Unless there is a real, acute problem, most people aren’t interested in incremental process improvement, particularly if it means more work assessing the offering.  Secondly, the corporate machine works against spending.  Most companies biggest competitor isn’t other providers…but rather prospects that don’t buy anything.

This comes at a cost.  And if you know what that cost is, using their numbers, it changes the dynamic.  As much as corporate procurement works actively not to procure anything, they hate losing money even more.  No one wants to hear that for every month that a decision is delayed, they are losing (or excessively spending) significant $$.  This quantifies the value of action and urgency.

This also really helps in the negotiation process.  Once, while negotiating a 7 figure software agreement, the “buyer” was pushing hard for about $100K in concessions.  The back and forth went on for a few weeks.  When I gently (OK, not gently at all) pointed out the the delay had already cost them about $1.3M, it brought context to the negotiation and also underscored the value of my products.  The negotiation ended very quickly at that point.

So do yourself and your prospects a favor…find the cost of doing nothing!